Which of the following strategies would a CPA most likely consider in auditing an entity that processes most of its financial data only in electronic form, such as a paperless system?
A. Continuous monitoring and analysis of transaction processing with an embedded audit module.
B. Increased reliance on internal control activities that emphasize the segregation of duties.
C. Verification of encrypted digital certificates used to monitor the authorization of transactions.
D. Extensive testing of firewall boundaries that restrict the recording of outside network traffic.
An auditor who wishes to capture an entity's data as transactions are processed and continuously test the
entity's computerized information system most likely would use which of the following techniques?
A. Snapshot application.
B. Embedded audit module.
C. Integrated data check.
D. Test data generator.
Which of the following is an engagement attribute for an audit of an entity that processes most of its financial data in electronic form without any paper documentation?
A. Discrete phases of planning, interim, and year-end fieldwork.
B. Increased effort to search for evidence of management fraud.
C. Performance of audit tests on a continuous basis.
D. Increased emphasis on the completeness assertion.
Which of the following is the primary reason that many auditors hesitate to use embedded audit modules?
A. Embedded audit modules cannot be protected from computer viruses.
B. Auditors are required to monitor embedded audit modules continuously to obtain valid results.
C. Embedded audit modules can easily be modified through management tampering.
D. Auditors are required to be involved in the system design of the application to be monitored.
This question will represent a statement, question, excerpt, or comment taken from various parts of an auditor's documentation file. Letter choices A-P represent a list of the likely sources of the statement, question, excerpt, or comment. Select, as the best answer for each item, the most likely source. Select only one source for each item. As discussed in Note 4 to the financial statements, the company experienced a net loss for the year ended July 31, 20XX, and is currently in default under substantially all of its debt agreements. In addition, on September 25, 20XX, the company filed a prenegotiated voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code. These matters raise substantial doubt about the company's ability to continue as a going concern.
A. Practitioner's report on management's assertion about an entity's compliance with specified requirements.
B. Auditor's communications on significant deficiencies in internal control.
C. Audit inquiry letter to legal counsel.
D. Lawyer's response to audit inquiry letter.
E. Communication from those charged with governance to the auditor.
F. Auditor's communication to those charged with governance (other than with respect to significant deficiencies in internal control).
G. Report on the application of accounting principles.
H. Auditor's engagement letter.
I. Letter for underwriters.
J. Accounts receivable confirmation request.
K. Request for bank cutoff statement.
L. Explanatory paragraph of an auditor's report on financial statements.
M. Partner's engagement review notes.
N. Management representation letter.
O. Successor auditor's communication with predecessor auditor.
P. Predecessor auditor's communication with successor auditor.
only one source for each item.
It is our opinion that the possible liability to the company in this proceeding is nominal in amount.
A. Practitioner's report on management's assertion about an entity's compliance with specified requirements.
B. Auditor's communications on significant deficiencies in internal control.
C. Audit inquiry letter to legal counsel.
D. Lawyer's response to audit inquiry letter.
E. Communication from those charged with governance to the auditor.
F. Auditor's communication to those charged with governance (other than with respect to significant deficiencies in internal control).
G. Report on the application of accounting principles.
H. Auditor's engagement letter.
I. Letter for underwriters.
J. Accounts receivable confirmation request.
K. Request for bank cutoff statement.
L. Explanatory paragraph of an auditor's report on financial statements.
M. Partner's engagement review notes.
N. Management representation letter.
O. Successor auditor's communication with predecessor auditor.
P. Predecessor auditor's communication with successor auditor.
This question will represent a statement, question, excerpt, or comment taken from various parts of an auditor's documentation file. Letter choices A-P represent a list of the likely sources of the statement, question, excerpt, or comment. Select, as the best answer for each item, the most likely source. Select only one source for each item. Nothing came to our attention that caused us to believe that at October 31, 20XX, there was any change in the capital stock, increase in long-term debt, or decrease in consolidated net current assets or stockholders' equity as compared with the amounts shown in the September 30, 20XX unaudited condensed consolidated balance sheet.
A. Practitioner's report on management's assertion about an entity's compliance with specified requirements.
B. Auditor's communications on significant deficiencies in internal control.
C. Audit inquiry letter to legal counsel.
D. Lawyer's response to audit inquiry letter.
E. Communication from those charged with governance to the auditor.
F. Auditor's communication to those charged with governance (other than with respect to significant deficiencies in internal control).
G. Report on the application of accounting principles.
H. Auditor's engagement letter.
I. Letter for underwriters.
J. Accounts receivable confirmation request.
K. Request for bank cutoff statement.
L. Explanatory paragraph of an auditor's report on financial statements.
M. Partner's engagement review notes.
N. Management representation letter.
O. Successor auditor's communication with predecessor auditor.
P. Predecessor auditor's communication with successor auditor.
only one source for each item.
There have been no communications from regulatory agencies concerning noncompliance with or
deficiencies in financial reporting practices.
A. Practitioner's report on management's assertion about an entity's compliance with specified requirements.
B. Auditor's communications on significant deficiencies in internal control.
C. Audit inquiry letter to legal counsel.
D. Lawyer's response to audit inquiry letter.
E. Communication from those charged with governance to the auditor.
F. Auditor's communication to those charged with governance (other than with respect to significant deficiencies in internal control).
G. Report on the application of accounting principles.
H. Auditor's engagement letter.
I. Letter for underwriters.
J. Accounts receivable confirmation request.
K. Request for bank cutoff statement.
L. Explanatory paragraph of an auditor's report on financial statements.
M. Partner's engagement review notes.
N. Management representation letter.
O. Successor auditor's communication with predecessor auditor.
P. Predecessor auditor's communication with successor auditor.
only one source for each item.
Our audit is designed to provide reasonable assurance of detecting misstatements that, in our judgment,
could have a material effect on the financial statements taken as a whole. Consequently, our audit will not
necessarily detect all misstatements that exist due to error, fraudulent financial reporting, or
misappropriation of assets.
A. Practitioner's report on management's assertion about an entity's compliance with specified requirements.
B. Auditor's communications on significant deficiencies in internal control.
C. Audit inquiry letter to legal counsel.
D. Lawyer's response to audit inquiry letter.
E. Communication from those charged with governance to the auditor.
F. Auditor's communication to those charged with governance (other than with respect to significant deficiencies in internal control).
G. Report on the application of accounting principles.
H. Auditor's engagement letter.
I. Letter for underwriters.
J. Accounts receivable confirmation request.
K. Request for bank cutoff statement.
L. Explanatory paragraph of an auditor's report on financial statements.
M. Partner's engagement review notes.
N. Management representation letter.
O. Successor auditor's communication with predecessor auditor.
P. Predecessor auditor's communication with successor auditor.
This question will represent a statement, question, excerpt, or comment taken from various parts of an auditor's documentation file. Letter choices A-P represent a list of the likely sources of the statement, question, excerpt, or comment. Select, as the best answer for each item, the most likely source. Select only one source for each item. Was the difference of opinion on the accrued pension liabilities that existed between the engagement personnel and the actuarial specialist resolved in accordance with firm policy and appropriately documented?
A. Practitioner's report on management's assertion about an entity's compliance with specified requirements.
B. Auditor's communications on significant deficiencies in internal control.
C. Audit inquiry letter to legal counsel.
D. Lawyer's response to audit inquiry letter.
E. Communication from those charged with governance to the auditor.
F. Auditor's communication to those charged with governance (other than with respect to significant deficiencies in internal control).
G. Report on the application of accounting principles.
H. Auditor's engagement letter.
I. Letter for underwriters.
J. Accounts receivable confirmation request.
K. Request for bank cutoff statement.
L. Explanatory paragraph of an auditor's report on financial statements.
M. Partner's engagement review notes.
N. Management representation letter.
O. Successor auditor's communication with predecessor auditor.
P. Predecessor auditor's communication with successor auditor.
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