SOLVED ACC311 Quiz 2 Solution and Discussion

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Quiz No.2 Total Questions : 10
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Which one of the following statements is correct with respect to obtaining an understanding of a client? ACC311
Auditors are not required to obtain an understanding with their clients

Analytical procedures used in planning an audit should focus on identifying which one of the followings?

Areas that may represent specific risks relevant to the audit
Material weaknesses in the internal control structure
The predictability of financial data form individual transactions
The various assertions that are embodied in the financial report

Which one of the following statements is TRUE about the auditors? ACC311
The auditor is not required to apply all the risk assessment procedures for each aspect of the understanding required

Which of the following is NOT one of the five major components of internal control?
A. Risk assessment
B. Control activities
C. Information and communication system
D. Human resource background checks

Which one of the following is an appropriate form of documenting the auditor’s understanding of the client’s internal control system? ACC311
Narratives

Trend analysis and vertical analysis are two important examples of: ACC311
Test of controls

All of the following should be observed and inspected by the auditors during the risk assessment process of an entity EXCEPT: ACC311
A. Observations of Activities and operations
B. Inspection of Documents and records
C. Reading Management reports
D. Visit to other companies in the industry

While considering internal control system of an entity, the auditor is basically concerned that the system provides reasonable assurance about which one of the following? ACC311
That the management can not override the system
Operational efficiency has been achieved according to management plans
Errors have been prevented or detected
Controls have not been circumvented by collusion

The various methods of ascertaining and documenting the internal control system of an entity include all of the following EXCEPT: ACC311
Organization charts

If the auditor makes an assessment that there is a low level of control risk and inherent risk for a client, what would you expect from an auditor to do? ACC311
Perform no substantive procedures