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Manila Doctors College CAM bsa AUDIT DOCUMENTATION 1)According to PSA 230 Documentation, working papers do not A

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Manila Doctors College

CAM bsa

AUDIT DOCUMENTATION

1)According to PSA 230 Documentation, working papers do not

A.            Assist in the planning and performance of the audit.

B.            Assist in the supervision and review of the audit work.

C.            Record the audit evidence resulting from the audit work performed to support an auditor's opinion.

D.            Prove the independence of the auditor.

 

2.            Statement 1: Working papers are the property of the auditor.

Statement 2: Although portions of or extracts from the working papers maybe made available to the entity at the discretion of the auditor, they may be substitute for the entity's accounting records.

A.            Only statement one is correct    C. Both statements are correct

B.            Only statement two is correct    D. Both statements are incorrect

 

 

3.            Statement 1: The auditor should prepare working papers which are sufficiently complete and detailed to provide an overall understanding of the audit.

Statement 2: The auditor should record in the working papers information on planning the audit work, the nature, timing and extent of the audit procedures performed, the results thereof, and the conclusions drawn from the audit evidence obtained.

A.            Only statement one is correct

B.            Only statement two is correct C. Both statements are correct

D. Both statements are incorrect

 

 

4.            The form and content of working papers are affected by matters such as the following except:

A.            Nature of the engagement

B.            Type of opinion to be rendered by the auditor

C.            Nature and complexity of the business

 

D.            Needs in the particular circumstances for the direction, supervision and review of work performed by assistants.

 

 

5.            Audit working papers are used to record the results of the auditor's evidence gathering work. When preparing working papers, the auditor should remember that

A.            Working papers should be designed to meet the circumstances and the auditor's need for each engagement

B.            Working papers should be kept on the client's premises so as to provide ready access to them by the client.

C.            Working papers should be at the primary support for the financial statements being examined.

D.            Working papers should be considered as a substitute for the client's accounting records.

 

6.            The primary purpose of audit working papers is to

A.            Provide evidence of compliance with auditing standards

B.            Provide management with an independent copy of financial records.

C.            Provide protection against litigation

D.            Document deficiencies in client policies and procedures

 

 

7.            Which of the following is incorrect?

A.            Documentation prepared at the time the work is performed is likely to be more accurate than documentation prepared subsequently.

B.            The auditor ordinarily includes from audit documentation superseded drafts of working papers and financial statements, notes that reflect incomplete or preliminary thinking, previous copies of documents corrected for typographical or other errors, and duplicates of documents.

C.            It is neither necessary nor practicable to document every matter the auditor considers during the audit.

D.            Oral explanations by the auditor, on their own, do not represent adequate support for the work the auditor performed or conclusions the auditor reached, but may be used to explain or clarify information contained in the audit documentation.

 

 

8.            During an audit engagement, pertinent data are compiled and included in the audit working papers. The working papers primarily are considered to be

A.            A client-owned record of conclusions reached by the auditors who performed the engagement

 

B.            Evidence supporting financial statements

C.            Support for the auditor’s representations as to compliance with generally accepted auditing standards.

D.            A record to be used as a basis for the following year’s engagement.

 

 

9.            Audit working papers should not

A.            Include any client-prepared papers or documents other than those prepared by the CPA or his assistant.

B.            Be kept by the CPA after review and completion of the audit except for items required for the income tax return or the permanent file.

C.            Be submitted to the client to support the financial statements and to provide evidence of the audit work performed.

D.            Be themselves be expected to provide sufficiency support for the auditor’s opinion.

 

 

10.          An auditor’s working papers will generally be least likely to include documentation showing how the

A.            Client’s schedules were prepared

B.            Engagement had been planned

C.            Client’s system of internal control had been reviewed and evaluated

D.            Unusual matters were resolved

 

 

11.                          Which of the following is not a factor affecting the independent auditor’s judgement about the quantity, type and content of audit working papers?

A.            The needs for supervision and review of the work performed by assistants.

 

B.            The nature and condition of the client’s records and internal control.

 

C.            The expertise of the client personnel and their participation in preparing schedules.

D.            The type of financial statements, schedules, or other information on which the auditor is reporting.

 

12.          Although the quantity, type and content of working paper will vary with the circumstance, the working papers generally include the

A.            Copies of those client records examined by the auditor during the course of the engagement.

B.                            Evaluation of the efficiency and competence of the audit staff assistants by the partner responsible for the audit.

C.            Auditor’s comments concerning the efficiency and competence of client management personnel.

D.            Auditing procedures followed, and the testing performed in obtaining evidential matter.

13.          Which of the following is generally included or shown in the auditor’s working papers?

 

A.            The procedures used by the auditor to verify the personal financial status of members of the client’s management’s team

B.                            Analysis that are designed to be a part of, or a substitute for, the client’s accounting records.

C.                            Excerpts from the authoritative pronouncements that supports the underlying generally accepted accounting principles used in preparing financial statements.

D.                            The manner in which exceptions and unusual matters disclosed by the auditor’s procedures were resolved or treated.

14.          An auditor’s working papers should

 

A.            Not be permitted to serve as a reference source for the client.

 

B.            Not contain comments critical of management.

 

C.            Show that the accounting records agree or reconcile with the financial statements.

 

D.            Be considered the primary support for the financial statements being audited.

 

 

15.          Using laptop computers in auditing may affect the methods used to review the work of staff assistants because.

A.            Supervisory personnel may not have an understanding of the capabilities and limitations of computers.

 

B.            Working               paper    documentation many     not         contain observable         details   of calculations.

C.            The audit fieldwork standards for supervision may differ.

 

D.            Documenting the supervisory review may require assistance of management services personnel.

16.          Documentation is a form of evidence

 

A.            Used in every financial statement audit

 

B.            Used in most financial statement audit

 

C.            Used on the rare occasions when it is both readily available and less costly than other procedures.

D.            Used when nothing is available that is more competent

 

17.          An audit working paper that shows the detailed evidence and procedures regarding the balance in the accumulated depreciation account in the year under audit will be found in the

A.            Current file of working papers

 

B.            Permanent file of working papers

 

C.            Other information working papers in the current file

 

D.            Planning memorandum in the current file.

 

18.          In the case of recurring audits, some working papers files may be classified as audit files which are updated with new information of continuing importance. This type of audit file is known as:

A.            Current audit file              C.            Electronic audit file

 

B.            Permanent audit file      D.            Planning memorandum file

 

 

 

 

19.          The audit working paper that reflects the major components of an amount reported in the financial statements is the

A.            Inter-bank transfer schedule      C.            Supporting schedule

 

B.            Carry-forward schedule                D.            Lead schedule

 

 

20.          A schedule listing account balances for the current and previous years, and columns for adjusting and reclassifying entries proposed by the auditors to arrive at the final amount that will appear in the financial statements, is referred to as a

A.            Working trial balance      C.            Summarizing schedule

 

B.            Lead schedule   D.            Supporting schedule

 

21.          What do you call the type of working paper where matters of importance are noted down for further verification?

A.            Summary sheet                C.            Agenda Sheet

 

B.            Audit program   D.            Supporting schedules.

 

22.          The current file of the auditor’s working papers generally should include.

 

A.            A flowchart of the internal controls         C.            A copy of the financial statements

B.            Organization charts         D.            Copies of bond and note indentures

23.          The permanent file portion of the auditor’s working papers generally should include

 

A.            A copy of the engagement letter.

 

B.            A copy of key customer confirmation

 

C.            Names and addresses of audit staff personnel on the engagements. D. Time and expense reports.

24.          The permanent (continuing) file of an auditor’s working paper most likely would include copies of the

A.            Lead schedules C.            Banks statements

 

B.            Attorney’s letter              D.            Debt agreements

 

 

25.          The current file of an auditor’s working paper most likely would include copy of the

 

A.            Bank reconciliation          C.            Articles of incorporation

 

B.            Pension plan contract    D.            Flowchart of the internal control activities

26.          The permanent file section of the working papers that is kept for each audit client most likely contains

A.            Review notes pertaining to questions and comments regarding the audit work performed.

B.            A schedule of time spent on the engagement by each individual auditor.

 

C.            Correspondence with the client’s legal counsel concerning pending litigation.

 

D.            Narrative descriptions of the client’s accounting procedures and internal controls.

 

27.          In general, which of the following statements is correct with respect to ownership, possession, or access to working papers prepared by a CPA firm in connection with an audit?

A.            The working papers may be obtained by third parties where they appear to be relevant to issues raised in litigation.

B.            The working papers are subject to the privileged communication rule which, in a majority of jurisdictions, prevents third-party access to the working papers.

C.            The working papers are the property of the client after the client pays the fees.

 

D.            The working papers must be retained by the CPA firm for a period of ten years.

 

28.          For what minimum period should audit working papers be retained by the independent CPA?

 

A.            For the period during which the entity remains a client of the independent CPA.

 

B.                            For the period during which an auditor-client relationship exists but not more than six (6) years

C.            For the statutory period within which legal action may be brought against the independent CPA.

D.            For as long as the CPA is in public practice.

 

29.          Which of the following documentation is required for an audit in accordance with PSA?

 

A.            An internal control questionnaire             C.            A             planning               memorandum   or checklist

B.            A client engagement letter          D.            A client representation letter

 

30.          The auditor should complete the assembly of the financial audit file on a timely basis after the date of the auditor’s report. As PSQC 1 indicates, days after the date of the auditor’s report is ordinarily an appropriate time limit within which to complete the assembly of the financial audit file.

A.            30           B.            60           C.            90           D.            120

31.          After the assembly of the final audit file has been completed, the auditor not delete or discard audit documentation before the end of its retention period. As PSQC 1 indicates, the retention period for audit engagement ordinarily is no shorter than   years from the date of the auditor’s report.

A.            5              B.            3              C.            7              D.            10

 

32.          In documenting the nature, timing and extent of audit procedures performed, the auditor should record

I.             Who performed the audit work and the date such work papers was completed

 

II.            Who reviewed the audit work and the date and extent of such review

 

A.            I only     C.            Both I and II

B.            II Only   D.            Neither I nor II

 

33.          Which of the following statements concerning working papers is incorrect?

 

A.            An auditor may support an opinion by other means in addition to working papers.

 

B.            The form of working papers should be designed to meet the circumstances. C.  An auditor’s working papers may not serve as reference source for the client

D.            Working papers should show that the internal accounting control system has been studied and evaluated to the degree necessary.

34.          The main advantage of properly indexed working papers is to

 

A.            Reduce the size of the file           C. Better organize the working papers

 

B.            Allow division of labor within the audit team       D. Facilitate the efficient use of audit staff

 

 

35.          During the working paper review, an audit supervisor finds that the auditor’s reported findings are not adequately cross-referenced to supporting documentation. The supervisor will most likely instruct the auditor to

A.            Prepare working paper to indicate that the full scope of the audit was carried out.

 

B.            Familiarize him/herself with the sequence of working papers so that he/she will be able to answer questions about the conclusions stated in the report.

C.            Eliminate any cross-references to other working papers since the system is unclear.

D.            Provide a working paper indexing system that shows the relationship between findings, conclusions and the related facts.