TRUE OR FALSE 1. WHEN OBTAINING AN UNDERSTANDING OF CONTROL ACTIVITIES OF A RELATIVELY SMALL CLIENT, THE AUDITOR IDENTIFIED NO CONTROL ACTIVITIES, THE AUDITOR WOULD PROBABLY SET A HIGH ASSESSMENT OF CONTROL RISK 2. WHEN A COMPANY DESIGNS AND IMPLEMENTS INTERNAL CONTROLS, COST OF THE CONTROLS IS NOT A VALID CONSIDERATION. 3. AUDITING STANDARDS PROHIBIT RELIANCE ON THE WORK OF INTERNAL AUDITORS DUE TO THE LACK OF INDEPENDENCE OF THE INTERNAL AUDITORS

Q: COMPANY A COMPANY B Controls are strong Controls are weak If an audit of any of these companies is…

A: What is meant by test controls? It is an audit procedure conducted to ensure the effectiveness of…

Q: The company being audited has an internal auditor who is both competent and objective.The…

A: Answer:   Option b.

Q: For each of the following situations indicating heightened fraud risk, discuss how a professionally…

A: During the audit, an auditor should analyze the situation and determine every perspective of frauds…

Q: Jamie is an auditor. While preparing to audit his client, FoodCourt, he finds a weakness in the…

A: Auditing is the process that is followed by a business to check the accuracy of the financial…

Q: For each of the following situations, describe how the auditors’ report on internal control over…

A: a.

Q: high for all financial statements assertions, an auditor should document the auditor’s     A B…

A: An Auditor understanding of its environment, it's entity and then assessing the risk of material in…

Q: Which of the following statements is characteristic of monitoring activities within the internal…

A: Internal controls system includes a set of rules, policies, and procedures an organization…

Q: financial statement fraud with asset misappropriation

A: Financial statement fraud is a deliberate attempt to conceal actual financial information so as to…

Q: Which one of the following is not true about internal auditors? Reports to management or those…

A: An internal auditor (IA) is an individual or company who audits the financial statements provided by…

Q: Auditors are important because they are able to provide assurance of an organization's financial…

A: Self-review threats:- This threat may occur when a previous judgment needs to be re-evaluated by the…

Q: 1: The documentation of internal controls pertain only to those controls that are relevant to the…

A: Answer: 1: The documentation of internal controls pertain only to those controls that are relevant…

Q: Which of the following are indicators of a high-risk or low-risk profile client? Explain? Poor…

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Tests of controls are most likely to be omitted when(1) an account balance reflects many…

A: Option C is correct

Q: The auditor only obtains understanding of internal control related to significant risks identified…

A: Internal control process is related with effective and efficient use of available resources and it…

Q: During planning phase of a client’s financial audit, the CPA firm of Arthur Smith, LLP discovered a…

A: The limited number of employees in the enterprise makes the segregation of duties difficult and…

Q: 4 Jamie is an auditor. While preparing to audit his client, FoodCourt, he finds a weakness in the…

A: “Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: 8 Answer is not complete. a. Evaluating the effectiveness of the client's internal control in…

A: Risk Assessment: The  client’s internal  control  is evaluated to get the effectiveness of it. It is…

Q: Auditors are important because they are able to provide assurance of an organization's financial…

A: Intimidation Threat :- An intimidation threat occur if the professional accountant is intimidated by…

Q: ’t these types of controls automatically make a correction in the identified error? Why are…

A: Internal control: Internal control involves the norms and rules which are followed by the company to…

Q: If the potential client operates in a risky industry, the management lacks integrity, and have a…

A: Inherent risk In simple term inherent risk means that there is chance of omission or errors while…

Q: Which of these statements is/are correct? | If an auditor had the required knowledge and…

A: Audit means checking of financial statements of a company.

Q: Generally, audit evidence cannot be obtained entirely through substantive procedures   True or…

A: Substantive procedures are the method or audit tests designed by an auditor to evaluate the…

Q: External auditors are very important gatekeepers. What was the cause of the breakdown in the…

A: Auditing can be defined as the verification and examination of the financial statement that is…

Q: With respect to fraudulent financial reporting, which one of the following statements is not…

A: Auditor can obtain reasonable assurance only, not an absolute assurance.

Q: An auditor's preliminary control risk assessment is at a high level. Which of the following are…

A: An auditor, during the preliminary assessment of control risk, evaluates the effectiveness of that…

Q: The auditor is required to maintain professional skepticism throughout the audit. Which of the…

A: Professional skepticism entails having an inquisitive mind. Keeping on the lookout for anything that…

Q: Which of the following statements is not true? a. The auditor’s main duty is the detection and…

A: The auditor has to ensure whether the financial statements represent true and fair view and as well…

Q: The auditors who find that the client has committed an illegal act would be most likely to withdraw…

A: Auditors are the professionals who are involved in the scrutiny of the financial reports and…

Q: Auditing The external auditor may seek to place reliance/TRUSTON internal controls in order to…

A: Internal auditors are employees of the entity, which might result in risks to independence (real or…

Q: Which of the following best describes the reason why an independent auditorreports on financial…

A: Auditing is a systematic process of analyzing, verifying, and quantifying any given information. It…

Q: The auditor’s primary consideration is whether, and how, internal control prevents, or detects and…

A: The answer for the theory question on Auditing is discussed hereunder :

Q: Question 30 If the auditor plans to assess control risk at less than the maximum and rely on…

A: Introduction:- The auditor intends to evaluate audit risks at a reduced level than highest and…

Q: The auditor faces a risk that the audit will not detect material misstatements that occur in the…

A: Introduction:- The main objective of auditor is to acquire sufficient appropriate audit evidence…

Q: The auditor designs and performs a combination of tests of controls and substantive procedures to…

A: Financial statements are referred to as reports containing monetary information regarding the…

Q: The following information pertains to internal controls at company A and company B respectively.…

A: What is meant by test controls? It is an audit procedure conducted to ensure the effectiveness of…

Q: Explain how the circumstances under each of the following might reflect failed leadership by…

A: Auditors:  an auditor is a person who is responsible to verify and review the accounting records and…

Q: Auditors are important because they are able to provide assurance of an organization's financial…

A: Familiarity threat is the threat that due to a long or close relationship with a client or employer,…

Q: d. When documenting their understanding of a client's internal controls, auditors are required to…

A: The books of accounts are required to be audited by the auditor so as to check whether the…

Q: Why does a certified audit present a high degree of risk for a CPA? A. They are difficult to…

A: Ans. Certified audit is auditing of financial statements to give an opinion on the true and fair…

Q: Select which option is correct. Select one or more: A. The level of professional skepticism can be…

A: Professional skepticism is an attitude that includes a questioning mind, being alert to conditions…

Q: Study and Evaluation of Management Control. The study and evaluation of management risk mitigation…

A: Management Control:   The process of comparing the performance of the present year with the planned…

Q: When completing the audit of internal controls for an issuer, the severity of an internal control…

A: Internal control is the managements’ effective and efficient controls for achieving goals and…

Q: A related party transaction is a transfer of resources, services, or obligations between related…

A: As per IAS 24  a related party transaction is a transfer of resources, services, or obligations…

Q: 2. The auditors who find that the client has committed an illegal act would be most likely to…

A: When auditors discover that a client has engaged in illegal activity, they are more likely to leave…

Q: Why is there a need on the part of the client entity to monitor internal controls over time? a.…

A: Internal Control- It is a process which is made by the entity to put control on its operations and…

Q: Which of the following statements describes why a properly designed and executedaudit may not detect…

A: Auditing: Auditing is the process by which assertions made by management about financial…

Q: The risk of not detecting a misstatement resulting from fraud is greater than that resulting from…

A: Audit is the process of verifying books of accounts and financial statements of business and it…