10. Which of the following situations would lead an auditor to test controlsover long-lived assets?Substantive analytical procedures indicated that controls wereeffectively designed.b. Risk assessment procedures indicated that controls were effectivelydesigned.c. . Tęsts of details has decided many errors in recording long-lived assettransactions.d. The auditor 'has decided that the additional effort to test controlswould not exceed the potential reduction in substantive procedures.11. To test the effectiveness of controls over asset impairment, the auditorcould perform which of the following procedures?a. Perform analytical procedures.b. Send confirmations to- the management specialist who performedwork related to the impairment.c. Inquire of management as to its process for determining assessmentimpairment.d. Inspect the asset for potential impairment.12. When auditing intangible assets, the auditor would likely recomputedamortization and determine whether management's recorded amount isreasonable. When performing this procedure which assertion is theauditor primarily gathering evidence for?á. Completenessb. ExistenceC. Valuationd. Rights and obligations.13. As part of auditing equipment, the auditor will inspect new equipmentadditions selected from the client's property ledger. Thè procedure willprovide evidence about which of the following assertions?a. Completenessb. Existencec. Valuationd. Rights and obligations.

Introduction:- Long live assets means, Which are are look forward to contribute future economic…

Answered: 10. Which of the following situations…

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter12: Auditing Long-lived Assets And Merger And Acquisition Activity

Section: Chapter Questions

Problem 27CYBK

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Similar questions

Assume that the client’s internal controls over the recordingand classifying of fixed asset additions are considered deficient because the individualresponsible for recording new acquisitions has inadequate technical training and limitedexperience in accounting. How will this situation affect the evidence you should accumulate in auditing fixed assets as compared with another audit in which the controls areexcellent? Be as specific as possible.
Assume that the client’s internal controls over the recording and classifying of fixed asset additions are considered weak because the individual responsible for recording new acquisitions has inadequate technical training and limited experience in accounting. How will this situation affect the evidence you should accumulate in auditing fixed assets as compared with another audit in which the controls are excellent? Be as specific as possible.
Which of the following controls will most likely justify a reduced assessed level ofcontrol risk for the existence assertion for equipment?(1) Internal auditors periodically select equipment items in the fixed assets masterfile and locate the related equipment on company premises.(2) Department heads are asked to provide information to the accounting department each quarter about any equipment no longer in use or somewhat damaged.(3) All contracts of equipment purchases are reviewed by both the controller andattorney to verify that legal title transfers to the client and that none representoperating leases.(4) As part of quarterly and annual inventory physical counts, factory equipment islisted and subsequently reconciled to the fixed asset master file.
1. Which of the following procedures is most appropriately done if the control risk and inherent risk was assessed at a below maximum level where the management does not have effective internal controls in place? * Omit test of controls, then perform substantive testing at year-end Perform tests of controls, then perform substantive testing at year-end Perform tests of controls, then perform substantive testing at an interim period Omit test of controls, then perform substantive testing at an interim period 2. In auditing the financial statements of ESELYU Inc., the management has deliberately precluded you from gathering evidence in one of its cash accounts which you perceive to be material in regards to the audit. Which of the following audit opinion are you most likely to express? * Qualified opinion if the item is material and pervasive Unqualified Opinion if the item is material and…
Applying substantive tests to the details of asset and liability accounts as of an interim date, rather than as the balance sheet date: Eliminates the use of certain statistical sampling methods that would otherwise be available, Presumes that the auditor will reperform the tests as of the balance sheet date, Should be especially considered when there are rapidly changing economic conditions, Potentially increases the risk that errors which exist at the balance sheet date will not be detected
In which of the following circumstances would an auditor expect to find that an entity had implemented automated controls to reduce risks of misstatement?a. When errors are difficult to predict.b. When misstatements are difficult to define.c. When large, unusual, or nonrecurring transactions require judgment.d. When transactions are high volume and recurring.
When the risk of material misstatement due to fraud is considered high in a particular area, which of the following is a likely response? Perform tests on an interim basis throughout the period. Obtain more reliable evidence by expanding tests to include all transactions. a. b. C. d. Obtain additional corroborative information. Design tests of controls to substantiate weaknesses.
An auditor discovered the following matters while performing tests of controls: 2.A purchase of raw materials was recorded as a purchase of supplies. Required: a.What control would have prevented or detected each of the above misstatements? b.What test should the auditor perform to test the control? c.To which financial statement assertion does the misstatement relate?

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