Settlement of Audit Objections
Risk of under reliance is the risk that the sample selected to test controls:
Does not support the auditor’s planned assessed level of control risk when the true operating effectiveness of the control structure justifies such an assessment
Supports the auditor’s planned assessed level of control risk when the actual position does not warrant such reliance
Is not supported by adequate documents
Both A and C
Does not support the auditor’s planned assessed level of control risk when the true operating effectiveness of the control structure justifies such an assessment
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The risk of management fraud increases in the presence of :A. Frequent changes in supplies
B. Improved internal control system
C. Substantial increases in sales
D. Management incentive system based on sales done in a quarter
Concurrent audit is a part of:
A. internal check system
B. continuous audit
C. internal audit system
D. final audit
Which of the following controls would ensure that securities are not lost, stolen or diverted:
A. Establish physical barriers over investment securities
B. Maintain files of authorized signatures
C. Segregate investment approval form accounting and from custody of securities
D. All of the above
An auditor conducts a surprise check on the pay day (i.e.) the day wages and salaries are paid. The primary purpose of this audit procedures is:
A. To ensure that there are not ghost workers
B. To test procedures for distributing pay cheques
C. Both A and B
D. None of these
A company auditor can be removed by:
A. board of directors
B. managing director
C. any director
D. general meeting
Which one of the following primary assertions is satisfied when an auditor ensures that there are no unrecorded assets liabilities transactions or events or undisclosed items in the client financial records:
A. Valuation
B. Completeness
C. Existence
D. Rights and obligations
Following descriptions are the examples of substantive testing EXCEPT:
A. Test of account balances to verify the correctness of the amounts
B. Verification that an operating system and/or applications are configured appropriately to the companies needs
C. Review of minutes of directors; meetings and inquiry
D. Use of statistical sampling to determine the accuracy of financial statement figures
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