Audit: Auditing and Substantive Tests

36648 Words May 26th, 2012 147 Pages
Question #1 (AICPA.900546AUD-AU) | | |
The first general standard requires that an audit of financial statements is to be performed by a person or persons having | A. Seasoned judgment in varying degrees of supervision and review. | | B. Adequate technical training and proficiency. | | The first general standard requires that the audit be performed by individuals with adequate technical training and proficiency as an auditor. The auditor must have obtained a proper education in accounting and auditing and then increase his/her knowledge and proficiency through experience. | | C. Knowledge of the standards of field work and reporting. | | The first general standard requires that the audit be performed by individuals
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| | The ultimate purpose of assessing control risk is to contribute to the auditor 's evaluation of the risk that material misstatements may exist in the financial statements. The assessment of control risk combined with the assessment of inherent risk aids the auditor in identifying where material misstatements might exist in the financial statements. The auditor must then select and perform the auditing procedures necessary to detect material misstatements if they exist. | | C. Specified controls requiring segregation of duties may be circumvented by collusion. | | D. Entity policies may be overridden by senior management. | Question #5 (AICPA.901141AUD-AU) | | |
The objective of tests of details of transactions performed as tests of controls is to | A. Detect material misstatements in the account balances of the financial statements. | | The objective of tests of controls is to ascertain whether internal controls are designed properly or operating effectively. The purpose of substantive tests is to detect material misstatements in the account balances of the financial statements. | | B. Evaluate whether an internal control structure policy or procedure operated effectively. | | The objective of tests of controls is to ascertain whether internal controls are designed properly or operating effectively. Tests directed toward design effectiveness are concerned with whether the control is suitably
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