Gleim 5.3

The following are steps in the financial statement audit process: I. Prepare flowchart II. Gather exhibits of all documents III. Interview personnel The most logical sequence of steps is

III, II, I

According to AU-c 315, Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement, not all controls are relevant to a financial statement audit. Which one of the following would most likely be considered in an audit?

Maintenance of control over unused checks.

Which of the following statements regarding auditor documentation of the understanding of the client's internal control components obtained to plan the audit is correct?

No one particular form of documentation is necessary, and the extent of documentation may vary.

Which of the following is not a medium that can normally be used by an auditor to record information concerning internal control?

Procedures manual

. A financial statement auditor is considering internal control for a client with an information system that makes extensive use of information technology. Which of the following statements related to the understanding of internal control for this client is false?

The auditor must possess all the information technology skills necessary to complete the engagement.

The primary purpose of obtaining an understanding of the entity and its environment, including its internal control, is to provide an auditor with

a frame of reference within which to plan the audit.

A secondary result of the auditor's understanding of internal control for a nonissuer is that the understanding may

bring to the auditor's attention possible control conditions required to be communicated to the client.

Which of the following statements indicates the wrong way to use an internal control questionnaire

clarifying all answers with written remarks and explanations

The auditor's understanding of internal control is documented to substantiate

compliance with generally accepted auditing standards

After obtaining an understanding of the entity and its environment, including its internal control, the auditor assesses

control risk and inherent risk to determine the acceptable level of detection risk.

In obtaining an understanding of internal control, the auditor may trace several transactions through the control process, including how the transactions interface with any service organizations whose services are part of the information system. The primary purpose of this task is to

determine whether the controls have been implemented.

A well-designed internal control questionnaire should

help evaluate the effectiveness of internal control.

A CPA's understanding of internal control in a financial statement audit of a nonissuer

is usually more limited than that made in an audit of internal control integrated with an audit of financial statements.

When obtaining an understanding of an entity's internal control, an auditor should concentrate on their substance rather than their form because

management may establish appropriate controls but not enforce compliance with them.

The ultimate purpose of understanding the entity and its environment and assessing the risks of material misstatement is to contribute to the auditor's assessment of the risk that

material misstatements may exist in the financial statements.

As part of understanding internal control relevant to the audit of a non issuer, an auditor does not need to

obtain knowledge about the operating effectiveness of internal control.

An auditor should obtain an understanding of an entity's information system, including

process used to prepare significant accounting estimates.

In obtaining an understanding of internal control in a financial statement audit, an auditor is not obligated to

search for significant deficiencies in the operation of internal control

In obtaining an understanding of an issuer's internal control, an auditor does all the following except

send confirmations to customers