Podcast
Questions and Answers
What are the interrelated components of internal control?
What are the interrelated components of internal control?
- Risk assessment, backup facilities, responsibility accounting and natural laws
- Legal environment of the firm, management philosophy, and organizational structure
- Organizational structure, management philosophy, and planning
- Control environment, risk assessment, control activities, information and communication systems, and monitoring (correct)
In an audit of financial statements, what is the auditor's primary consideration regarding a control?
In an audit of financial statements, what is the auditor's primary consideration regarding a control?
- Affects management’s financial statement assertions
- Reflects management’s philosophy and operating style
- Enhances management’s decision-making processes
- Provides adequate safeguards over access to assets (correct)
What does effective internal control do?
What does effective internal control do?
- Eliminates risk and potential loss to the organization (correct)
- Reduces the need for management to review exception reports on a day-to-day basis
- Is unaffected by changing circumstances and conditions encountered by the organization
- Cannot be circumvented by management
Which statement about internal control is correct?
Which statement about internal control is correct?
If management fails to provide adequate justification for a change in accounting principles, what should the auditor do?
If management fails to provide adequate justification for a change in accounting principles, what should the auditor do?
What should an auditor do when qualifying an opinion due to inadequate disclosure?
What should an auditor do when qualifying an opinion due to inadequate disclosure?
Can an auditor express a qualified opinion when a scope limitation prevents completing an important audit procedure?
Can an auditor express a qualified opinion when a scope limitation prevents completing an important audit procedure?
Under what circumstances can an auditor express a qualified opinion?
Under what circumstances can an auditor express a qualified opinion?
In what situation should an auditor disclaim an opinion?
In what situation should an auditor disclaim an opinion?
What action should the auditor take if management lacks independence with respect to the audited entity?
What action should the auditor take if management lacks independence with respect to the audited entity?
What is the primary purpose of internal control procedures?
What is the primary purpose of internal control procedures?
Why does the auditor consider internal control procedures?
Why does the auditor consider internal control procedures?
What is the purpose of documenting the auditor's review of internal control?
What is the purpose of documenting the auditor's review of internal control?
Why is consideration of internal control during an audit usually not sufficient to express an opinion on entity controls?
Why is consideration of internal control during an audit usually not sufficient to express an opinion on entity controls?
Which aspect is NOT a secondary purpose of the auditor's consideration of internal control?
Which aspect is NOT a secondary purpose of the auditor's consideration of internal control?
In what way do internal control procedures provide assurance?
In what way do internal control procedures provide assurance?
When should the auditor date the report?
When should the auditor date the report?
Which situation will usually result in a modified report but not affect the auditor’s opinion?
Which situation will usually result in a modified report but not affect the auditor’s opinion?
In extreme cases with significant uncertainties, what type of opinion may the auditor express?
In extreme cases with significant uncertainties, what type of opinion may the auditor express?
Which statement is incorrect regarding comparatives?
Which statement is incorrect regarding comparatives?
What will NOT affect an auditor’s opinion?
What will NOT affect an auditor’s opinion?
Why is it important for the auditor to not date the report earlier than the date the financial statements are signed or approved by management?
Why is it important for the auditor to not date the report earlier than the date the financial statements are signed or approved by management?
In which paragraph should a successor auditor refer to a predecessor auditor's report?
In which paragraph should a successor auditor refer to a predecessor auditor's report?
If the auditor is uncertain about the cost of property and equipment due to inadequate records, what type of opinion should be issued?
If the auditor is uncertain about the cost of property and equipment due to inadequate records, what type of opinion should be issued?
What type of opinion would an auditor express if an entity changed from straight-line to declining balance method of depreciation?
What type of opinion would an auditor express if an entity changed from straight-line to declining balance method of depreciation?
Which circumstance does NOT result in a modified but unqualified report?
Which circumstance does NOT result in a modified but unqualified report?
Under which circumstance might an auditor disclaim an opinion?
Under which circumstance might an auditor disclaim an opinion?
When would an auditor issue a disclaimer of opinion?
When would an auditor issue a disclaimer of opinion?
