CFC Audit Coordination & Preparation 5

Question 1

Which audit standard governs the auditor's use of the work of an internal audit function for external audit purposes?

Accepted Answer

AS 2605 (Using the Work of Internal Auditors)

Answer

AS 2605 provides guidance on how external auditors can use internal audit work, requiring assessment of internal audit competence and objectivity.

Question 2

A financial controller notices that the external auditor's sample size for accounts payable testing seems unusually small. The MOST appropriate response is to:

Accepted Answer

Inquire whether the sample size is sufficient given the assessed risk and account balance

Answer

Controllers can professionally question audit methodology when it appears inconsistent with the risk profile, ensuring audit quality without compromising auditor independence.

Question 3

What is the PURPOSE of an audit readiness assessment conducted several months before year-end?

Accepted Answer

To identify and remediate control gaps before auditors arrive, reducing audit risk and time

Answer

An audit readiness assessment proactively identifies weaknesses in controls, documentation, and processes so they can be corrected before external audit fieldwork begins.

Question 4

When auditors perform a walkthrough of a business process, what are they PRIMARILY evaluating?

Accepted Answer

Whether employees are following the documented process and controls as described

Answer

Walkthroughs confirm that controls operate as described in process documentation by tracing one or more transactions through the entire process from initiation to recording.

Question 5

Which of the following BEST describes the concept of tolerable misstatement in the context of audit planning?

Accepted Answer

The maximum misstatement that can exist without affecting the auditor's opinion

Answer

Tolerable misstatement is an amount set below overall materiality that allows the auditor to conclude that misstatements in an account or class will not exceed overall materiality in aggregate.

(CFC) Certified Financial Controller Practice Test

(CFC) Certified Financial Controller Practice Test

CFC Audit Coordination & Preparation 5