WGU D251 ADVANCED AUDITING 2024 NEWEST EXAM
AND PRACTICE EXAM 400 QUESTIONS WITH DETAILED
VERIFIED ANSWERS (100% CORRECT) /A+ GRADE
ASSURED
What is the materiality level that an auditor uses for determining significant
accounts, significant locations, and audit procedures for those accounts and
locations? - ANSWER: Performance materiality
An auditor has determined performance materiality has been set too high at the
beginning of the audit. Which procedures should this auditor consider to detect
misstatements? - ANSWER: The auditor should perform additional substantive audit
procedures.
Which risk exists at the overall financial statement level and at the assertion level
and can be categorized as involving inherent risk and control risk? - ANSWER: Risk of
material misstatement
What represents an identified and assessed risk of material misstatement that
requires special audit consideration? - ANSWER: Significant risk
What is the impact on the amount of acceptable audit risk if an auditor believes the
chance of financial failure of a client is high? - ANSWER: The acceptable audit risk is
reduced.
Which factor should lead an auditor to assess inherent risk as high? - ANSWER: The
account balance consists of a large number of complex transactions.
Which factor would lead an auditor to assess client business risk at a higher level? -
ANSWER: The client's use of information technology is incompatible across systems
and processes.
An auditor determines overall materiality of $500,000 would be material to the
income statement and $1,000,000 would be material to the balance sheet. Which
amount would an auditor typically assess performance materiality to be for this
client? - ANSWER: 75% of $500,000
At which percentage do auditors commonly set posting materiality? - ANSWER: 5%
of planning materiality
What is quantitative evaluation? - ANSWER: Determining whether the upper limit of
the possible deviation rate exceeds the tolerable deviation rate
, In which circumstance would an auditor change an audit objective to estimating the
correct value? - ANSWER: When the total estimated misstatement exceeds the
tolerable misstatement
What describes tainting percentage? - ANSWER: The percentage of misstatement
present in a logical unit
Which statement reflects a 5% risk of overreliance? - ANSWER: 95% confidence level
that the actual rate of deviation will not exceed the tolerable deviation
What is the objective of sampling when testing controls? - ANSWER: To determine
whether controls are operating effectively
What is the primary objective of monetary unit sampling? - ANSWER: To identify
overstatement errors
How can an auditor increase the chances that systematically selected samples are
representative of the population? - ANSWER: By using multiple random starts
Which sampling method allows an auditor to measure the risk of making an incorrect
inference about the population from which the sample is taken? - ANSWER:
Statistical
Which action must an auditor take after discovering an illegal act during an audit of a
publicly traded company? - ANSWER: Alert management and the audit committee,
even if the act is immaterial
Which type of misstatement results from an auditor's best estimate of the total
misstatements in a given population based on the misstatements detected in an
audit sample of that population? - ANSWER: Projected misstatements
When do generally accepted accounting principles (GAAP) require a client to only
disclose a contingent loss that might occur, and either an accrual has not been made
or an exposure exists that is greater than the amount accrued? - ANSWER: When the
loss contingency is reasonably possible
A client made a decision to discontinue a major line of business after the balance
sheet date.How should an auditor treat this type of subsequent event? - ANSWER:
Disclose the information in the notes to the financial statements
Who is responsible for designing and maintaining policies and procedures to identify,
evaluate, and account for loss contingencies in accordance with generally accepted
accounting principles (GAAP)? - ANSWER: Management
Which procedures help an auditor form an overall conclusion about whether
financial statements are consistent with the auditor's understanding of an entity? -
ANSWER: Review analytical procedures
AND PRACTICE EXAM 400 QUESTIONS WITH DETAILED
VERIFIED ANSWERS (100% CORRECT) /A+ GRADE
ASSURED
What is the materiality level that an auditor uses for determining significant
accounts, significant locations, and audit procedures for those accounts and
locations? - ANSWER: Performance materiality
An auditor has determined performance materiality has been set too high at the
beginning of the audit. Which procedures should this auditor consider to detect
misstatements? - ANSWER: The auditor should perform additional substantive audit
procedures.
Which risk exists at the overall financial statement level and at the assertion level
and can be categorized as involving inherent risk and control risk? - ANSWER: Risk of
material misstatement
What represents an identified and assessed risk of material misstatement that
requires special audit consideration? - ANSWER: Significant risk
What is the impact on the amount of acceptable audit risk if an auditor believes the
chance of financial failure of a client is high? - ANSWER: The acceptable audit risk is
reduced.
Which factor should lead an auditor to assess inherent risk as high? - ANSWER: The
account balance consists of a large number of complex transactions.
Which factor would lead an auditor to assess client business risk at a higher level? -
ANSWER: The client's use of information technology is incompatible across systems
and processes.
An auditor determines overall materiality of $500,000 would be material to the
income statement and $1,000,000 would be material to the balance sheet. Which
amount would an auditor typically assess performance materiality to be for this
client? - ANSWER: 75% of $500,000
At which percentage do auditors commonly set posting materiality? - ANSWER: 5%
of planning materiality
What is quantitative evaluation? - ANSWER: Determining whether the upper limit of
the possible deviation rate exceeds the tolerable deviation rate
, In which circumstance would an auditor change an audit objective to estimating the
correct value? - ANSWER: When the total estimated misstatement exceeds the
tolerable misstatement
What describes tainting percentage? - ANSWER: The percentage of misstatement
present in a logical unit
Which statement reflects a 5% risk of overreliance? - ANSWER: 95% confidence level
that the actual rate of deviation will not exceed the tolerable deviation
What is the objective of sampling when testing controls? - ANSWER: To determine
whether controls are operating effectively
What is the primary objective of monetary unit sampling? - ANSWER: To identify
overstatement errors
How can an auditor increase the chances that systematically selected samples are
representative of the population? - ANSWER: By using multiple random starts
Which sampling method allows an auditor to measure the risk of making an incorrect
inference about the population from which the sample is taken? - ANSWER:
Statistical
Which action must an auditor take after discovering an illegal act during an audit of a
publicly traded company? - ANSWER: Alert management and the audit committee,
even if the act is immaterial
Which type of misstatement results from an auditor's best estimate of the total
misstatements in a given population based on the misstatements detected in an
audit sample of that population? - ANSWER: Projected misstatements
When do generally accepted accounting principles (GAAP) require a client to only
disclose a contingent loss that might occur, and either an accrual has not been made
or an exposure exists that is greater than the amount accrued? - ANSWER: When the
loss contingency is reasonably possible
A client made a decision to discontinue a major line of business after the balance
sheet date.How should an auditor treat this type of subsequent event? - ANSWER:
Disclose the information in the notes to the financial statements
Who is responsible for designing and maintaining policies and procedures to identify,
evaluate, and account for loss contingencies in accordance with generally accepted
accounting principles (GAAP)? - ANSWER: Management
Which procedures help an auditor form an overall conclusion about whether
financial statements are consistent with the auditor's understanding of an entity? -
ANSWER: Review analytical procedures
