Mastering Audit Planning

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Which phase of the audit is the most expensive?

Issuance of Audit Report

Test of Transactions

Observation of the application of specific policies and procedures

Substantive Testing (correct)

Which of the following is NOT a feature of Substantive Testing?

Substantiating management's assertion

Assessing presentation and disclosure of items in the FS

Determining the effectiveness of controls (correct)

Evaluating results and preparing audit reports

Which of the following is NOT a factor that determines the nature, timing, and extent of Substantive Testing?

Assessed level of control risk

Detection risk

Extent of losses (correct)

Materiality of losses

Which of the following is NOT an opinion that can be issued in an audit report?

Unqualified opinion (C) Signup and view all the answers

What is the purpose of the Test of Transactions?

To evaluate whether transactions have been handled effectively and efficiently (D) Signup and view all the answers

When is the auditor required to perform the Test of Controls (TOC)?

When the control risk assessment is below the maximum level (A) Signup and view all the answers

What is the purpose of the Substantive Testing phase?

To obtain relevant evidence for making a final judgment on losses or account misstatements (B) Signup and view all the answers

When is the auditor not required to perform any Test of Controls (TOC)?

When the control risk assessment is at the maximum level (D) Signup and view all the answers

What does CR stand for in the context of control risk assessment?

Control Risk (D) Signup and view all the answers

What is the purpose of the Test of Balances in Substantive Testing?

To obtain relevant evidence for making a final judgment on losses or account misstatements (B) Signup and view all the answers

Which of the following is NOT a step in the audit planning process?

Assessing control risk at the maximum level for all assertions (C) Signup and view all the answers

What is the purpose of the Test of Controls phase in an audit?

To evaluate the design and operation of the internal control structure (A) Signup and view all the answers

Which of the following is NOT a procedure in the Test of Control phase in an IT environment?

Assessing control risk at the maximum level (D) Signup and view all the answers

What is the maximum control risk?

The greatest probability that a material misstatement will not be prevented or detected on a timely basis (B) Signup and view all the answers

What is the purpose of the preliminary assessment of control risk?

To plan test of controls and substantive testing (A) Signup and view all the answers

What is the purpose of the Test of Controls phase?

To evaluate the design and operation of the internal control structure (A) Signup and view all the answers

What is included in the audit planning process?

All of the above (D) Signup and view all the answers

What is the purpose of the preliminary assessment of control risk?

To plan test of controls and substantive testing (C) Signup and view all the answers

What is the purpose of the Test of Controls phase in an IT environment?

To evaluate the design and operation of the internal control structure (A) Signup and view all the answers

What is the maximum control risk?

The greatest probability that a material misstatement will not be prevented or detected on a timely basis (C) Signup and view all the answers

Mastering Audit Planning

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Questions and Answers

Which phase of the audit is the most expensive?

Which of the following is NOT a feature of Substantive Testing?

Which of the following is NOT a factor that determines the nature, timing, and extent of Substantive Testing?

Which of the following is NOT an opinion that can be issued in an audit report?

What is the purpose of the Test of Transactions?

When is the auditor required to perform the Test of Controls (TOC)?

What is the purpose of the Substantive Testing phase?

When is the auditor not required to perform any Test of Controls (TOC)?

What does CR stand for in the context of control risk assessment?

What is the purpose of the Test of Balances in Substantive Testing?

Which of the following is NOT a step in the audit planning process?

What is the purpose of the Test of Controls phase in an audit?

Which of the following is NOT a procedure in the Test of Control phase in an IT environment?

What is the maximum control risk?

What is the purpose of the preliminary assessment of control risk?

What is the purpose of the Test of Controls phase?

What is included in the audit planning process?

What is the purpose of the preliminary assessment of control risk?

What is the purpose of the Test of Controls phase in an IT environment?

What is the maximum control risk?

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