Area 3: Performing Procedures

An auditor is calculating the sample size for a test of controls using attribute sampling. Which of the following changes would result in a DECREASE in the required sample size?

In performing a search for unrecorded liabilities, which of the following procedures would be most effective?

An auditor sends positive confirmation requests to 50 customers. One customer replies indicating that the balance is overstated because they returned the goods on December 28 (year-end is December 31). The auditor verifies that the goods were received by the client on January 4. The shipping terms were FOB Destination. What is the correct conclusion?

Which of the following procedures would be most appropriate for testing the existence of the client's investments in marketable securities held by a custodian?

An auditor is testing the completeness of the sales account. Which of the following audit procedures would be most relevant?

Which of the following situations would most likely require the auditor to use 'Variables Sampling' rather than 'Attribute Sampling'?

An auditor is reviewing the 'Repair and Maintenance' expense account. The primary objective of this procedure is to obtain evidence regarding which assertion for Property, Plant, and Equipment (PPE)?

Kiting is a fraud scheme involving the transfer of money between bank accounts. Which of the following procedures is most effective in detecting kiting?

An auditor is evaluating the results of a variables sampling plan for accounts receivable. The calculated point estimate of the population is $1,000,000. The recorded book value is $1,050,000. The allowance for sampling risk (precision) is calculated as $40,000. What is the auditor's conclusion?

Which of the following subsequent events would require adjustment to the financial statements (Type I event)?

An auditor is concerned about the valuation of the allowance for doubtful accounts. Which of the following procedures provides the best evidence?

Which of the following is an example of 'Sampling Risk' of the type that leads to an incorrect acceptance (Type II error)?

An auditor is auditing the fair value measurements of Level 3 assets (unobservable inputs). Which of the following is the most appropriate audit procedure?

During the audit of inventory, the auditor observes the client's physical count. The auditor notices that several pallets of goods are tagged as 'Consignment - Do Not Count'. What should the auditor do?

Which of the following procedures is most likely to assist an auditor in identifying related party transactions?

An auditor is testing the 'Rights and Obligations' assertion for accounts payable. Which procedure is most relevant?

Which of the following is a 'Type 2' subsequent event (Non-recognized event)?

An auditor is testing the completeness of the payroll expense. Which of the following analytical procedures would be most effective?

An auditor is testing the 'Occurrence' assertion for sales. Which procedure is most appropriate?

Which of the following is a 'Type 1' error in audit sampling?

An auditor is testing the 'Cutoff' assertion for inventory. Which procedure is most relevant?

When auditing a client's accounting estimates (e.g., warranty reserve), which of the following is NOT a required procedure?

An auditor is using 'Probability-Proportional-to-Size' (PPS) sampling. Which of the following is a characteristic of this method?

Which of the following is true regarding the 'Management Representation Letter'?

An auditor is auditing the 'Completeness' of the cash balance. Which procedure is most appropriate?

An auditor is testing the 'Existence' of accounts receivable. The auditor sends positive confirmations. A customer responds stating, 'We do not owe this amount because we paid it on December 28.' The auditor verifies that the check was received by the client on January 3. What is the conclusion?