11
answers
0
watching
40
views
29 Nov 2019

1. Materiality underlies the application of generally acceptedauditing standards, particularly the: a. general and field workstandards. b. general and reporting standards. c. field work andreporting standards. d. reporting standards. e. generalstandards.

2. Which of the following is not a weakness of analyticalprocedures? a. Fraudulent financial reporting often reports numbersthat appear to be reasonable. b. The auditor may have no basis forpresuming that the data used is accurate. c. Analytical proceduresare usually very cost effective. d. Improper specification ofrelationships between the variables used may undermine theireffectiveness. e. Any audit procedure runs some risk of failing todetect material misstatements.

3. The auditor makes preliminary judgments about materialitylevels in planning the audit. This materiality assessment isreferred to as: a. planning materiality. b. preliminarymateriality. c. initial materiality. d. beginning materiality. e.benchmark materiality.

4. When setting the level of materiality on a particularengagement, the auditor is required to consider: a. the uniquecircumstances pertaining to the entity. b. the information needs ofthe users. c. neither the unique circumstances pertaining to theentity nor the information needs of the users. d. the informationneeds of the client. e. both the unique circumstances pertaining tothe entity and the information needs of the users.

5. In a normal audit, the relationship between the level ofmateriality used to plan the engagement and the level ofmateriality used to evaluate evidence is: a. they must beidentical. b. the former may be either higher or lower than thelatter. c. the former is normally higher than the latter. d. theformer is normally lower than the latter. e. they can never be thesame.

6. In planning the audit, the auditor should assess materialityat two levels: a. the preliminary level and the final level. b. thecompany level and the divisional level. c. the account balancelevel and the detailed item level. d. the financial statement leveland the account balance level. e. the account balance level and thetransaction level.

7. Materiality at the account balance level is stated inplanning an audit because: a. some users make decisions based uponindividual account balances. b. the auditor verifies accountbalances in reaching an overall conclusion on the fairness of thefinancial statements. c. the opinion on the fairness of thefinancial statements extends to the individual account balances. d.official pronouncements have specified different levels ofmateriality for various financial statement items. e. the opinionon the fairness of the financial statements extends to theindividual transactions.

8. In making a preliminary judgments about materiality, theauditor initially determines the aggregate (overall) level ofmateriality for each statement. For planning purposes, the auditorshould use the: a. levels separately. b. level he or she judges tobe the more reliable. c. average of these levels. d. largestaggregate level. e. smallest aggregate level.

9. Quantitative guidelines for setting materiality levels arecurrently provided by: a. neither GAAP nor GAAS. b. GAAP. c. GAAS.d. both GAAP and GAAS. e. the AICPA.

10. Professional standards recognize that a misstatement that isquantitatively immaterial may be qualitatively material. In regardto these items, professional standards require the auditor to: a.plan the audit to search for them. b. design explicit procedures todetect them. c. be on the alert for them. d. report them to theaudit committee. e. report them directly to client management.

For unlimited access to Homework Help, a Homework+ subscription is required.

Unlock all answers

Get 1 free homework help answer.
Get unlimited access
Already have an account? Log in
Get unlimited access
Already have an account? Log in
Get unlimited access
Already have an account? Log in
Get unlimited access
Already have an account? Log in
Get unlimited access
Already have an account? Log in
Get unlimited access
Already have an account? Log in
Get unlimited access
Already have an account? Log in
Get unlimited access
Already have an account? Log in
Get unlimited access
Already have an account? Log in
Get unlimited access
Already have an account? Log in
Casey Durgan
Casey DurganLv2
17 Dec 2019
Get unlimited access
Already have an account? Log in

Weekly leaderboard

Start filling in the gaps now
Log in