WGU D251 ADVANCED AUDITING 2024COMPREHENSIVE
PRACTICE QUESTIONS WITH DETAILED VERIFIED
ANSWERS GRADED A+(CORRECT 100%)!!!!
1) Which phrase or term regarding materiality is used by the Supreme Court of the United States and is
not found in FASB Concepts Statements No. 2
in light of surrounding circumstances
significantly altered the total mix of information available
magnitude of an omission or misstatement
probable that the judgment of a reasonable person - (correct answer) significantly altered the total
mix of information available
2) Which materiality does an auditor use when determining whether the financial statements overall are
materially correct?
performance materiality
Specific materiality
planning materiality
Posting materiality - (correct answer) performance materiality
3)What describes the misstatements identified throughout the audit that will be considered at the end of
the audit in determining whether the financial
statements overall are materially correct?
Posting materiality
Tolerable error
Overall materiality
Performance materiality - (correct answer) Posting materiality
4) When materiality judgments change during the audit opinion formulation process, what happens to
previous audit decisions that were based on
evidence obtained using the initial materiality setting?
The auditor repeats all audit procedures performed prior to the change in the materiality judgments.
The auditor reassesses those previous audit decisions.
The auditor takes no action.
The auditor modifies the audit opinion to note the change in the materiality judgments. - (correct
answer) The auditor reassesses those previous audit decisions.
,5)Which factor would result in control risk being assessed at a higher level?
Controls are well designed.
Accounting staff are well trained and educated.
There is a lack of supervision of accounting personnel.
The control environment is operating effectively. - (correct answer) There is a lack of supervision of
accounting personnel.
6) Which technique is used to analyze year-to-year comparisons of account balances?
Trend analysis
Ratio analysis
Variance analysis
Reasonableness test - (correct answer) Trend analysis
7) Which term describes the numerical depiction of the relationship between control risk, inherent risk,
and detection risk?
Risk assessment process
Risk of material misstatement
Data modeling
Audit risk model - (correct answer) Audit risk model
8)Which risk factor suggests a heightened level of risk of material misstatement?
Having key personnel of a company depart
Having a stable product
Declining a merger with another company
Having few immaterial related-party transactions - (correct answer) Having key personnel of a
company depart
8) What is the relationship between the risk of material misstatement and audit risk?
Correlational
Direct
None
Inverse - (correct answer) Inverse
,What is the typical range for the setting of audit risk?
0% to 5%
0% to 10%
1% to 10%
1% to 5% - (correct answer) 1% to 5%
9) Which risk result would likely be achieved from using a 1% level of detection risk?
A high detection risk and a low audit risk
A low detection risk and a low audit risk
A low detection risk and a high audit risk
A high detection risk and a high audit risk - (correct answer) A low detection risk and a low audit
risk
9) Which tests are eliminated when an auditor chooses not to rely on a client's internal controls because
the control design is ineffective?
Inquiries
Tests of control
Tests of details of balances
Substantive analytical procedures - (correct answer) Tests of control
10) In which audit procedure would sampling be appropriate?
Observation
Inquiry
Confirmation
Analytics - (correct answer) Confirmation
11) What is sampling risk?
When the sample does not contain characteristics representative of the sample such that inferences
made about that sample are incorrect
When the auditor incorrectly applies sampling methodology
When the sample does not contain characteristics representative of the population such that inferences
made about that population are incorrect
, When the sample size is larger than needed - (correct answer) When the sample does not contain
characteristics representative of the sample such that inferences made about that sample are incorrect
12)What is the auditor most concerned with when performing sampling?
Risk of incorrect rejection
Risk of incorrect acceptance
Risk of errors in the population
Risk of excess sample size - (correct answer) Risk of incorrect acceptance
13) What is a factor of nonsampling risk?
Using nonstatistical sampling
Having a sample that does not represent the population
Using a random sample selection
Not carrying out the appropriate audit procedure - (correct answer) Not carrying out the appropriate
audit procedure
14) Why do some auditors restrict the use of nonstatistical sampling?
It is less risky.
It is less objective.
It is less efficient.
It is less effective. - (correct answer) It is less objective.
15) What is the level at which the control's failure to operate would cause an auditor to conclude that the
control is not effective and would likely change
the auditor's planned assessment of control risk in performing tests of account balances?
Allowable risk of assessing the control risk as too low
Tolerable failure rate
Expected failure rate
Allowance for sampling error - (correct answer) Tolerable failure rate
16) Which statistical sampling method is most commonly used to test control procedures?
Attribute sampling
Dollar-unit sampling
Ratio estimation sampling
PRACTICE QUESTIONS WITH DETAILED VERIFIED
ANSWERS GRADED A+(CORRECT 100%)!!!!
1) Which phrase or term regarding materiality is used by the Supreme Court of the United States and is
not found in FASB Concepts Statements No. 2
in light of surrounding circumstances
significantly altered the total mix of information available
magnitude of an omission or misstatement
probable that the judgment of a reasonable person - (correct answer) significantly altered the total
mix of information available
2) Which materiality does an auditor use when determining whether the financial statements overall are
materially correct?
performance materiality
Specific materiality
planning materiality
Posting materiality - (correct answer) performance materiality
3)What describes the misstatements identified throughout the audit that will be considered at the end of
the audit in determining whether the financial
statements overall are materially correct?
Posting materiality
Tolerable error
Overall materiality
Performance materiality - (correct answer) Posting materiality
4) When materiality judgments change during the audit opinion formulation process, what happens to
previous audit decisions that were based on
evidence obtained using the initial materiality setting?
The auditor repeats all audit procedures performed prior to the change in the materiality judgments.
The auditor reassesses those previous audit decisions.
The auditor takes no action.
The auditor modifies the audit opinion to note the change in the materiality judgments. - (correct
answer) The auditor reassesses those previous audit decisions.
,5)Which factor would result in control risk being assessed at a higher level?
Controls are well designed.
Accounting staff are well trained and educated.
There is a lack of supervision of accounting personnel.
The control environment is operating effectively. - (correct answer) There is a lack of supervision of
accounting personnel.
6) Which technique is used to analyze year-to-year comparisons of account balances?
Trend analysis
Ratio analysis
Variance analysis
Reasonableness test - (correct answer) Trend analysis
7) Which term describes the numerical depiction of the relationship between control risk, inherent risk,
and detection risk?
Risk assessment process
Risk of material misstatement
Data modeling
Audit risk model - (correct answer) Audit risk model
8)Which risk factor suggests a heightened level of risk of material misstatement?
Having key personnel of a company depart
Having a stable product
Declining a merger with another company
Having few immaterial related-party transactions - (correct answer) Having key personnel of a
company depart
8) What is the relationship between the risk of material misstatement and audit risk?
Correlational
Direct
None
Inverse - (correct answer) Inverse
,What is the typical range for the setting of audit risk?
0% to 5%
0% to 10%
1% to 10%
1% to 5% - (correct answer) 1% to 5%
9) Which risk result would likely be achieved from using a 1% level of detection risk?
A high detection risk and a low audit risk
A low detection risk and a low audit risk
A low detection risk and a high audit risk
A high detection risk and a high audit risk - (correct answer) A low detection risk and a low audit
risk
9) Which tests are eliminated when an auditor chooses not to rely on a client's internal controls because
the control design is ineffective?
Inquiries
Tests of control
Tests of details of balances
Substantive analytical procedures - (correct answer) Tests of control
10) In which audit procedure would sampling be appropriate?
Observation
Inquiry
Confirmation
Analytics - (correct answer) Confirmation
11) What is sampling risk?
When the sample does not contain characteristics representative of the sample such that inferences
made about that sample are incorrect
When the auditor incorrectly applies sampling methodology
When the sample does not contain characteristics representative of the population such that inferences
made about that population are incorrect
, When the sample size is larger than needed - (correct answer) When the sample does not contain
characteristics representative of the sample such that inferences made about that sample are incorrect
12)What is the auditor most concerned with when performing sampling?
Risk of incorrect rejection
Risk of incorrect acceptance
Risk of errors in the population
Risk of excess sample size - (correct answer) Risk of incorrect acceptance
13) What is a factor of nonsampling risk?
Using nonstatistical sampling
Having a sample that does not represent the population
Using a random sample selection
Not carrying out the appropriate audit procedure - (correct answer) Not carrying out the appropriate
audit procedure
14) Why do some auditors restrict the use of nonstatistical sampling?
It is less risky.
It is less objective.
It is less efficient.
It is less effective. - (correct answer) It is less objective.
15) What is the level at which the control's failure to operate would cause an auditor to conclude that the
control is not effective and would likely change
the auditor's planned assessment of control risk in performing tests of account balances?
Allowable risk of assessing the control risk as too low
Tolerable failure rate
Expected failure rate
Allowance for sampling error - (correct answer) Tolerable failure rate
16) Which statistical sampling method is most commonly used to test control procedures?
Attribute sampling
Dollar-unit sampling
Ratio estimation sampling
