d.1. The major advantage to using statistical techniquesis:
a. it limits the risk of incorrect acceptance
b. it relate sample size to audit risk
c. it limits the risk of inefficiency
d. it limits sample size to the smallest appropriate size
2. If the auditor is performing an audit of a nonpubliccompany and the client refuses to provide a managementrepresentation letter, the auditor may:
a. issue a financial statement audit report
b. issue an integrated audit report
c. issue a financial statement audit report with a scopelimitation
d. dependening on the circumstances the auditor may choose anyof the alternitives
3. Which of the following would be least likely topreclude an audit firm from proposing on a potential client due toindependence concerns?
a. A recently-promoted partner in the audit firm holds afinancial interest in the potential client company.
b. Someone who resigned from the audit firm three years ago isnow the Chief Accounting Officer at the potentialclient company.
c. The audit firm provides internal audit outsourcing andcertain nonaudit services to the client company.
d. The audit firm's pension plan holds securities of thepotential client company.
4. If an auditor determines that a client company'sinternal controls are producing reliable and complete financialinformation, the auditor will rely upon the internal control systemand:
a. reduce the extent of controls testing in the interim phase ofthe financial statement audit.
b. reduce the planned substantive testing during the financialstatement audit.
c. increase the amount of evidence collected during thefinancial statement audit.
d. increase the planned substantive testing during the financialstatement audit.
5. Which of the following internal control activitiesmost likely would deter lapping of collections fromcustomers?
a. Independent internal verification of dates of entry in thecash receipts journal with dates of daily cash summaries.
b. Separation of duties between receiving cash and posting theaccounts receivable ledger.
c. Authorization of write-offs of uncollectible accounts by asupervisor independent of credit approval.
d. Supervisory comparison of the daily cash summary with the sumof the cash receipts journal entries.
d.1. The major advantage to using statistical techniquesis:
a. it limits the risk of incorrect acceptance
b. it relate sample size to audit risk
c. it limits the risk of inefficiency
d. it limits sample size to the smallest appropriate size
2. If the auditor is performing an audit of a nonpubliccompany and the client refuses to provide a managementrepresentation letter, the auditor may:
a. issue a financial statement audit report
b. issue an integrated audit report
c. issue a financial statement audit report with a scopelimitation
d. dependening on the circumstances the auditor may choose anyof the alternitives
3. Which of the following would be least likely topreclude an audit firm from proposing on a potential client due toindependence concerns?
a. A recently-promoted partner in the audit firm holds afinancial interest in the potential client company.
b. Someone who resigned from the audit firm three years ago isnow the Chief Accounting Officer at the potentialclient company.
c. The audit firm provides internal audit outsourcing andcertain nonaudit services to the client company.
d. The audit firm's pension plan holds securities of thepotential client company.
4. If an auditor determines that a client company'sinternal controls are producing reliable and complete financialinformation, the auditor will rely upon the internal control systemand:
a. reduce the extent of controls testing in the interim phase ofthe financial statement audit.
b. reduce the planned substantive testing during the financialstatement audit.
c. increase the amount of evidence collected during thefinancial statement audit.
d. increase the planned substantive testing during the financialstatement audit.
5. Which of the following internal control activitiesmost likely would deter lapping of collections fromcustomers?
a. Independent internal verification of dates of entry in thecash receipts journal with dates of daily cash summaries.
b. Separation of duties between receiving cash and posting theaccounts receivable ledger.
c. Authorization of write-offs of uncollectible accounts by asupervisor independent of credit approval.
d. Supervisory comparison of the daily cash summary with the sumof the cash receipts journal entries.
