2 A Planning an Engagement

The permanent file of an auditor's working papers generally would include: (3)

1. bond indenture agreements. 2. lease agreements. 3. a flowchart of internal control.

The permanent file of an auditor's working papers generally would not include:

A working trial balance

Which of the following is required documentation in an audit in accordance with generally accepted auditing standards?

An audit plan setting forth in detail the procedures necessary to accomplish the engagement's objectives

For which of the following engagements is a detailed engagement plan required by the Statements on Standards for Accounting and Review Services (SSARS) or the Auditing Standards (SASs)?

Audit only Not a review or compilation

What is the overall primary objective of developing a detailed audit plan on a financial statement audit?

Design procedures to reduce risk to an acceptably low level.

In addition to descriptions of the nature, timing, and extent of planned risk assessment procedures and planned further audit procedures, which of the following additional pieces of information should be documented in the audit plan?

Other audit procedures to be performed to comply with generally accepted auditing standards

Which of the following best reflects the preferred timing of when planning should occur on a financial statement audit?

Planning is an ongoing activity that occurs throughout the audit process.

An auditor decides to perform substantive tests on a client's property and equipment balance as of an interim date. The auditor has not obtained evidence about the operating effectiveness of relevant controls. What additional work must be performed to extend the audit conclusions from the interim date to the balance sheet date?

Substantive procedures for the period between the interim date and the balance sheet date When substantive procedures are performed at an interim date, the auditor should perform further substantive procedures or substantive procedures combined with tests of controls to cover the remaining period that provide a reasonable basis for extending the audit conclusions from the interim date to the period-end.

Which of the following statements is correct regarding the auditor's responsibility to detect errors and fraud?

The auditor should design the audit to provide reasonable assurance of detecting errors and fraud that are material to the financial statements.

Which of the following terms best describes the interrelationship of the overall audit strategy and the detailed audit plan on a financial statement audit of a nonissuer?

They are interrelated.

A written audit plan is required to be prepared by an auditor for:

every audit. In planning the audit, the auditor should consider the nature, extent, and timing of work to be performed and should prepare a written audit plan to respond to the risk of material misstatement for each relevant assertion for each significant audit area.

In order to respond to the increased risks that could be present in the initial audit of an entity, an external auditor should consider the assignment of:

external audit personnel with appropriate levels of capabilities and competence.

In designing a written audit plan, an auditor should establish specific audit objectives that relate primarily to the:

financial statement assertions.

After obtaining an understanding of the entity and its environment and assessing the risk of material misstatement, an auditor decided to perform tests of controls. The auditor most likely decided that:

it would be efficient to perform tests of controls that would result in a reduction in planned substantive tests.

In establishing the overall audit strategy for an audit of a nonissuer, an auditor should:

plan the timing of the audit and the nature of the communications required based on the engagement's reporting objectives.

Audit plans should be designed so that:

the audit evidence gathered supports the auditor's conclusions.

Audit programs should be designed so that:

the audit evidence gathered supports the auditor's conclusions.

An auditor should design the written audit plan so that:

the audit procedures selected will achieve specific audit objectives.