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DE LA SALLE UNIVERSITY MANILA RVR – COB DEPARTMENT OF ACCOUNTANCY REVDEVT 1st Term AY 15 - 16 Auditing Theory Prof. Francis H. Villamin AT – Quizzer 6 “Audit Planning” 1. Planning an audit involves I. Establishing the overall audit strategy for the engagement II. Developing an audit plan a. I only b. II only c. Both I and II d. Neither I nor II 2. Which of the following activities should be performed by the auditor at the beginning of the current audit engagement? I. Perform procedures regarding the continuance of the client relationship and the specific audit engagement. II. Evaluate compliance with the requirements of the Code of Ethics for Professional Accountants in the Philippines, including independence. III. Establish an understanding of the terms of the engagement. a. I and II only b. II and III only c. I and III only d. I, II, and III 3. Adequate planning helps to ensure that a. b. c. d. Appropriate attention is devoted to important areas of the audit NoYes Yes No Potential problems are identified and resolved on a timely basis Yes Yes No No The audit engagement is properly organized and managed Yes Yes No No 4. Which of the following statements concerning audit planning is incorrect? a. Planning is a discrete phase of an audit. b. Planning is a continual and iterative process. c. In a recurring audit, planning often begins shortly after (or in connection with) the completion of the previous audit and continues until the completion of the current audit engagement. d. In planning an audit, the auditor considers the timing of certain planning activities and audit procedures that are to be completed prior to the performance of further audit procedures. 5. In performing an audit of financial statements, the auditor should obtain a sufficient knowledge of a client’s business and industry to a. Develop an attitude of professional skepticism concerning management’s financial statement assertions. b. Make constructive suggestions concerning improvements to the client’s internal control. c. Evaluate whether the aggregation of known misstatements causes the financial statements taken as a whole to be materially misstated. d. Understand the events and transactions that may have an effect on the client’s financial statements. Why is this page out of focus?This is a Premium document. Become Premium to read the whole document. Why is this page out of focus?This is a Premium document. Become Premium to read the whole document. Which of the following procedures would a CPA least likely perform in the planning?Answer and Explanation: Obtaining confirmation of cash balances is least likely to be performed as a part of obtaining an understanding during an audit engagement of a new audit client previously audited by another CPA.
Which of the following procedures does a CPA usually perform when reviewing the financial statements of a non issuer?Which of the following procedures would an accountant most likely perform when reviewing the financial statements of a nonissuer? Ask management about the entity's procedures for recording transactions.
Which of the following procedures would an auditor least likely perform while obtaining an understanding of a client in a Financial Statement Audit?Hence, the audit of cash balances is a negligible procedure during the audit engagement for most of the auditors who are performing the audit of a new client.
When performing a review of financial statements The CPA is required to?Reviewed Financial Statements must be performed by an independent licensed CPA firm. The accountant must obtain evidence that will provide a reasonable basis for obtaining the limited assurance needed that there are no material modifications that should be made to the financial statements.
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Which of the following procedures would a CPA least likely perform when reviewing the financial statements of a client?
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