14. What is the purpose of using analytical reviews during the planning stage of
ID: 2578638 • Letter: 1
Question
14. What is the purpose of using analytical reviews during the planning stage of an audit?
MULTIPLE CHOICE
a. To test controls
b. to insure duties are segregated.
c. to identify unusual items for further investigation.
d. to insure the audit evidence supports the auditor’s conclusions regarding the financial statements.
33. Which of the following is not considered a limitation of internal control?
MULTIPLE CHOICE
a. Misunderstanding instructions.
b. Not having an internal audit function.
c. Mistakes of judgment.
d. Carelessness, distraction and/or fatigue.
35. Which of the following is correct concerning evidence provided by specialists on audits?
MULTIPLE CHOICE
a. The use of a specialist is most likely to be appropriate when the auditor's independence is questioned.
b. The auditor must obtain an understanding of the methods used by the specialist to determine whether the findings are suitable to serve as corroborating evidence.
c. The specialist must be independent in fact and appearance.
d. A specialist should not be used to determine the market valuation of inventory.
51. Auditors are primarily concerned with internal controls that relate to:
MULTIPLE CHOICE
a. Financial statement assertions made by management.
b. Compliance with laws and regulations.
c. Generally accepted auditing standards.
d. Balance sheet accounts.
a. The use of a specialist is most likely to be appropriate when the auditor's independence is questioned.
b. The auditor must obtain an understanding of the methods used by the specialist to determine whether the findings are suitable to serve as corroborating evidence.
c. The specialist must be independent in fact and appearance.
d. A specialist should not be used to determine the market valuation of inventory.
Explanation / Answer
14-Option C Analytical procedure like trend analysis is used to identify the unusual changes items for further investigation E.g Last year selling expenses are 5% of total sales and for current year same is 20%..ie.15% increase which is significant to be analysed 33-Option b Not having internal audit function is not a limitation to internal control rather lack of internal control 35-Option B The auditor must be in a position of understanding the methods used by specialist to determine the findings are Suitable to corroborate the evidence 51-Option a Auditors are primarily concerned with the financial assertions made by management ..being if the controls are in place and effectively operating then one can relay on those assertions
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