1. Which of the following documentation is required, assuming client acceptance? None above are required Decision tree Flowchart Engagement letter 2. Which of the following is generally not an...

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1. Which of the following documentation is required, assuming client acceptance? None above are required Decision tree Flowchart Engagement letter 2. Which of the following is generally not an internal control activity? Group of answer choices Payroll is always vouchered The treasurer signs and mails the checks Large checks require two signatures All of the above are common control activities 3. Which of the following represents the greatest risk?   The director of IT (a key employee) resigned The company’s database is corrupted with no backup facilities The president of the company was fired for embezzlement  An IT hardware failure occurred 4. Which of the following generally reviews and documents ERM? External auditors Internal auditors Management Board of directors 5. Which of the following ERM components are the external auditors most concerned with?  Compliance and operations Reporting and operations   Reporting and compliance Compliance and strategy 6. Which of the following represents the greatest risk?  Poor cash flow Excessive turnover of management No audit committee The loss of a substantial customer 7. Which best describes the definition of the audit universe? All auditable components of an entity All Account balances That which is documented None of the above is correct 8. Inherent risk, as defined by ERM, is assessed in relation to Materiality and business risk Business risk and detection risk Audit risk and materiality Impact and likelihood of occurrence 9. What best describes residual risk? Risk that cannot be mitigated Risks that, if properly managed, will make the organization successful in the achievement of its objectives or, if not well managed, it (the organization) will not achieve its objectives A component of overall audit risk None of the above describes residual risk QUESTION 10 1. Which statement is false?  Risk assessment involves both qualitative and quantitative elements ERM is the responsibility of management The ERM system is used by external auditors to make client acceptance decisions. All of the above are true statements QUESTION 11 1. Assume you have evaluated an event and given it a score of 2 for probability and 3 for impact.  Another event was given a score of 3 for probability and 2 for impact.  What can be said about the two events given they both had scores of 5. The event with the highest probability should be given the most concern The event with the highest impact should be given the most concern Judgment of the auditor determines which event should be given the most concern Cannot be determined with the information given QUESTION 12 1. Which of the following statements is true? The external auditor is most concerned about inherent risk The external auditor is most concerned about residual risk The external auditor assesses internal controls to determine inherent risk None of the above is true Bottom of Form 13. Which of the following is not a planning consideration? Group of answer choices Fees Business environment Reports to be issued Materiality level 14. Analytical procedures used in planning an audit should focus on Enhancing the auditor s understanding of the client s business Reducing the scope of tests of controls and substantive tests Assessing the adequacy of the available evidential matter Providing assurance that potential material misstatements will be identified 15. Which of the following is least likely to be considered a risk assessment procedure? confirmation of ending accounts receivable inspection of documents analytical procedures observation of the performance of certain accounting procedures 16. Factors or components of the control environment include all except Group of answer choices Integrity and ethical values Human resources Organizational structure All of the above are factors 17.An auditor obtains knowledge about a new client's business and its industry in order to  Group of answer choices To make an acceptance decision To plan the audit To help determine who is to be assigned to the audit All of the above 18 Which of the following procedures would an auditor likely include in the initial planning of a financial statement audit?  None of the above Examining documents to detect illegal acts having a material effect on the financial statements Considering whether the client's accounting estimates are reasonable in the circumstances Obtain an attorney's letter 19 When a CPA is approached to perform an audit for the first time, the CPA should make inquiries of the predecessor auditor.  This is a necessary procedure because the predecessor may be able to provide the successor with information that will assist the successor in determining.  CHOOSE BEST ANSWER Group of answer choices Whether the engagement should be accepted. Whether the company follows the policy of rotating its auditors. Whether the predecessor’s work should be utilized. Whether in the predecessor’s opinion internal control of the company has been satisfactory. 20 Which of the following procedures is most likely to be performed as a part of obtaining an understanding during an audit engagement of a new audit client previously audited by another CPA? Group of answer choices Communication with the predecessor auditor. Performing analytical procedures. Considering internal control. Obtaining confirmation of cash balances. 21 Which of the following situations would most likely require special audit planning? Group of answer choices Depreciation methods used on the client's tax return differ from those used on the books Assets costing less than $500 are expensed even though the expected life exceeds one year. Some items of factory and office equipment do not bear identification numbers. Inventory is comprised of precious stones 22. Analytical procedures used in planning an audit should focus on identifying Group of answer choices Material weaknesses in the internal control structure Areas that may represent specific risks relevant to the audit. The predictability of financial data from individual transactions. The various assertions that are embodied in the financial statements 23. Which of the following should an auditor obtain from the predecessor auditor prior to accepting an audit engagement? Group of answer choices Analysis of income statement accounts. All matters of continuing accounting significance. Facts that might bear on management integrity Analysis of balance sheet accounts. 24. Which of the following factors most likely would cause a CPA not to accept a new audit engagement? Group of answer choices The CPA's lack of understanding of the prospective client's operations and industry. Indications that management has not investigated employees in key positions before hiring them. The inability to review the predecessor auditor's documentation The prospective client's unwillingness to permit inquiry of its legal counsel 25. Which event would you consider the most impactful? Group of answer choices An impending recession Loss of backup files Board of Directors are indicted for fraud Theft of petty cash