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(Solved) Devry ACCT591 Unit 5 Auditing 5 quiz 5 latest 2016 july


Question 1.1. (TCOs B and C) (CPA-05615.B) Jackson is auditing the financial statements of Saffer Company, an issuer. Which of the following is true? (Points : 10) Jackson is not required to audit internal control, but should report any significant deficiencies or material weaknesses noted. Saffer is required to obtain an audit of its internal control, but a professional other than Jackson may be hired for this purpose. Jackson is required to audit and report on Saffer's internal control. If Jackson provides an adverse opinion on the financial statements, an audit of Saffer's internal control is not permitted. Question 2.2. (TCOs B and C) (CPA-06853.B) An auditor discovers that an account balance believed not to be materially misstated based on an audit sample was materially misstated based on the total population of the account balance. This is an example of which of the following sampling types of risks? (Points : 10) Incorrect rejection. Incorrect acceptance. Assessing control risk too low. Assessing control risk too high. Question 3.3. (TCOs B and C) (CPA-02600.B) An advantage of statistical sampling over nonstatistical sampling is that statistical sampling helps an auditor to: (Points : 10) Eliminate the risk of nonsampling errors. Reduce the level of audit risk and materiality to a relatively low amount. Measure the sufficiency of the audit evidence obtained. Minimize the failure to detect errors and fraud. Question 4.4. (TCOs B and C) (CPA-02617.B) Which of the following sample planning factors would influence the sample size for a substantive test of details for a specific account? Expected Measure of amount of tolerable misstatements misstatement (Points : 10) No No Yes Yes No Yes Yes No Question 5.5. (TCOs B and C) (CPA-02733.) Should an auditor communicate the following matters to those charged with governance of a public entity? Management's consultation with Significant audit other accountants adjustments recorded about significant by the entity accounting matters (Points : 10) Yes Yes Yes No No Yes No No Question 6.6. (TCOs B and C) (CPA-06723.B) Which of the following disagreements between the auditor and management do not have to be communicated by the auditor to those charged with governance? (Points : 10) Disagreements regarding management's judgment about accounting estimates for goodwill. Disagreements about the scope of the audit. Disagreements in the application of accounting principles relating to software development costs. Disagreements of the amount of the LIFO inventory layer based on preliminary information. Question 7.7. (TCOs B and C) (CPA-02882.B) In a probability-proportional-to-size sample with a sampling interval of $5,000, an auditor discovered that a selected account receivable with a recorded amount of $10,000 had an audit amount of $8,000. If this were the only error discovered by the auditor, the projected error of this sample would be: (Points : 10) $1,000 $2,000 $4,000 $5,000 Question 8.8. (TCOs B and C) (CPA-02894.B) An auditor may decide to decrease the acceptable level of risk when: (Points : 10) Increased reliability from the sample is desired. Many differences (audit value minus recorded value) are expected. Initial sample results do not support the planned level of control risk. The cost and effort of selecting additional sample items is low. Question 9.9. (TCOs B and C) (CPA-02542.B) An auditor's letter issued on significant deficiencies relating to a nonissuer's internal control observed during a financial statement audit should: (Points : 10) Include a brief description of the tests of controls performed in searching for significant deficiencies and material weaknesses. Indicate that the significant deficiencies should be disclosed in the annual report to the entity's shareholders. Include a paragraph describing management's assertion concerning the effectiveness of internal control. Indicate that the audit's purpose was to report on the financial statements and not to provide assurance on internal control. Question 10.10. (TCOs B and C) (CPA-02585.B) An auditor established a $60,000 tolerable misstatement for an asset with an account balance of $1,000,000. The auditor selected a sample of every twentieth item from the population that represented the asset account balance and discovered overstatements of $3,700 and understatements of $200. Under these circumstances, the auditor most likely would conclude that: (Points : 10) There is an unacceptably high risk that the actual misstatements in the population exceed the tolerable misstatement because the total projected misstatement is more than the tolerable misstatement. There is an unacceptably high risk that the tolerable misstatement exceeds the sum of actual overstatements and understatements. The asset account is fairly stated because the total projected misstatement is less than the tolerable misstatement. The asset account is fairly stated because the tolerable misstatement exceeds the net of projected actual overstatements and understatements.

 


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