Smart 6-2

Responsibility for the appointment, compensation, and oversight of the auditors rests with the client's ______. Multiple choice question. audit committee board of directors management

audit committee

Achieving management's objectives is always subject to —--- risks.

business

The overall audit strategy involves determining overall characteristics of the engagement that ______. Multiple select question. determine the timing of procedures determine the focus of the audit team define the audit scope determine the auditors' opinion

determine the timing of procedures determine the focus of the audit team define the audit scope

Inquiries of predecessor auditors are aimed at obtaining information on ______. Multiple select question. profits obtained from the audit disagreements with management integrity of management reason for change in auditors

disagreements with management integrity of management reason for change in auditors

Obtaining evidence about opening balances is necessary ______. Multiple choice question. when the prior year's audit did not result in an unqualified opinion in the first audit of a client in every audit

in the first audit of a client

Potential significant business risks for a client include ______. Multiple select question. material price volatility competition changes in government regulations interest rate increases hiring a new production manager

material price volatility competition changes in government regulations interest rate increases

An increase in the level of planning materiality results a decrease in ______. Multiple choice question. interim period relevant assertions scope of audit procedures

scope of audit procedures

Silver Corporation is seeking a new auditor due to a disagreement with the current audit firm regarding a financial statement disclosure. Silver is looking for a new auditor who will provide a clean opinion on the statements. This is known as ______. Multiple choice question. shopping for accounting principles unsubstantiated auditor shopping auditor swapping

shopping for accounting principles

The required understanding of the client is used to help plan the audit and assess the risks of material misstatement at ______. Multiple choice question. the financial statement and relevant assertion levels neither the financial statement nor relevant assertion level the relevant assertion level only the financial statement level only

the financial statement and relevant assertion levels

In a first time audit, if the auditors cannot obtain sufficient evidence about the balance of beginning inventories, they may have to ______. Multiple choice question. disclaim an opinion on the income statement withdraw from the engagement disclaim an opinion on the financial statements as a whole issue a qualified opinion

disclaim an opinion on the income statement

Risk assessment procedures include ______. Multiple select question. observation and inspection analytical procedures recalculation of balances inquiry of external parties

observation and inspection analytical procedures inquiry of external parties

Auditors consider materiality to determine their scope of the audit during the ______ stage of an audit. Multiple choice question. substantive procedures planning test of controls

planning

The required understanding of the client is used to help plan the audit and assess the risks of material misstatement at the financial statement and —--- —---- levels

relevant assertion

Engagement letters should include all of the following except ______. Multiple choice question. inherent limitations of the audit objective and scope of the audit auditor and management responsibilities the exact fees to be charged for the audit

the exact fees to be charged for the audit

Examples of risk assessment procedures include all of the following except ______. Multiple choice question. analytical procedures vouch sales transactions observation and inspection inquiries of management

vouch sales transactions Reason: Vouch sales transactions would be completed during further audit procedures, which are performed after the risk assessment procedures.

The client's staff may prepare some of the —---- —---- for the auditors.

working paper

During the audit the client's staff may prepare a(n) ______. Multiple select question. analysis of the adequacy of internal controls analysis of accounts written off trial balance aging of accounts receivable

analysis of accounts written off trial balance aging of accounts receivable

Which of the following are a facet of the overall audit strategy?

-Setting the basis of reporting -Consideration of industry reporting requirements -Setting the deadlines for reporting

Which of the following is not a facet of the overall audit strategy? Multiple choice question. Setting the basis of reporting Consideration of industry reporting requirements Setting the deadlines for reporting Setting a date when the final audit fees will be paid

Setting a date when the final audit fees will be paid

Comparing a company's inventory turnover to industry standard rates is an example of ______. Multiple choice question. tests of controls analytical procedures performance materiality

analytical procedures