1. When the auditor attempts to understand the operation of the accounting syste
ID: 2563081 • Letter: 1
Question
1. When the auditor attempts to understand the operation of the accounting system by tracing a few transactions through the accounting system, this is referred to as
a) tests of transactions.
b) tests of controls.
c) a walk-through.
d) none of the above.
2. If the results of tests of controls support the design and operations of controls as expected, the auditor uses ________ control risk as the preliminary assessment.
a) a lower
b) the same
c) a higher
d) either a lower or higher
3. If the assessed control risk is low (rather than high or moderate), there will be ______ emphasis placed on tests of controls.
a) no
b) relatively little.
c) Moderate
d) heavy
4. When the auditor of a private company finds that there are missing controls in an area of the accounting system, the audit program in that area would be modified in such a way as to
a) increase the amount of tests of controls.
b) increase the reliance on tests of controls.
c) cause the issuance of a qualified or adverse opinion.
d) reduce or eliminate the need for a test of controls.
5. The least likely procedure to obtain an understanding of internal controls would be:
a) reviewing previous experience with the client.
b) inspecting documents and records.
c) reperforming control activities.
d) inquiring of appropriate management.
e) observing entity operations.
Explanation / Answer
1)It is option C
2)It is option B
3)It is option D
4)It is option D
5)It is option E
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