Chapter 6
If auditors identify fraud risks, the auditors may modify their overall approach to the audit in which of the following ways? (Select all that apply) a. adding specialized audit staff b. increase third-party confirmations c. add additional management inquiry
A, B
T or F: Completeness of an asset account can best be established by vouching recorded entries in the asset account.
False
Effect on Risks of Material Misstatement (I/D/NE)? An IPO of a company's stock is planned for late 20X2.
Increase
T or F: A systems approach to an audit emphasizes tests of controls.
True
Match the following terms to the correct statements. a. Successor auditor b. Predecessor auditor 1. CPA firm that was replaced by a new firm 2. Newly hired CPA firm
A - 2 B - 1
Auditors should document several elements of risk assessment including all of the following except: a. audit team discussion b. auditor's opinion on FS c. nature, timing, extent of further audit procedures d. understanding of entity and its environment
B
T or F: The audit plan generally should be modified if the auditors revise their estimate of risk for the engagement.
True
Effect on Risks of Material Misstatement (I/D)? Create a Risk of Fraud (Y/N)? A bank operates in a growing, prosperous area and has remained profitable over the years.
Decrease; No
Effect on Risks of Material Misstatement (I/D)? Create a Risk of Fraud (Y/N)? Management at a bank's branch offices has authority for directing and controlling the company's operations and is compensated based on branch profitability.
Increase; Yes
T or F: An engagement letter represents a written contract between the auditors and the client.
True
Fair values can be evaluated by comparing to prices on _______ markets.
Existing
The audit __________ is a description of the nature, timing, and extent of the audit procedures to be performed.
Plan
Audit _______ begins with determining the requirements for the engagement.
Planning
A cutoff test that relates to plant assets typically affects __________.
The BS
During the planning stages of the audit, the auditors develop which of the following? (Select all that apply) a. Plan b. Strategy c. Opinion d. Program
A, B, D
The risks that threaten management's ability to achieve the organization's objectives are known as ______ risks.
Business
Match the audit procedure example to its correct general objective. a. Establish the existence of assets b. Establish that the company has rights to the asset c. Establish completeness of the recorded assets d. Verify the cutoff of transactions e. Determine the appropriate valuation of the assets f. Determine the appropriate financial statement presentation and disclosure of the asset Auditors examine transactions just before and just after year end.
D
If you discover fraud, are you allowed to disclose it to third parties?
No - unless required by court of law (client information is confidential)
What is not one of the assertions made by management about an account balance?
Relevance
Further audit procedures include: (Select all that apply) a. substantive procedures b. business risk c. tests of controls
A, C
Which of the following is NOT a facet of the overall audit strategy? a. Define the audit scope b. Determine the auditors' opinion c. Determine the focus of the audit team d. Determine the timing of procedures
B
The confirmation of receivables with debtors to verify that all recorded receivables are legitimate is verifying the audit assertions ___________. a. rights to assets b. valuation of assets c. existence of assets
C
Which of the following is most likely to be an overall response to fraud risks identified in an audit? a. Decrease the use of professional skepticism and increase the use of internally generated evidence. b. Use predictable, well established audit procedures. c. Consider further management's selection and application of significant accounting principles. d. Supervise members of the audit team less closely and rely more upon judgment.
C
Which of the following is the most likely first step the auditors would perform at the beginning of an initial audit engagement? a. Prepare a rough draft of the financial statements and of the auditors' report. b. Consider internal control. c. Tour the client's facilities and review the general records. d. Consult with and review the work of the predecessor auditors prior to discussing the engagement with the client management.
C
Match the audit procedure example to its correct general objective. a. Establish the existence of assets b. Establish that the company has rights to the asset c. Establish completeness of the recorded assets d. Verify the cutoff of transactions e. Determine the appropriate valuation of the assets f. Determine the appropriate financial statement presentation and disclosure of the asset Vouch the cost of acquisition to paid checks.
E
T or F: One basic reason that audit plans usually focus on balance sheet accounts is because users of financial statements are likely to rely more heavily upon the balance sheet than the other financial statements.
False
Effect on Risks of Material Misstatement (I/D/NE)? During 20X1, a company changed its method of preparing its FS from the cash basis to GAAP.
Increase
Effect on Risks of Material Misstatement (I/D/NE)? During 20X1, a company completed a barter transaction with a municipality. The company removed waste from the municipally owned site and acquired title to another contaminated site at below market price. The company intends to service this new site in 20X2.
Increase
Effect on Risks of Material Misstatement (I/D/NE)? The accounting department has experienced a high rate of turnover of key personnel.
Increase
T or F: Tests of controls are designed to determine whether the client's controls are operating effectively.
True
Effect on Risks of Material Misstatement (I/D/NE)? A company has such a strong financial presence in its industry to allow it often to dictate the terms or conditions of transactions with its suppliers.
Increase
Effect on Risks of Material Misstatement (I/D/NE)? A company's BOD is controlled by the majority stockholder who also acts as the CEO.
Increase
What matter is generally included in an auditor's engagement letter?
Limitations of engagement (no absolute assurance)
A successor auditor should attempt communication with a predecessor auditor: a. prior to accepting the engagement. b. after the engagement has been accepted. c. both prior to acceptance of the engagement and after the engagement has been accepted. d. is not required to do so.
A
All of the following are common indications of fraud except: a. related party transactions b. missing inventory c. complaints by management about conduct of audit d. tips to auditors about fraud
A
a. Classification and understandability b. Completeness c. Existence and occurrence d. Rights and obligations e. Valuation or allocation The client failed to describe in the financial statements significant debt restrictions.
A
Tracing of a transaction from source documents to the accounting records is generally an audit procedure that is designed to establish: a. completeness. b. valuation. c. existence. d. rights.
A
To gain an understanding of the client, the auditors will identify methods used by the client to measure and review __________. a. analytical procedures b. performance c. risks
B
Which of the following is an effective audit planning and control procedure that helps prevent misunderstandings and inefficient use of audit personnel? a. Arrange to make copies, for inclusion in the working papers, of those client supporting documents examined by the auditors. b. Arrange to provide the client with copies of the audit plans to be used during the audit. c. Arrange a preliminary conference with the client to discuss audit objectives, fees, timing, and other information. d. Arrange to have the auditors prepare and post any necessary adjusting or reclassification entries prior to final closing.
C
Effect on Risks of Material Misstatement (I/D/NE)? A company's bank has a loan officer who meets regularly with the company's CEO and controller to monitor the company's financial performance.
Decrease
Auditors may use audit ______ to test clerical accuracy.
Software
To best test existence, an auditor would sample from?
General ledger to source documents (A)
Test of account balances and transactions designed to detect any material misstatements in the financial statements are called __________ procedures.
Substantive
a. Classification and understandability b. Completeness c. Existence and occurrence d. Rights and obligations e. Valuation or allocation The client failed to include in their financial statements inventory that was consigned to others.
B
Put the stages of an audit in the correct order. 1. Perform further audit procedures 2. Form an opinion and issue the audit report 3. Assess the risks of misstatement and design further audit procedures 4. Plan the Audit 5. Complete the audit 6. Obtain an understanding of the client and its environment, including internal control
4, 6, 3, 1, 5, 2
Place the steps of the audit process in the order from first to last step completed. 1. Perform further audit procedures 2. Assess risks of misstatement and design further audit processes 3. Form an opinion and issue the report 4. Complete the audit 5. Obtain an understanding of the client, including internal controls 6. Plan the audit
6, 5, 2, 1, 4, 3
An estimate of the time required to perform each step in the audit is called a(n): a. time budget b. audit strategy c. audit plan
A
Auditors test the client's rights to assets to verify that all: a. receivables belong to the client b. receivables have been recorded c. recorded receivables are valid
A
Match the following terms to the correct definitions. a. Fraudulent financial reporting b. Misappropriation of assets c. Inherent risk 1. Material misstatement of FS by management with the intent to mislead FS users 2. Theft of client assets by an employee or officer of organization 3. Risk of material misstatement of an assertion about an account without considering internal controls
A - 1 B - 2 C - 3
Match the following risks to their definition. a. Inherent risk b. Control risk c. Audit risk 1. The risk that material misstatement will not be prevented on a timely basis by internal control 2. The risk that material misstatement of an assertion about an account without considering internal control 3. The risk that the auditors may unknowingly fail to appropriately modify their opinion on FS that are materially misstated
A - 2 B - 1 C - 3
Match the following terms to the correct statements. a. Systems portion of the audit b. Substantive test portion of the audit c. Overall audit strategy 1. Tests of FS account balances 2. Defines audit scope, reporting objectives, timing, etc. 3. Procedures to assess the effectiveness of internal controls
A - 3 B - 1 C - 2
Identify examples of risks at the FS level. (Select all that apply) a. lack of sufficient capital to continue operations b. declining industry c. existence or occurence d. ineffective control environment
A, B, D
The primary objective of tests of details of transactions performed as substantive procedures is to: a. Comply with GAAS b. Attain assurance about the reliability of the accounting system c. Detect material misstatements in the FS d. Evaluate whether management's policies and procedures are operating effectively
C
The risk of material misstatement of an assertion about an account without considering internal control is called __________ risk. a. control b. audit c. inherent
C
Theft of client assets by employees or offers of the organization is known as __________. a. fraudulent financial reporting b. business risks c. misappropriation of assets
C
Three conditions generally are present when fraud occurs. Select the one below that is not one of those conditions. a. Incentive or pressure b. Opportunity c. Supervisory position d. Attitude
C
Which of the following should not normally be included in the engagement letter for an audit? a. A description of the responsibilities of client personnel to provide assistance b. An indication of the amount of the audit fee c. A description of the limitations of an audit d. A listing of the client's branch offices selected for testing
D
Which of the following should the auditors obtain from the predecessor auditors before accepting an audit engagement? a. Analysis of BS accounts b. Analysis of IS accounts c. All matters of continuing accounting significance d. Facts that might bear on the integrity of management
D
Which of the following topics is not normally included in an engagement letter? a. The auditors' responsibilities with respect to the audit. b. A request that the client sign a copy of the letter. c. Client responsibilities regarding the audit. d. A schedule of individual audit team member billing rates.
D
Effect on Risks of Material Misstatement (I/D/NE)? Because municipalities have received increased federal and state funding for environmental purposes, a company returned to profitability for the first year following three years with losses.
Decrease
Effect on Risks of Material Misstatement (I/D/NE)? During 20X1, litigation filed against a company from an action 10 years ago that alleged that the company discharged pollutants into state waterways was dropped by the state. Loss contingency disclosures that the company included in prior years' FS are being removed from the 20X1 FS.
Decrease
Effect on Risks of Material Misstatement (I/D)? Create a Risk of Fraud (Y/N)? A bank is a continuing audit client.
Decrease; No
Effect on Risks of Material Misstatement (I/D/NE)? Inquiries about the substantial increase in revenue a company recorded in the fourth quarter of 20X1 disclosed a new operating policy. The company guaranteed to several municipalities that it would refund the federal and state funding paid to the company if any municipality fails a federal or state site clean-up inspection in 20X2.
Increase
Effect on Risks of Material Misstatement (I/D/NE)? The internal auditors reports to the controller and the controller reports to the CEO.
Increase
Effect on Risks of Material Misstatement (I/D)? Create a Risk of Fraud (Y/N)? A bank's BOD is controlled by the majority stockholder, who also acts as the CEO.
Increase; Yes
Effect on Risks of Material Misstatement (I/D)? Create a Risk of Fraud (Y/N)? A company's formula has consistently underestimated the allowance for loan losses in current years.
Increase; Yes
Effect on Risks of Material Misstatement (I/D)? Create a Risk of Fraud (Y/N)? During 20X1, a company increased the efficiency of its accounting operations by installing a new, sophisticated computer system
Increase; Yes
Effect on Risks of Material Misstatement (I/D)? Create a Risk of Fraud (Y/N)? Interest rates have been very volatile recently.
Increase; Yes
Effect on Risks of Material Misstatement (I/D)? Create a Risk of Fraud (Y/N)? The banking industry has been significantly impacted by the downturn in the economy in recent years.
Increase; Yes
_______risk is the risk of material misstatement of an assertion without considering internal control.
Inherent
What would most likely cause a CPA not to accept a new audit engagement?
Management's disinterest in internal control
Who do auditors report fraud to?
Management, audit committee, and shareholders if necessary
Effect on Risks of Material Misstatement (I/D/NE)? The company's employees are paid biweekly.
No effect
A(n) __________ cycle is the sequence f procedures applied by the company (client) in processing a particular type of recurring transaction.
Transaction
T or F: A declining industry with increasing business failures is an industry condition that is indicative of increased risk of fraudulent financial reporting.
True
T or F: A documented audit plan is required on all audits.
True
T or F: An audit plan includes procedures for verifying the client's cutoff of transactions to be included in the financial statements of the current period.
True
T or F: An audit plan should indicate which auditing procedures have been completed and which remain to be done.
True
T or F: Audit risk is the risk of issuing an inappropriate opinion because the auditors' procedures fail to detect a material misstatement in the financial statements.
True
T or F: Auditors are required to specifically assess the risk of material misstatement of the financial statements due to fraud on every audit.
True
T or F: Since characteristics differ with every audit engagement, the auditors should tailor the audit plan to the particular engagement.
True
T or F: Successor auditors are required by professional standards to attempt certain inquiries of the predecessors before accepting a new audit client.
True
Auditors vouch cash receipt transactions occurring near period end to verify __________. a. cutoff transactions b. existence of assets c. completeness of assets
A
Match the audit procedure example to its correct general objective. a. Establish the existence of assets b. Establish that the company has rights to the asset c. Establish completeness of the recorded assets d. Verify the cutoff of transactions e. Determine the appropriate valuation of the assets f. Determine the appropriate financial statement presentation and disclosure of the asset Cash can be verified by physical inspection.
A
The portions of the auditors' audit plans relating to internal control are generally organized around the: a. major transaction cycles. b. substantive procedures. c. analytical procedures. d. inherent risk assessment.
A
When an audit firm is considering a new client, they try to communicate with the __________ auditor. a. predecessor b. current c. subsequent
A
Which of the following amounts of planning materiality will require the auditors to gather the most audit evidence? a. $10,000 b. $250,000 c. $50,00
A
Match the following audit assertions to the correct statement. a. Cutoff b. Valuation c. Presentation & Disclosure 1. Auditors obtain a list of related parties and verify all related party transactions are displayed 2. Auditors investigate credit rating for delinquent receivables to verify they are recorded at net realizable value 3. Auditor vouches sales transactions near period end to verify sales are recorded in proper period
A - 3 B - 2 C - 1
The overall audit strategy involves determining overall characteristics of the engagement that: (Select all that apply) a. determine the focus of the audit team b. determine the timing of procedures c. determine the auditors' opinion d. define the audit scope
A, B, D
Planning materiality is commonly based on which of the following? (Select all that apply) a. % of net income b. % of total liabilities c. % of total assets d. % of total revenues
A, C, D
To gain an understanding of the client, its environment, and internal controls, audits will review the: (Select all that apply) a. nature of the client, including the client's application of accounting principles b. representation letter obtained from the management of the client c. industry, regulatory, and other external factors affecting the client d. the client's objectives and strategies and related business risks
A, C, D
A test of controls is a test directed toward the operation of a control to assess its effectiveness in preventing: a. management's ability to achieve the organization's objectives b. material misstatement of FS assertion c. auditors unknowingly failing to modify their opinion on FS that are materially misstated
B
Auditors test completeness of receivables in order to determine that: a. all receivables belong to the client b. all receivables have been recorded c. all recorded receivables are valid
B
Comparing a company's inventory turnover to industry standard rates is an example of __________. a. performance materiality b. analytical procedures c. tests of controls
B
Match the audit procedure example to its correct general objective. a. Establish the existence of assets b. Establish that the company has rights to the asset c. Establish completeness of the recorded assets d. Verify the cutoff of transactions e. Determine the appropriate valuation of the assets f. Determine the appropriate financial statement presentation and disclosure of the asset Rights to cash can be verified by sending a confirmation.
B
The concept of __________ recognized that some matters are important to the fair presentation of FS while others are not. a. audit risk b. materiality c. audit strategy
B
Which of the following best describes what is meant by the term "fraud risk factor"? a. Factors that, when present, indicate that risk exists b. Factors often observed in circumstances where frauds have occurred c. Factors that, when present, require modification of planned audit procedures d. Weaknesses in internal control identified during an audit
B
Which of the following is correct concerning audit plans? a. Plans are required for public company audits, but not for non-public company audits. b. They are often revised throughout the audit. c. It is essential that the audit engagement team perform every audit step. d. They are generally less detailed than are audit engagement letters.
B
Which of the following is most likely to be an overall response to fraud risks identified in an audit? a. Supervise members of the audit team less closely and rely more upon judgment b. Use less predictable audit procedures c. Use only CPAs on the engagement d. Place increased emphasis on the audit of objective transactions rather than subjective transactions
B
Which of the following is most likely to be included in an auditor's inquiry of management while obtaining information to identify the risk of material misstatement due to fraud? a. Are financial reporting operations controlled by and limited to one location? b. Does it have knowledge of fraud or suspect fraud? c. Has the possibility of management override been assessed? d. Does the company have insurance against all forms of fraud?
B
Which of the following is the best example of a substantive procedure? a. Examining a sample of cash disbursements to test whether expenses have been properly approved. b. Confirming balances of accounts receivable. c. Comparing signatures on checks to a list of authorized check signers. d. Flowcharting a client's cash receipts system.
B
Relevant assertions include: (Select all that apply) a. Appropriation b. Valuation and allocation c. Rights and obligations d. Completeness
B, C, D
Engagement letters should include all of the following except: a. inherent limitations of the audit b. auditor/management responsibilities c. auditors' opinion on the FS d. objective and scope of the audit
C
Following specific transactions from their source documents forward to their inclusion in the financial statement summary figures is a test of the __________ assertion. a. valuation b. occurrence c. completeness
C
In planning and performing an audit, auditors are concerned about risk factors for two distinct types of fraud: fraudulent financial reporting and misappropriation of assets. Which of the following is a risk factor for misappropriation of assets? a. Generous performance-based compensation systems b. Management preoccupation with increased financial performance c. An unreliable accounting system d. Strained relationships between management and the auditor
C
Match the audit procedure example to its correct general objective. a. Establish the existence of assets b. Establish that the company has rights to the asset c. Establish completeness of the recorded assets d. Verify the cutoff of transactions e. Determine the appropriate valuation of the assets f. Determine the appropriate financial statement presentation and disclosure of the asset Examining shipping documents helps to determine if assets are properly recorded.
C
The _________ portion of the audit program is aimed at confirming FS amounts, and is usually organized around the BS accounts. a. systems b. internal controls c. substantive procedures
C
Which of the following elements underlies the application of generally accepted auditing standards, particularly the standards of fieldwork and reporting? a. Adequate disclosure b. Quality control c. Materiality and audit risk d. Client acceptance
C
Which of the following statements is not correct regarding the auditor's determination of materiality? a. It is the smallest amount of misstatement that would probably influence the judgment of a reasonable person relying upon the financial statements. b. Auditing standards require auditors to consider materiality in planning the audit. c. The planning level of materiality will normally be the larger of the amount considered for the balance sheet versus the income statement. d. The appropriate financial statement base for computing materiality may vary based on the nature of the client's business.
C
Which portion of an audit is least likely to be completed before the balance sheet date? a. Tests of controls b. Issuance of an engagement letter c. Substantive procedures d. Assessment of control risk
C
a. Classification and understandability b. Completeness c. Existence and occurrence d. Rights and obligations e. Valuation or allocation The client recorded receivables that were fictitious.
C
What would most likely cause a CPA to not accept an auditing engagement?
Client unwilling to make financial records available to CPAs
Auditor review of subsequent period invoices to verify all receivables are recorded is verification of __________ of assets.
Completeness
An audit committee's responsibilities normally would not include: a. discussing the meaning and significance of audited financial statements. b. discussing problems and experience with independent auditors in completing the audit of annual financial statements. c. nominating the independent auditors. d. discussing all details of the audit plans of the independent auditors.
D
As one step in testing sales transactions, a CPA traces a random sample of sales journal entires to debits in the accounts receivable subsidiary ledger. This test provides evidence as to whether: a. Each recorded sale represents a bona fide transaction b. All sales have been recorded in the sales journal c. All debit entries in the accounts receivable subsidiary ledger are properly supported by sales journal entries d. Recorded sales have been properly posted to customer accounts.
D
Hawkins, CPA, requested permission to communicate with the predecessor auditors of a prospective client. The prospective client's refusal to permit this will bear directly on Hawkins' decision concerning the: a. adequacy of the preplanned audit plan. b. ability to establish consistency in application of accounting principles between years. c. apparent scope limitation. d. integrity of management.
D
The audit committee of a company must be made up of: a. Representatives from the client's management, investors, suppliers, and customers b. The audit partner, the CFO, the legal counsel, and at least one outsider c. Representatives of the major equity interests, such as preferred and common stockholders d. Members of the BOD who are not officers or employees
D
The risk that the auditors will conclude, based on substantive procedures, that a material misstatement does not exist in an account balance when, in fact, such misstatement does exist is referred to as: a. Business risk b. Engagement risk c. Control risk d. Detection risk
D
Which of the following is a basic tool used by the auditors to control the audit work and review the progress of the audit? a. Time and expense summary. b. Engagement letter. c. Progress flowchart. d. Audit plan.
D
Which of the following is least likely to be considered a risk assessment procedure in a financial statement audit? a. Analytical procedures. b. Inquiries of management. c. Observation and inspection relating to client activities. d. Tests of controls.
D
Which of the following risk factors indicates an increased risk of misappropriation of assets? a. High turnover of senior management. b. Strained relationships between management and auditors. c. Overly complex organizational structure. d. Lack of mandatory vacations for employees performing key functions.
D
Effect on Risks of Material Misstatement (I/D)? Create a Risk of Fraud (Y/N)? Government regulation and overview of the the banking industry is extensive and effective.
Decrease; No
Effect on Risks of Material Misstatement (I/D)? Create a Risk of Fraud (Y/N)? Management has been receptive to the audit firm's suggestions relating to accounting adjustments.
Decrease; No
Effect on Risks of Material Misstatement (I/D)? Create a Risk of Fraud (Y/N)? The accounting department has experienced little turnover in personnel during the five years a CPA has audited the company.
Decrease; No
Effect on Risks of Material Misstatement (I/D)? Create a Risk of Fraud (Y/N)? The internal auditor reports directly to a minority shareholder, who also acts as chairman of the board's audit committee.
Decrease; No
An audit procedure that serves as a test of controls and a substantive test of the detailed of the transactions that occurred during the year is known as a(n) __________ procedure.
Dual-purpose
a. Classification and understandability b. Completeness c. Existence and occurrence d. Rights and obligations e. Valuation or allocation The client had a significant amount of damaged goods that were presented at cost.
E
Tests of controls are performed to determine whether key controls operate __________.
Effectively
The risk of loss or injury to the auditors' reputation by association with a client that goes bankrupt or one whose management lacks integrity is called __________ risk.
Engagement
Match the audit procedure example to its correct general objective. a. Establish the existence of assets b. Establish that the company has rights to the asset c. Establish completeness of the recorded assets d. Verify the cutoff of transactions e. Determine the appropriate valuation of the assets f. Determine the appropriate financial statement presentation and disclosure of the asset Reviewing subsequent events is an important step.
F
T or F: Analytical procedures are optional procedures that may be useful to the auditors during the risk assessment stage of the audit.
False
T or F: Auditors should never spend more time on an audit than is called for in a conscientiously developed time budget.
False
T or F: CPAs cannot ethically refuse to provide auditing services to any prospective client which the CPAs are competent to audit, if the prospective client is willing to pay the CPAs' standard audit fees.
False
T or F: Substantive procedures are generally completed before the auditors assess control risk.
False
T or F: The more recommendations made in the management letter, the less effort the auditors must devote to substantive procedures.
False
T or F: The substantive procedures portion of the audit plan generally is organized around income statement accounts.
False - balance sheet
Material misstatement of FS by management with the intent to mislead FS users is considered __________ financial reporting.
Fraudulent
Effect on Risks of Material Misstatement (I/D/NE)? During 20X1, a company sold one-half of its controlling interest in another company. The company retained significant influence over that company.
Increase
Effect on Risks of Material Misstatement (I/D/NE)? During December 20X1, a company signed a contract to lease disposal equipment from an entity owned by the CEO's parents. This related-party transaction is not disclosed in the company's notes to the 20X1 FS.
Increase
In using information on statement of cash flows, while obtaining understanding of profitable growing company, which would be ordinarily least surprising for a growing/profitable company?
Negative cash flows from investing
Effect on Risks of Material Misstatement (I/D/NE)? During 20X1, a company increased its casualty insurance coverage on several pieces of sophisticated machinery from historical cost to replacement cost.
No effect
Because documents like checks, shipping documents, and receiving reports are usually _______, it is easier for auditors to verify cutoff.
Numbered
Assertions such as existence or occurrence, rights and obligations, completeness, and cutoff are considered __________ assertions.
Relevant
The final step of an audit is issuing the audit ________.
Report
________assessment procedures are performed when obtaining an understanding of the client.
Risk
Procedures to obtain an understanding of the client and its environment, which are supplemented by further audit procedures are called __________ procedures.
Risk assessment
At the planning stage of an audit, auditors consider materiality to determine the appropriate __________ of their audit.
Scope
The amount appearing as an asset on a financial statement is usually the accumulation of many ________ items.
Smaller
