Auditing and Assurance Training Audit Planning and Procedures 2

Question 1

Tests of controls are performed when the auditor plans to:

Accepted Answer

Rely on the operating effectiveness of controls to reduce substantive testing

Answer

If the auditor intends to rely on controls to reduce the extent of substantive procedures, they must test whether those controls operated effectively during the period.

Question 2

Dual-purpose tests serve what function in an audit?

Accepted Answer

They simultaneously test a control's operating effectiveness and provide substantive evidence

Answer

Dual-purpose tests are designed to achieve two objectives at once — testing whether a control functioned and gathering substantive evidence about a transaction or balance.

Question 3

When assessing fraud risk, AU-C Section 240 requires the audit team to specifically consider the risk of:

Accepted Answer

Management override of controls

Answer

AU-C 240 mandates that auditors always assess management override of controls as a significant fraud risk because management can bypass even well-designed controls.

Question 4

The 'fraud risk triangle' consists of which three elements?

Accepted Answer

Incentive/pressure, opportunity, and rationalization

Answer

The fraud triangle describes the three conditions — pressure (motivation), opportunity (ability to commit fraud), and rationalization (justification) — that typically accompany fraudulent acts.

Question 5

Interim testing refers to audit procedures performed:

Accepted Answer

During the period before the balance sheet date, with a roll-forward to year-end

Answer

Interim testing occurs before year-end to spread audit work, and the auditor then performs roll-forward procedures to bring the evidence up to the balance sheet date.

Auditing and Assurance Training Practice Test

Auditing and Assurance Training Practice Test

Auditing and Assurance Training Audit Planning and Procedures 2