Auditing & Assurance Services CH 3 Multiple-
Choice Questions All Verified
A. - Answer 3.27 When initiating communications with predecessor auditors, prospective auditors
should expect
a. To take responsibility for obtaining the client's consent for the predecessor to give information about
prior audits.
b. To conduct interviews with the partner and manager in charge of the predecessor public accounting
firm's engagement.
c. To obtain copies of some or all of the predecessor auditors' audit documentation.
d. All of the above.
C. - Answer 3.28 Generally accepted auditing standards require that auditors always prepare and use
a. A written planning memorandum explaining the auditors' understanding of the client's business.
b. A written client consent to discuss audit matters with prospective auditors.
c. A written audit plan.
d. The written time budgets and schedules for performing each audit.
C. - Answer 3.29 When planning an audit, which of the following is not a factor that affects auditors'
decisions about the quantity, type, and content of audit documentation'?
a. The auditors' need to document compliance with generally accepted auditing standards.
b. auditors' need to verify the existence of new sales contracts important for the client's business.
c. The auditors' judgment about their independence with regard to the client.
d. The auditors' judgments about materiality.
A. - Answer 3.30 Audit documentation that shows the detailed evidence and procedures regarding the
balance in the accumulated depreciation account for the year under audit will be found in the
a. Current file audit documentation.
b. Permanent file audit documentation.
c. Administrative audit documentation in the current file.
d. Planning memorandum in the current file.
, D. - Answer 3.31 An auditor's permanent file audit documentation most likely will contain
a. Internal control analysis for the current year.
b. The most recent engagement letter.
c. Memoranda of conference with management.
d. Excerpts of the corporate charter and bylaws.
C. - Answer 3.32 Which of the following is not a benefit claimed for the practice of determining
materiality in the initial planning stage of an audit?
a. Being able to fine-tune the audit work for effectiveness and efficiency.
b. Avoiding the problem of doing more work than necessary (overauditing).
c. Being able to decide early what type of audit opinion to issue.
d. Avoiding the problem of doing too little work (underauditing).
C. - Answer 3.33 Spreadsheet software would be most useful for which of the following audit activities?
a. Testing internal controls over computerized accounting applications.
b. Preparing an audit plan.
c. Preparing a comparison of current-year expenses with those from the previous year.
d. Drafting a planning memorandum.
B. - Answer 3.34 Which of the following is an advantage of computer-assisted audit techniques (CAATs)?
a. The CAATs programs are all written in one computer language.
b. The software can be used for audits of clients that use differing computer equipment and file formats.
c. The use of CAATs has reduced the need for the auditor to study input controls for computer-related
procedures.
d. The use of CAATs can be substituted for a relatively large part of the required testing.
B. - Answer 3.35 A primary advantage of using CAATs in the audit of an advanced computerized system
is that it enables the auditor to
a. Substantiate the accuracy of data through self-checking digits and hash totals.
Choice Questions All Verified
A. - Answer 3.27 When initiating communications with predecessor auditors, prospective auditors
should expect
a. To take responsibility for obtaining the client's consent for the predecessor to give information about
prior audits.
b. To conduct interviews with the partner and manager in charge of the predecessor public accounting
firm's engagement.
c. To obtain copies of some or all of the predecessor auditors' audit documentation.
d. All of the above.
C. - Answer 3.28 Generally accepted auditing standards require that auditors always prepare and use
a. A written planning memorandum explaining the auditors' understanding of the client's business.
b. A written client consent to discuss audit matters with prospective auditors.
c. A written audit plan.
d. The written time budgets and schedules for performing each audit.
C. - Answer 3.29 When planning an audit, which of the following is not a factor that affects auditors'
decisions about the quantity, type, and content of audit documentation'?
a. The auditors' need to document compliance with generally accepted auditing standards.
b. auditors' need to verify the existence of new sales contracts important for the client's business.
c. The auditors' judgment about their independence with regard to the client.
d. The auditors' judgments about materiality.
A. - Answer 3.30 Audit documentation that shows the detailed evidence and procedures regarding the
balance in the accumulated depreciation account for the year under audit will be found in the
a. Current file audit documentation.
b. Permanent file audit documentation.
c. Administrative audit documentation in the current file.
d. Planning memorandum in the current file.
, D. - Answer 3.31 An auditor's permanent file audit documentation most likely will contain
a. Internal control analysis for the current year.
b. The most recent engagement letter.
c. Memoranda of conference with management.
d. Excerpts of the corporate charter and bylaws.
C. - Answer 3.32 Which of the following is not a benefit claimed for the practice of determining
materiality in the initial planning stage of an audit?
a. Being able to fine-tune the audit work for effectiveness and efficiency.
b. Avoiding the problem of doing more work than necessary (overauditing).
c. Being able to decide early what type of audit opinion to issue.
d. Avoiding the problem of doing too little work (underauditing).
C. - Answer 3.33 Spreadsheet software would be most useful for which of the following audit activities?
a. Testing internal controls over computerized accounting applications.
b. Preparing an audit plan.
c. Preparing a comparison of current-year expenses with those from the previous year.
d. Drafting a planning memorandum.
B. - Answer 3.34 Which of the following is an advantage of computer-assisted audit techniques (CAATs)?
a. The CAATs programs are all written in one computer language.
b. The software can be used for audits of clients that use differing computer equipment and file formats.
c. The use of CAATs has reduced the need for the auditor to study input controls for computer-related
procedures.
d. The use of CAATs can be substituted for a relatively large part of the required testing.
B. - Answer 3.35 A primary advantage of using CAATs in the audit of an advanced computerized system
is that it enables the auditor to
a. Substantiate the accuracy of data through self-checking digits and hash totals.
