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Quizzer 4

This document contains a quiz on audit documentation and working papers according to PSA 230 Redrafted. It includes 23 multiple choice questions covering topics such as: - The purpose of audit documentation/working papers - What should be included in working papers - Standards for organization and indexing of working papers - Uses of working papers to support the audit opinion and review work performed - Requirements regarding retention and custody of working papers

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Raraj
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555 views

Quizzer 4

This document contains a quiz on audit documentation and working papers according to PSA 230 Redrafted. It includes 23 multiple choice questions covering topics such as: - The purpose of audit documentation/working papers - What should be included in working papers - Standards for organization and indexing of working papers - Uses of working papers to support the audit opinion and review work performed - Requirements regarding retention and custody of working papers

Uploaded by

Raraj
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Auditing Theory

Prof. Francis H. Villamin


CPA Review
AT
Quizzer 4
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PSA 230 Redrafted, Audit Documentation
1. According to PSA 230 Redrafted, Documentation, working papers do not
a. Assist in the planning and performance of the audit.
b. Assist in the supervision and review if the audit work.
c. Record the audit evidence from the audit work performed to support an auditors
opinion.
d. Support the clients financial statements.
2. 1st statement Working papers are the property of the auditor.
2nd statement Although portions of or extracts from the working papers may be
made available to the entity at the discretion of the auditor, they may be substitute
for the entitys accounting records.
a. 1st statement is True ; 2nd statement is False
b. 1st statement is False ; 2nd statement is True
c. Both statements are True
d. Both statements are False
3. 1st statement The auditor should prepare working papers which are sufficiently
complete and detailed to provide an overall understanding of the audit.
2nd statement 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. 1st statement is True ; 2nd statement is False
b. 1st statement is False ; 2nd statement is True
c. Both statements are True
d. Both statements are False
4. Why does an auditor document audit evidence?
a. To comply with the requirements of gathering all available evidence.
b. To provide client reference for all account balances and correcting entries.
c. To support audit opinion and to provide evidence that the audit was carried out in
accordance with PSA.
d. To document all records of misstatements noted in the financial statements.
5. Working papers that record the procedures used by the auditor to gather evidence
should be
a. Considered the primary support for the financial statements being audited.
b. Viewed as the connecting link between the books of accounts and the financial
statements.
c. Designed to meet the circumstances of the particular engagement.
d. Destroyed when the audited entity ceases to be a client.
6. Which of the following conditions constitutes inappropriate working paper
documentation?
a. Flowcharts are included in the working papers.
b. Findings are cross-referenced to supporting documentation.
c. Tick marks are explained in working papers.
d. All forms and directives used by the auditee department are included in the
working papers.
7. An auditors working papers will be ordinarily least likely to include documentation
showing how the
a. Client schedules were prepared.
b. Engagement was planned.
c. Understanding of the clients internal control was obtained and control risk was
assessed.
d. Unusual matters were resolved.
8. Which of the following is usually included or shown in the auditors working papers?
a. The procedures used by the auditor to verify the personal financial statues of the
members of the clients management within.
b. Analyses that are designed to be a part of, or a substitute for, the clients
accounting records.

c. Excerpts from authoritative pronouncements that support the underlying


generally accepted accounting principles used in preparing the financial
statements.
d. The manner in which exceptions and unusual matters disclosed by the auditors
procedures were resolved or treated.
9. Which of the following is not generally included in the working paper files?
a. An indication as to who performed the audit procedures and when they were
performed.
b. Documentation of the auditors understanding of the accounting and internal
control systems.
c. Copy of the internal audits audit program.
d. Analyses of significant ratios and trends.

10. Although the quantity and content of audit working papers vary with each particular
engagement, an auditors permanent files most likely include
a. Schedules that support the current years adjusting entries.
b. Prior years accounts receivable confirmations that were classified as exceptions.
c. Documentation indicating that the audit work was adequately planned and
supervised.
d. Analyses of capital stock and other owners equity accounts.
11. Audit working papers are indexed by the means of reference numbers. The primary
purpose of indexing is to
a. Permit cross-referencing and simplify supervisory review.
b. Support the audit report.
c. Eliminate the need for follow-up reviews.
d. Determine that working papers adequately support findings, conclusions, and
reports.
12. The audit working paper that reflects the major components of an amount reported in
the financial statements is the
a. Interbank transfer schedule
c. Supporting schedule
b. Carryforward schedule
d. Lead schedule
13. An auditor ordinarily uses a working trial balance resembling the financial statements
without footnotes, but containing columns for
a. Cash flow increases and decreases
c. Reclassifications
and
adjustments
b. Audit objectives and assertions
d. Reconciliations and tick marks
14. In the course of the audit of financial statements for the purpose of expressing an
opinion thereon, the auditor will normally prepare a schedule of unadjusted
differences for which he did not propose adjustment when they were uncovered. The
primary purpose served by this schedule is to
a. Point out to the responsible client officials the errors made by the various
company personnel.
b. Summarize the adjustments that must be made before the company can prepare
and submit its income tax returns.
c. Identify the potential financial statement effects of errors or disputed items that
were considered immaterial when discovered.
d. Summarize the errors made by the company so that corrections can be made
after the audited financial statements released.
15. Which of the following analyses appearing in a predecessors working papers is the
successor auditor least likely to be interested in reviewing?
a. Analysis of noncurrent balance sheet
c. Analysis of income statement
accounts
accounts
b. Analysis of current balance sheet accounts
d. Analysis of contingencies
16. In an internal audit, the audit supervisor determines that working papers are
complete
a. When satisfied that the audit objectives have been met and the working papers
support the conclusions.
b. When working papers refer to the steps outlined in the audit program.
c. Only after the auditor who prepared the working papers has signed and dated
them.
d. When proper cross-references to other working papers are noted.
17. Standardized working papers are often used, chiefly because they allow working
papers to be prepared more
a. Efficiently
b. Professionally
c. Neatly
d. Accurately
18. Ordinarily, the audit may use schedules, analyses and other documentation prepared
by entity personnel in order to:
a. Lessen auditors responsibility.
b. Eliminate the need to apply any audit procedures on verifying their correctness.
c. Emphasize that the responsibility on financial statements rests with the client
engagement.
d. Improve audit efficiency.
19. Working papers which contain information relating primarily to the audit of a single
period.
a. Current audit files
c. Financial reporting files
b. Permanent audit files
d. Correspondence files
20. Which of the following is the least required of the audit working papers?
a. Substitute for the entitys accounting records.

b. Confidentiality of information included in the working papers.


c. Safe custody of the working papers.
d. Retention for a period sufficient to meet the needs of practice

21. The form and content of working papers are affected by matters such as the following
except:
a. Nature of engagement
b. Type of opinion 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
22. 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 sufficient support for the auditors opinion.
23. 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 capa

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