Auditing and Attestation MCQs

Which of the following is ordinarily considered to be a fraud risk factor?

The companyâ€™s financial statements include a number of last minute material adjustments.
Management regularly informs investors of forecast information.
The company has experienced increasing earnings over the previous five years.
The companyâ€™s president is included as a member of the board of directors.

Which of the following statements best describes the primary purpose of Statements on Auditing Standards?

They are guides intended to set forth auditing procedures that are applicable to a variety of situations.
They are procedural outlines that are intended to narrow the areas of inconsistency and divergence of auditor opinion.
They are authoritative statements, enforced through the Code of Professional Conduct.
They are interpretive guidance.

Which of the following should an auditor obtain from the predecessor auditor prior to accepting an audit engagement?

Analysis of balance sheet accounts.
Analysis of income statement accounts.
All matters of continuing accounting significance.
Facts that might bear on the integrity of management.

One reason that an auditor only obtains reasonable, and not absolute, assurance that financial statements are free from material misstatement is

Comprehensive basis reporting.
Employee collusion.
Material misstatements.
Professional skepticism.

The auditors of a nonissuer (nonpublic) company must perform a test of the operating effectiveness of a significant control

In all audits.
When the control relates to a significant asset.
When substantive procedures alone will not provide sufficient evidence about the related assertion.
When the auditors believe that the control may not be effective.

The independent auditor selects several transactions in each functional area and traces them through the entire system, paying special attention to ...

Application test.
Test of a controls.
Substantive test.
Test of a function.

In obtaining an understanding of a manufacturing entityâ€™s internal control over inventory balances, an auditor most likely would

Review the entityâ€™s descriptions of inventory policies and procedures.
Perform test counts of inventory during the entityâ€™s physical count.
Analyze inventory turnover statistics to identify slowmoving and obsolete items.
Analyze monthly production reports to identify variances and unusual transactions.

Which of the following statements best describes the ethical standard of the profession pertaining to advertising and solicitation?

All forms of advertising and solicitation are prohibited.
There are no prohibitions regarding the manner in which CPAs may solicit new business.
A CPA may advertise in any manner that is not false, misleading, or deceptive.
A CPA may only solicit new clients through mass mailings.

Which is least likely to be a question asked of client personnel during a walk-through in an audit of the internal control of an issuer (public) com...

What do you do when you find an error?
Who is most likely to commit fraud among your coworkers?
What kind of errors have you found?
Have you ever been asked to override the process or controls?

An abnormal fluctuation in gross profit that might suggest the need for extended audit procedures for sales and inventories would most likely be ide...

Tests of transactions and balances.
A preliminary review of internal control.
Specialized audit programs.
Analytical procedures

When auditing merchandise inventory at year-end, the auditor performs a purchase cutoff test to obtain evidence that

All goods purchased before year-end are received before the physical inventory count.
No goods held on consignment for customers are included in the inventory balance.
No goods observed during the physical count are pledged or sold.
All goods owned at year-end are included in the inventory balance.

An auditor who uses the work of a specialist may refer to and identify the specialist in the auditorâ€™s report if the

Specialist is also considered to be a related party.
Auditor indicates a division of responsibility related to the work of the specialist.
Specialistâ€™s work provides the auditor greater assurance of reliability.
Auditor expresses an â€œexcept forâ€ qualified opinion or an adverse opinion related to the work of the specialist.

Which of the following statements concerning audit evidence is correct?

Appropriate evidence supporting managementâ€™s assertions should be convincing rather than merely persuasive.
Effective internal control contributes little to the reliability of the evidence created within the entity.
The cost of obtaining evidence is not an important consideration to an auditor in deciding what evidence should be obtained.
A clientâ€™s accounting data cannot be considered sufficient audit evidence to support the financial statements.

Burrow & Co., CPAs, have provided annual audit and tax compliance services to Mare Corp. for several years. Mare has been unable to pay Burrow in fu...

Mare sets up a two-year payment plan with Burrow to settle the unpaid fee balance.
Mare commits to pay the past due fee in full before the audit report is issued.
Mare gives Burrow an eighteen-month note payable for the full amount of the past due fees before Burrow begins the audit.
Mare engages another firm to perform the fieldwork, and Burrow is limited to reviewing the workpapers and issuing the audit report.

A note to the financial statements of the First Security Bank indicates that all of the records relating to the bankâ€™s business operations ar...

An adverse opinion.
An â€œexcept forâ€ opinion.
An unmodified (unqualified) opinion.
A qualified opinion.

A company has changed its method of inventory valuation from an unacceptable one to one in conformity with generally accepted accounting principles....

No reference to consistency.
A reference to a prior period adjustment in the opinion paragraph.
An emphasis-of-matter paragraph explaining the change
A justification for making the change and the impact of the change on reported net income.

When an auditor reissues in 20X7 the auditorâ€™s report on the 20X5 financial statements at the request of the client without revising the 20X5...

Use the date of the original report.
Use the date of the clientâ€™s request.
Use the date of the current period report.
Dual date the report.

Which of the following is not a covered member for purposes of application of the independence requirements of the AICPA Code of Professional Conduc...

A staff person on the attest team.
A staff person that performs tax services for the attest client.
The partner in charge of the firm office that performs the attest engagement.
A partner that performs extensive consulting services for the attest client.

Accounting control procedures within computer processing may leave no visible evidence indicating that the procedures were performed. In such instan...

Making corroborative inquiries.
Observing the separation of duties of personnel.
Reviewing transactions submitted for processing and comparing them to related output.
Reviewing the run manual.

Which is least likely to be a response when an auditor has obtained evidence indicating a risk of material misstatement in the area of inventory?

Discuss questions of inventory valuation with any other auditors involved with the audit.
Make oral inquiries of major suppliers in addition to written confirmations.
Perform inventory observations on an unannounced basis.
Request inventory counts at the end of each month.

Confirmations of accounts receivable address which assertion most directly?

Completeness.
Existence.
Valuation.
Classification.

Which of the following is always present in an attestation engagement?

Assertion about the subject matter.
Generally accepted assurance principles.
Subject matter.
An examination report.

Which of the following is not typically performed when accountants are performing a review of the financial statements of a nonissuer?

Analytical procedures applied to financial data.
Inquiries about significant subsequent events.
Inquiries of the clientâ€™s attorney about legal matters.
Obtaining an understanding of the accounting principles followed by the clientâ€™s industry.

If information is for managementâ€™s use only, which of the following forms of CPA association with financial information is most likely to res...

An agreed-upon procedures engagement.
An audit.
A compilation.
A review.

A CPA who is not independent may perform which of the following services for a nonissuer company? . .Compilation . .Review

Yes Yes
Yes No
No Yes
No No

When performing a review of an issuer company, which is least likely to be included in the CPAâ€™s inquires of management members with responsi...

Subsequent events.
Significant journal entries and other adjustments.
Communications with related parties.
Unusual or complex situations affecting the financial statements

An advantage of using statistical over nonstatistical sampling methods in tests of controls is that the statistical methods

Can more easily convert the sample into a dualpurpose test useful for substantive testing.
Eliminate the need to use judgment in determining appropriate sample sizes.
Afford greater assurance than a nonstatistical sample of equal size.
Provide an objective basis for quantitatively evaluating sample risk.

An advantage of statistical sampling over nonstatistical sampling is that statistical sampling helps an auditor to

Eliminate the risk of nonsampling errors.
Reduce the level of audit risk and materiality to a relatively low amount.
Measure the sufficiency of the evidential matter obtained.
Minimize the failure to detect errors and fraud.

The likelihood of assessing control risk too high is the risk that the sample selected to test controls

Does not support the auditorâ€™s planned assessed level of control risk when the true operating effectiveness of the control structure justifies such an assessment.
Contains misstatements that could be material to the financial statements when aggregated with misstatements in other account balances or transactions classes.
Contains proportionately fewer monetary errors or deviations from prescribed controls than exist in the balance or class as a whole.
Does not support the tolerable error for some or all of managementâ€™s assertions.

The risk of incorrect acceptance and the likelihood of assessing control risk too low relate to the

Allowable risk of tolerable misstatement.
Preliminary estimates of materiality levels.
Efficiency of the audit.
Effectiveness of the audit.

Which of the following best illustrates the concept of sampling risk?

A randomly chosen sample may not be representative of the population as a whole on the characteristic of interest.
An auditor may select audit procedures that are not appropriate to achieve the specific objective.
An auditor may fail to recognize errors in the documents examined for the chosen sample.
The documents related to the chosen sample may not be available for inspection.

In assessing sampling risk, the risk of incorrect rejection and the risk of assessing control risk too high relate to the

Efficiency of the audit.
Effectiveness of the audit.
Selection of the sample.
Audit quality controls.

While performing a test of details during an audit, an auditor determined that the sample results supported the conclusion that the recorded account...

Assessing control risk too high.
Assessing control risk too low.
Incorrect rejection.
Incorrect acceptance.

The size of a sample designed for dual-purpose testing should be

The larger of the samples that would otherwise have been designed for the two separate purposes.
The smaller of the samples that would otherwise have been designed for the two separate purposes.
The combined total of the samples that would otherwise have been designed for the two separate purposes.
More than the larger of the samples that would otherwise have been designated for the two separate purposes, but less than the combined total of the samples that would otherwise have been designed for the two separate purposes.

The expected population deviation rate of client billing errors is 3%. The auditor has established a tolerable rate of 5%. In the review of client i...

Stratified sampling.
Variable sampling.
Discovery sampling.
Attribute sampling

The expected population deviation rate of client billing errors is 3%. The auditor has established a tolerable rate of 5%. In the review of client i...

Stratified sampling.
Variable sampling.
Discovery sampling.
Attribute sampling

Which of the following sampling methods would be used to estimate a numerical measurement of a population, such as a dollar value? a. b. c. d.

Attribute sampling.
Stop-or-go sampling.
Variables sampling.
Random-number sampling.

For which of the following audit tests would an auditor most likely use attribute sampling?

Making an independent estimate of the amount of a LIFO inventory.
Examining invoices in support of the valuation of fixed asset additions.
Selecting accounts receivable for confirmation of account balances.
Inspecting employee time cards for proper approval by supervisors.

An underlying feature of random-based selection of items is that each

Stratum of the accounting population be given equal representation in the sample.
Item in the accounting population be randomly ordered.
Item in the accounting population should have an opportunity to be selected.
Item must be systematically selected using replacement.

Which of the following statistical selection techniques is least desirable for use by an auditor?

Systematic selection.
Stratified selection.
Block selection.
Sequential selection.

Which of the following statistical sampling plans does not use a fixed sample size for tests of controls?

Dollar-unit sampling.
Sequential sampling.
PPS sampling.
Variables sampling.

If certain forms are not consecutively numbered

Selection of a random sample probably is not possible.
Systematic sampling may be appropriate.
Stratified sampling should be used.
Random number tables cannot be used.

When performing a test of a control with respect to control over cash receipts, an auditor may use a systematic sampling technique with a start at a...

Must be systematically replaced in the population after sampling.
May systematically occur more than once in the sample.
Must be recorded in a systematic pattern before the sample can be drawn.
May occur in a systematic pattern, thus destroying the sample randomness.

What is the primary objective of using stratification as a sampling method in auditing?

To increase the confidence level at which a decision will be reached from the results of the sample selected.
To determine the occurrence rate for a given characteristic in the population being studied.
To decrease the effect of variance in the total population.
To determine the precision range of the sample selected.

As a result of tests of controls, an auditor assessed control risk too low and decreased substantive testing. This assessment occurred because the t...

Less than the risk of assessing control risk too low, based on the auditorâ€™s sample.
Less than the deviation rate in the auditorâ€™s sample.
More than the risk of assessing control risk too low, based on the auditorâ€™s sample.
More than the deviation rate in the auditorâ€™s sample

Which of the following statements is correct concerning statistical sampling in tests of controls?

Deviations from control procedures at a given rate usually result in misstatements at a higher rate.
As the population size doubles, the sample size should also double.
The qualitative aspects of deviations are not considered by the auditor.
There is an inverse relationship between the sample size and the tolerable rate.

In determining the sample size for a test of controls, an auditor should consider the likely rate of deviations, the allowable risk of assessing con...

Tolerable deviation rate.
Risk of incorrect acceptance.
Nature and cause of deviations.
Population size.

An auditor is testing internal control procedures that are evidenced on an entityâ€™s vouchers by matching random numbers with voucher numbers....

Constitutes a deviation.
Has been properly voided.
Cannot be located.
Represents an immaterial dollar amount.

An auditor plans to examine a sample of twenty purchase orders for proper approvals as prescribed by the clientâ€™s control procedures. One of ...

Choose another purchase order to replace the missing purchase order in the sample.
Consider this test of control invalid and proceed with substantive tests since internal control cannot be relied upon.
Treat the missing purchase order as a deviation for the purpose of evaluating the sample.
Select a completely new set of twenty purchase orders.

When assessing the tolerable rate, the auditor should consider that, while deviations from control procedures increase the risk of material misstate...

A recorded disbursement that does not show evidence of required approval may nevertheless be a transaction that is properly authorized and recorded.
Deviations would result in errors in the accounting records only if the deviations and the errors occurred on different transactions.
Deviations from pertinent control procedures at a given rate ordinarily would be expected to result in errors at a higher rate.
A recorded disbursement that is properly authorized may nevertheless be a transaction that contains a material error.

The objective of the tolerable rate in sampling for tests of controls of internal control is to

Determine the probability of the auditorâ€™s conclusion based upon reliance factors.
Determine that financial statements taken as a whole are not materially in error.
Estimate the reliability of substantive tests.
Estimate the range of procedural deviations in the population

The tolerable rate of deviations for a test of a control is generally

Lower than the expected rate of errors in the related accounting records.
Higher than the expected rate of errors in the related accounting records.
Identical to the expected rate of errors in related accounting records.
Unrelated to the expected rate of errors in the related accounting records.

If the auditor is concerned that a population may contain exceptions, the determination of a sample size sufficient to include at least one such exc...

Discovery sampling.
Variables sampling.
Random sampling.
Dollar-unit sampling.

In determining the number of documents to select for a test to obtain assurance that all sales have been properly authorized, an auditor should cons...

I only.
II only.
Both I and II.
Either I or II.

Which of the following statements is correct concerning statistical sampling in tests of controls?

As the population size increases, the sample size should increase proportionately.
Deviations from specific internal control procedures at a given rate ordinarily result in misstatements at a lower rate.
There is an inverse relationship between the expected population deviation rate and the sample size.
In determining tolerable rate, an auditor considers detection risk and the sample size.

What is an auditorâ€™s evaluation of a statistical sample for attributes when a test of fifty documents results in three deviations if tolerabl...

Modify the planned assessed level of control risk because the tolerable rate plus the allowance for sampling risk exceeds the expected population deviation rate.
Accept the sample results as support for the planned assessed level of control risk because the sample deviation rate plus the allowance for sampling risk exceeds the tolerable rate.
Accept the sample results as support for the planned assessed level of control risk because the tolerable rate less the allowance for sampling risk equals the expected population deviation rate.
Modify the planned assessed level of control risk because the sample deviation rate plus the allowance for sampling risk exceeds the tolerable rate.

An auditor desired to test credit approval on 10,000 sales invoices processed during the year. The auditor designed a statistical sample that would ...

Tolerable rate (7%) was less than the achieved upper precision limit (8%).
Expected deviation rate (7%) was more than the percentage of errors in the sample (3 1/2%).
Achieved upper precision limit (8%) was more than the percentage of errors in the sample (3 1/2%).
Expected deviation rate (2 1/2%) was less than the tolerable rate (7%).

An auditor desired to test credit approval on 10,000 sales invoices processed during the year. The auditor designed a statistical sample that would ...

5 1/2%
4 1/2%
3 1/2%
1%

Which of the following statements is correct concerning statistical sampling in tests of controls?

The population size has little or no effect on determining sample size except for very small populations.
The expected population deviation rate has little or no effect on determining sample size except for very small populations.
As the population size doubles, the sample size also should double.
For a given tolerable rate, a larger sample size should be selected as the expected population deviation rate decreases.

When an auditor has chosen a random sample and is using nonstatistical attributes sampling, that auditor

Need not consider the risk of assessing control risk too low.
Has committed a nonsampling error.
Will have to use discovery sampling to evaluate the results.
Should compare the deviation rate of the sample to the tolerable deviation rate.

Which of the following courses of action would an auditor most likely follow in planning a sample of cash disbursements if the auditor is aware of sev...

Set the tolerable rate of deviation at a lower level than originally planned.
Stratify the cash disbursements population so that the unusually large disbursements are selected.
Increase the sample size to reduce the effect of the unusually large disbursements.
Continue to draw new samples until all the unusually large disbursements appear in the sample.

When planning a sample for a substantive test of details, an auditor should consider tolerable misstatement for the sample. This consideration shoul...

Be related to the auditorâ€™s business risk.
Not be adjusted for qualitative factors.
Be related to preliminary judgments about materiality levels.
Not be changed during the audit process.

A number of factors influences the sample size for a substantive test of details of an account balance. All other factors being equal, which of the ...

Greater reliance on internal control.
Greater reliance on analytical procedures.
Smaller expected frequency of errors.
Smaller measure of tolerable misstatement.

In estimation sampling for variables, which of the following must be known in order to estimate the appropriate sample size required to meet the aud...

The qualitative aspects of errors.
The total dollar amount of the population.
The acceptable level of risk.
The estimated rate of misstatements in the population.

An auditor established a $60,000 tolerable misstatement for an asset with an account balance of $1,000,000. The auditor selected a sample of every t...

There is an unacceptably high risk that the actual misstatements in the population exceed the tolerable misstatement because the total projected misstatement is more than the tolerable misstatement.
There is an unacceptably high risk that the tolerable misstatement exceeds the sum of actual overstatements and understatements.
The asset account is fairly stated because the total projected misstatement is less than the tolerable misstatement.
The asset account is fairly stated because the tolerable misstatement exceeds the net of projected actual overstatements and understatements

Which of the following statements is correct concerning probability-proportional-to-size (PPS) sampling, also known as dollar unit sampling?

The sampling distribution should approximate the normal distribution.
Overstated units have a lower probability of sample selection than units that are understated.
The auditor controls the risk of incorrect acceptance by specifying that risk level for the sampling plan.
The sampling interval is calculated by dividing the number of physical units in the population by the sample size.

In a probability-proportional-to-size sample with a sampling interval of $5,000, an auditor discovered that a selected account receivable with a rec...

$1,000
$2,000
$4,000
$5,000

In statistical sampling methods used in substantive testing, an auditor most likely would stratify a population into meaningful groups if

Probability-proportional-to-size (PPS) sampling is used.
The population has highly variable recorded amounts.
The auditorâ€™s estimated tolerable misstatement is extremely small.
The standard deviation of recorded amounts is relatively small.

The use of the ratio estimation sampling technique is most effective when

The calculated audit amounts are approximately proportional to the clientâ€™s book amounts.
A relatively small number of differences exist in the population.
Estimating populations whose records consist of quantities, but not book values.
Large overstatement differences and large understatement differences exist in the population.

In the application of statistical techniques to the estimation of dollar amounts, a preliminary sample is usually taken primarily for the purpose of...

Variability.
Mode.
Range.
Median.

Use of the ratio estimation sampling technique to estimated dollar amounts is inappropriate when

The total book value is known and corresponds to the sum of all the individual book values.
A book value for each sample item is unknown.
There are some observed differences between audited values and book values.
The audited values are nearly proportional to the book values.

An auditor is performing substantive tests of pricing and extensions of perpetual inventory balances consisting of a large number of items. Past exp...

Unstratified mean-per-unit.
Probability-proportional-to-size.
Stop or go.
Ratio estimation.

The major reason that the difference and ratio estimation methods would be expected to produce audit efficiency is that the

Number of members of the populations of differences or ratios is smaller than the number of members of the population of book values.
Beta risk may be completely ignored.
Calculations required in using difference or ratio estimation are less arduous and fewer than those required when using direct estimation.
Variability of the populations of differences or ratios is less than that of the populations of book values or audited values.

Which of the following statements is correct concerning the auditorâ€™s use of statistical sampling?

An auditor needs to estimate the dollar amount of the standard deviation of the population to use classical variables sampling.
An assumption of PPS sampling is that the underlying accounting population is normally distributed.
A classical variables sample needs to be designed with special considerations to include negative balances in the sample.
The selection of zero balances usually does not require special sample design considerations when using PPS sampling.

Which of the following most likely would be an advantage in using classical variables sampling rather than probability proportional- to-size (PPS) s...

An estimate of the standard deviation of the populationâ€™s recorded amounts is not required.
The auditor rarely needs the assistance of a computer program to design an efficient sample.
Inclusion of zero and negative balances generally does not require special design considerations.
Any amount that is individually significant is automatically identified and selected.

A flowchart is most frequently used by an auditor in connection with the

Preparation of generalized computer audit programs.
Review of the clientâ€™s internal control.
Use of statistical sampling in performing an audit.
Performance of analytical procedures of account balances.

Matthews Corp. has changed from a system of recording time worked on clock cards to a computerized payroll system in which employees record time in ...

A generalized computer audit program must be used.
Part of the audit trail is altered.
The potential for payroll-related fraud is diminished.
Transactions must be processed in batches.

Which of the following is correct concerning batch processing of transactions?

Transactions are processed in the order they occur, regardless of type.
It has largely been replaced by online real-time processing in all but legacy systems.
It is more likely to result in an easy-to-follow audit trail than is online transaction processing.
It is used only in non-database applications.

An auditor would be most likely to assess control risk at the maximum level in an electronic environment with automated system-generated information...

Sales orders are initiated using predetermined, automated decision rules.
Payables are based on many transactions and large in dollar amount.
Fixed asset transactions are few in number, but large in dollar amount.
Accounts receivable records are based on many transactions and are large in dollar amount.

In a highly automated information processing system tests of control

Must be performed in all circumstances.
May be required in some circumstances.
Are never required.
Are required in first year audits.

Which of the following is least likely to be considered by an auditor considering engagement of an information technology (IT) specialist on an audi...

Complexity of clientâ€™s systems and IT controls.
Requirements to assess going concern status.
Clientâ€™s use of emerging technologies.
Extent of entityâ€™s participation in electronic commerce.

Which of the following strategies would a CPA most likely consider in auditing an entity that processes most of its financial data only in electroni...

Continuous monitoring and analysis of transaction processing with an embedded audit module.
Increased reliance on internal control activities that emphasize the segregation of duties.
Verification of encrypted digital certificates used to monitor the authorization of transactions.
Extensive testing of firewall boundaries that restrict the recording of outside network traffic.

Which of the following is not a major reason for maintaining an audit trail for a computer system?

Deterrent to fraud.
Monitoring purposes.
Analytical procedures.
Query answering.

Computer systems are typically supported by a variety of utility software packages that are important to an auditor because they

May enable unauthorized changes to data files if not properly controlled.
Are very versatile programs that can be used on hardware of many manufacturers.
May be significant components of a clientâ€™s application programs.
Are written specifically to enable auditors to extract and sort data

An auditor would most likely be concerned with which of the following controls in a distributed data processing system?

Hardware controls.
Systems documentation controls.
Access controls.
Disaster recovery controls.

Which of the following types of evidence would an auditor most likely examine to determine whether internal control is operating as designed?

Gross margin information regarding the clientâ€™s industry.
Confirmations of receivables verifying account balances.
Client records documenting the use of computer programs.
Anticipated results documented in budgets or forecasts.

An auditor anticipates assessing control risk at a low level in a computerized environment. Under these circumstances, on which of the following act...

Programmed control activities.
Application control activities.
Output control activities.
General control activities.

After the preliminary phase of the review of a clientâ€™s computer controls, an auditor may decide not to perform tests of controls related to ...

The controls duplicate operative controls existing elsewhere in the structure.
There appear to be major weaknesses that would preclude reliance on the stated procedure.
The time and dollar costs of testing exceed the time and dollar savings in substantive testing if the tests of controls show the controls to be operative.
The controls appear adequate.

Auditing by testing the input and output of a computer system instead of the computer program itself will

Not detect program errors which do not show up in the output sampled.
Detect all program errors, regardless of the nature of the output.
Provide the auditor with the same type of evidence as tests of application controls.
Not provide the auditor with confidence in the results of the auditing procedures.

Which of the following client information technology (IT) systems generally can be audited without examining or directly testing the IT computer pro...

A system that performs relatively uncomplicated processes and produces detailed output.
A system that affects a number of essential master files and produces a limited output.
A system that updates a few essential master files and produces no printed output other than final balances.
A system that performs relatively complicated processing and produces very little detailed output.

An auditor who wishes to capture an entityâ€™s data as transactions are processed and continuously test the entityâ€™s computerized inform...

Snapshot application.
Embedded audit module.
Integrated data check.
Test data generator.

Which of the following computer-assisted auditing techniques processes client input data on a controlled program under the auditorâ€™s control ...

Test data.
Review of program logic.
Integrated test facility.
Parallel simulation.

To obtain evidence that online access controls are properly functioning, an auditor most likely would

Create checkpoints at periodic intervals after live data processing to test for unauthorized use of the system.
Examine the transaction log to discover whether any transactions were lost or entered twice due to a system malfunction.
Enter invalid identification numbers or passwords to ascertain whether the system rejects them.
Vouch a random sample of processed transactions to assure proper authorization.

An auditor most likely would introduce test data into a computerized payroll system to test controls related to the

Existence of unclaimed payroll checks held by supervisors.
Early cashing of payroll checks by employees.
Discovery of invalid employee I.D. numbers.
Proper approval of overtime by supervisors.

When an auditor tests a computerized accounting system, which of the following is true of the test data approach?

Several transactions of each type must be tested.
Test data are processed by the clientâ€™s computer programs under the auditorâ€™s control.
Test data must consist of all possible valid and invalid conditions.
The program tested is different from the program used throughout the year by the client.

Which of the following is not among the errors that an auditor might include in the test data when auditing a clientâ€™s computer system?

Numeric characters in alphanumeric fields.
Authorized code.
Differences in description of units of measure.
Illogical entries in fields whose logic is tested by programmed consistency checks.

Which of the following computer-assisted auditing techniques allows fictitious and real transactions to be processed together without client operati...

Integrated test facility.
Input controls matrix.
Parallel simulation.
Data entry monitor.

Which of the following methods of testing application controls utilizes a generalized audit software package prepared by the auditors?

Parallel simulation.
Integrated testing facility approach.
Test data approach.
Exception report tests.

In creating lead schedules for an audit engagement, a CPA often uses automated workpaper software. What client information is needed to begin this p...

Interim financial information such as third quarter sales, net income, and inventory and receivables balances.
Specialized journal information such as the invoice and purchase order numbers of the last few sales and purchases of the year.
General ledger information such as account numbers, prior year account balances, and current year unadjusted information.
Adjusting entry information such as deferrals and accruals, and reclassification journal entries.

Using microcomputers in auditing may affect the methods used to review the work of staff assistants because

The generally accepted auditing standards may differ.
Documenting the supervisory review may require assistance of consulting services personnel.
Supervisory personnel may not have an understanding of the capabilities and limitations of microcomputers.
Working paper documentation may not contain readily observable details of calculations.

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Auditing and Attestation MCQs