Audit Exam Corrections

Topics: Auditing, Audit, Balance sheet Pages: 4 (1352 words) Published: November 4, 2011
3. When an auditor believes that an illegal act may have occurred, the auditor should first: The answer is C, to inquire management at a level above those likely to be involved. The reason C is the correct answer is because it is one of the three things that an auditor should do when they believe that an illegal act has occurred. The other 2 things that they should do are: The auditor should consult with the client’s legal counsel or other specialist who is knowledgeable about the potential legal act. And the auditor should consider accumulating additional evidence to determine whether there actually is an illegal act. (Page 146-147) 6. Which of the following statement about the existence and completeness assertions is not true? The answer is D, existence deals with understatements and completeness deals with overstatements. The reason D is the correct answer is because existence deals with overstatements and completeness deals with understatements, I got them mixed up. (Page 154-155) 7. Which of the following statements is not true?

The answer is B, Balance-related audit objectives are applied to both beginning and ending balances in balance sheet accounts. The reason this is the right answer is because the way audits are preformed, balance-related audit objectives are almost always applied to the ending balance sheet accounts. It never applies to the beginning balance in the balance sheet accounts. (Page 158) 8. Audit evidence has two primary qualities for the auditor; relevance and reliability. Given the choices below which provides the auditor with the most reliable audit evidence? The answer is D, confirmation of accounts receivable balance received from a customer. The reason that D is the answer is because; confirmation describes the receipt of a written or oral response from an independent third party verifying the accuracy. Confirmation evidence is the most guaranteed for relevance and reliability. Confirmation has a high reliability rate and it...
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