Ch07 Examine Planning Evaluation Of Contr
п»їAudit Planning: Assessment of Control Risk
1 ) Which from the following is ordinarily considered a test of internal control methods? a. Mail confirmation letters to banking companies.
b. Count and list funds on hand.
c. Analyze signatures upon checks.
d. Obtain or prepare reconciliations of bank accounts since the balance sheet date.
2 . Once obtaining an understanding of an entity's control environment, an auditor should pay attention to the compound of management's policies and procedures rather than their type because a. The auditor may well believe that the policies and procedures happen to be inappropriate for your particular
m. The board of administrators may not be aware about management's frame of mind toward the control environment. c. Managing may set up appropriate guidelines and types of procedures but not act on them. g. The guidelines and methods may be thus weak that no
reliance is considered by the auditor.
3. After the research and analysis of a patient's internal control policies and procedures has been completed, an auditor might decide to a. Improve the extent of substantive screening in areas where the internal control policies and procedures happen to be strong. b. Reduce the degree of control testing in areas where the interior control policies and types of procedures are strong. c. Decrease the extent of both substantive and control testing in areas where the interior control policies and types of procedures are solid. d. Increase the extent of substantive tests in areas where the internal settings are weakened.
5. A conceptually logical approach to the auditor's evaluation of internal accounting control consists of the following several steps: I. Determine perhaps the necessary methods are prescribed and are becoming followed satisfactorily. II. Consider the types of mistakes and scam that could
III. Determine the internal control guidelines and methods
that should prevent or identify errors and fraud.
4. Evaluate any weakness to ascertain its effect on the nature, time, or degree of auditing procedures to become applied and suggestions to get made to the client.
What should be the buy in which these four steps are performed? a. 3, IV, I, II n. III, My spouse and i, II, IV
c. II, 3, I, 4
d. II, I, III, 4
your five. An auditor evaluates the existing internal control in order to a. Determine the extent of substantive testing which should be performed. m. Determine the extent of control assessments which must be performed. c. Ascertain if irregularities will be probable.
d. Determine whether any kind of employees possess incompatible features.
6. The auditor is studying internal control policies and procedures in the sales, shipping and delivery, and payment subset of the revenue pattern. Which from the following conditions suggests a need for additional tests of settings? a. Inside control is found to be weak with regard to shipping and billing. w. Internal control of sales, invoicing, and delivery appears solid, but 80% of sales revenue is attributable to 3 major consumers. c. Inner control over billing and shipping and delivery is thought to be strong plus the auditor views...