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If the auditor's test counts do not match with the test countsperformed by the employees, what are some reasons as to why thismay have occurred? What are some additional steps that may berequired by the auditor?

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Hubert Koch
Hubert KochLv2
28 Sep 2019

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Related questions

www.wsj.com/articles/u-s-audit-regulator-probing-leak-of-confidentiality

1. Based on the allegations, KPMG was told which firms weregoing to be chosen by the PCAOB for inspection. Describe how thismay have compromised the inspection process.

2. Our textbook discusses different organizations that affectthe external auditing prfession. Which of htese groups will beprimarily concerned about this breach? Why?

3. What are the possible implications of this breach for KPMG?The PCAOB? The ausit profession as a whole?

Which of the following statements is most correct regarding the independent auditor's reliance on the tests of controls performed by the internal auditors to reduce their substantive testing?

1-The independent auditor must obtain assurance of the independence of the internal auditors but need not test their work.
2-It is not acceptable for the independent auditor to rely upon the work of the internal auditors.
3-There are no restrictions in relying upon the work of internal auditors.
4-The independent auditor must evaluate the competency and objectivity of the internal auditors and must test a sample of the work of the internal auditors in order to rely upon their work.

The term "materiality" as used in auditing is best described as the

1-substance of the auditing procedures.
2-amount of misstatement on the financial statements that would influence a decision maker.
3-underlying evidence upon which the audit opinion is based.
4-amount of material the auditor gathers as evidence to support the audit opinion.

Prior to accepting an audit client an auditor has a professional obligation to

1-contact the predecessor auditor.
2-perform preliminary analytical review procedures.
3-do all of the listed actions.
4-obtain approval for the audit engagement from the SEC.

Which of the following best represents financial statement fraud?

1-The transfer agent issues 40,000 shares of the company's stock to a friend without authorization by the board of directors.
2-The controller of the company decreases a contingent liability by $3 million so the company will meet analysts' expectations this quarter.
3-The in-house attorney receives payments from the French government for negotiating the development of a new plant in Paris.
4-The accounts receivable clerk covers up the theft of cash receipts by writing off older receivables without authorization.

Sampling risk is the risk that

1-errors are inherent and may be present in the population without regard to the internal controls.
2-the population will not contain characteristics representative of the sample such that inferences made about that sample will be incorrect.
3-internal controls are not adequate to prevent or detect material errors.
4-the sample will not contain characteristics representative of the population such that inferences made about that population will be incorrect.

Control risk that is assessed excessively high (i.e. the auditor believes control risk is high when in reality it is moderate or low) leads to:

1-audit inefficiency.
2-a less expensive audit.
3-reduced substantive testing.
4-errors that are more likely to occur than anticipated.

The purchasing process consists of each of the following phases except

1-receipts of goods and services.
2-approval of items for payment.
3-authorized request for goods and services.
4-cash receipts.

(Assessing control risk) An auditor is required to obtain asufficient understanding of each
of the components of an entity’s system of internal control to planthe audit of the entity’s
financial statements and to assess control risk for the assertionsembodied in the account
balance, transaction class, and disclosure components of thefinancial statements.

Required
a. Explain the reasons an auditor may assess control risk at themaximum level for one or
more assertions embodied in an account balance.
b. What must an auditor do to support assessing control risk atless than the maximum
level when the auditor has determined that controls have beenplaced in operation?
c. What should an auditor consider when seeking a further reductionin the planned
assessed level of control risk?
d. What are an auditor’s documentation requirements concerning anentity’s system of
internal control and the assessed level of control risk?

Please answer all questions please.

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