Auditing & Assurance Services Timothy Louwers 7th Edition – Test Bank
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Auditing & Assurance Services Timothy Louwers 7th Edition – Test Bank
Sample Questions
Instant Download With Answers Chapter 3 Engagement Planning
1) Which of the following auditor concerns most likely ...
which of the following auditor concerns most likel
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Auditing & Assurance Services Timothy Louwers
7th Edition – Test Bank
Description
Auditing & Assurance Services Timothy Louwers 7th Edition – Test Bank
Sample Questions
Instant Download With Answers
Chapter 3 Engagement
Planning
1) Which of the following auditor concerns most likely could be so serious that the
auditor would conclude that a financial statement audit cannot be conducted?
1. A) The entity has no formal written code of conduct.
2. B) The integrity of entity’s management is suspect.
3. C) Procedures requiring separation of duties are subject to management override.
4. D) Management fails to modify prescribed controls for changes in conditions.
Answer: B
Difficulty: 2
Medium
Topic: Pre-Engagement Activities (AU-C 300, AS 2101)
Learning Objective: 03-01 List and describe the required pre-engagement activities
that auditors undertake before beginning an audit engagement.
Blooms: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard
Navigation
2) Before accepting an engagement to audit a new client, an auditor is required to:
1. A) make inquiries of the predecessor auditor after obtaining the consent of the
prospective client.
2. B) obtain the prospective client’s signature to the engagement letter.
3. C) prepare a memorandum setting forth the staffing requirements and
documenting the preliminary audit plan.
4. D) discuss the management representation letter with the prospective client’s
audit committee.
Answer: A
,Difficulty: 1 Easy
Topic: Pre-Engagement Activities (AU-C 300, AS 2101)
Learning Objective: 03-01 List and describe the required pre-engagement activities
that auditors undertake before beginning an audit engagement.
Blooms: Remember
AACSB: Analytical
Thinking
Accessibility: Keyboard Navigation
3) Which of the following statements is most accurate regarding sufficient and
appropriate documentation?
1. A) Accounting estimates are not considered sufficient and appropriate
documentation.
2. B) Sufficient and appropriate documentation should include evidence that the
audit working papers have been reviewed.
3. C) If additional evidence is required to document significant findings or issues,
the original evidence is not considered sufficient and appropriate and therefore
should be deleted from the working papers.
4. D) Audit documentation is the property of the client, and sufficient and
appropriate copies should be retained by the auditor for at least five years.
Answer: B
Difficulty: 2
Medium
Topic: Audit Procedures for Obtaining Audit Evidence (AU-C 500, AS 1105)
Learning Objective: 03-04 List and describe the eight general types of audit
procedures for gathering evidence.
Blooms: Remember
AACSB: Analytical
Thinking
Accessibility: Keyboard Navigation
,4) When applying analytical procedures during an audit, which of the following is the
best approach for developing expectations?
, 1. A) Considering unaudited account balances and ratios to calculate what adjusted
balances should be.
2. B) Identifying reasonable explanations for unexpected differences before talking
to client management.
3. C) Considering the pattern of several unusual changes without trying to explain
what caused them.
4. D) Comparing client data with client-determined expected results to reduce
detailed tests of account balances.
Answer: B
Difficulty: 2
Medium
Topic: Pre-Engagement Activities (AU-C 300, AS 2101)
Learning Objective: 03-01 List and describe the required pre-engagement activities
that auditors undertake before beginning an audit engagement.
Blooms: Remember
AACSB: Analytical
Thinking
Accessibility: Keyboard Navigation
5) Which of the following explanations best describes why an auditor may decide to
reduce tests of details for a particular audit objective?
1. A) The audit is being performed soon after the balance sheet date.
2. B) Audit staff are experienced in performing the planned procedures.
3. C) Analytical procedures have revealed no unusual or unexpected results.
4. D) There were many transactions posted to the account during the period.
Answer: C
Difficulty: 2
Medium
Topic: Pre-Engagement Activities (AU-C 300, AS 2101)
Learning Objective: 03-01 List and describe the required pre-engagement activities
that auditors undertake before beginning an audit engagement.
Blooms: Remember
AACSB: Analytical
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