Free Auditing revision

1. TRUE OR FALSE: An audit program provides a basic plan for the audit team regarding the entity’s business, its size, how to conduct the audit, allocation of work among team members and the estimation of time within which it should complete the work, whereas a time budget is an estimated time allocated to implementation of audit assignments.

2. The code of professional conduct states that auditors must go about their business with due care. Which of the following statements does not apply to due care ?

3. ________auditors refers to auditors who specialize in crimes and are used by law enforcement organizations.

4. TRUE OR FALSE: Assets which are fully depreciated should not be deleted from the records until they are disposed of / sold.

5. _________report refers to a written letter from the auditor containing the opinion on whether a company’s financial statements comply with IFRS.

6. TRUE OR FALSE: Segregation of duties refers to transfer of authorisation or responsibility to others, whereas delegation of duties means division or allocation of duties between two or more employees.

7. ___________of duties refers to an internal control system where various steps in a process are assigned to different people.

8. Which of the following is not an example of fraud?

9. ___________ technique is applied to prove arithmetical accuracy of a transaction and to verify that the computation is in accordance with the rules, procedures and acceptable practices.

The following refers to work carried out following replies to receivable circularization for reference to:
A. Balances agreed by customers
B. Balance not agreed by customer,
C. No customer replies to the confirmation letter.

10.

Required: Match work carried out after replies for each of the above (Answer format A-1,2,3)

11. __________ risk is the risk that the financial reports are materially incorrect before the audit is performed.

12. The following statements argue the case for carrying out audit risk analysis. Which are true?

13. Inventory auditing is used to verify the amount of inventory as well as to its quality and condition to ensure that the value of the inventory is fairly represented in the financial records and statements. There are several inventory audit procedures used : (a)_______ analysis includes grouping different value and volume inventory(i.e. grouping high-value & low-value products separately),(b)___________ analysis include analyzing inventory based on financial metrics such as gross margins, days inventory on hand, inventory turnover ratio, and costs of inventory historically, ( c )________ analysis includes valuing finished inventory during an accounting period,( d)__________ analysis involves matching the number of items and the cost of inventory shipped with financial records ( e)________-analysis includes pausing operations such as receiving and shipping of inventory while making a physical count to avoid mistakes,(f)________-analysis includes solving discrepancies that are found in an inventory audit,(g)______analysis includes analyzing the indirect costs of the business and overhead costs that may be included in the costs of inventory, and (h)_________includes determining the shipping or freight costs for transporting inventory to different locations.

14. TRUE OR FALSE. To be successful, test data should include only data without errors.

15. (a)_______ is defined as disputes occurring between the client firm and audit firm involving accounting principles or practices, financial statement disclosure, or auditing scope or procedures ,whereas restriction on an audit that is caused by the client or other events that do not allow the auditor to complete all aspects of his/ her audit procedures is referred to as (b)_________.