Auditing Daily Practice - 2020 CPA Title Exam

1. (Multiple Choice) If the CPA performs control testing during the period and obtains audit evidence of the effectiveness of the controls operating during the period, the following statements are correct ( ). (Chapter 8. Risk Response)

A. If the performance of substantive procedures at the end of the period does not reveal a misstatement in a determination, it means that the control related to the determination is effective and there is no need to test the related control again

B. If a control changes during the remainder of the period, the results of the mid-period test do not need to be taken into account in evaluating the effectiveness of the control's operation during the entire period

C . . Audit evidence of the operating effectiveness of controls during the remaining period can be obtained by testing the effectiveness of general controls over the information system for certain controls that are operated automatically

D. If a control does not change during the remaining period, there is no need to supplement the audit evidence of the operating effectiveness of the control during the remainder of the period

2. (Single-choice questions) In determining the timing of substantive procedures, the following statements are is correct ( ). (Chapter 8. Risk Response)

A. There is no need to consider internal control

B. The higher the assessed risk of material misstatement of a determination, and the higher the relevance and reliability requirements for audit evidence to be obtained in response to that determination, the more the CPA should consider focusing substantive procedures on the mid-period period

C. If it is proposed that the conclusions drawn from the mid-period tests be extended to the end of the period, the CPA should consider focusing substantive procedures on the mid-period period. C. If the conclusions from the interim tests are to be extended to the end of the period, the CPA should consider whether it is sufficient to perform only substantive procedures for the remainder of the period

D. Audit evidence obtained by performing substantive procedures in previous audits is usually highly probative for the current period as well

3. (Multiple Choice) If there are deficiencies in the control environment, the CPA should not consider what ( ) should be considered as general modifications to the nature, timing, and extent of the audit procedures to be performed. should not consider is ( ). (Chapter 8. Risk Response)

A. Increasing the number of operating locations to be included in the scope of the audit

B. Obtaining a broader range of audit evidence by performing substantive procedures

C. Obtaining a broader range of audit evidence by performing tests of control

D. Performing more audit procedures at the end of the period rather than at mid-period

4. (Multiple Choice Questions) Typically , the CPA may use a combination of testing the effectiveness of control operations and substantive procedures to design further audit procedures for cost-effectiveness reasons ( ). (Chapter 8. Risk Response)

A. Risk Assessment Procedures

B. Substantive Procedures

C. Integrated Programs

D. Substantive Programs

5. (Multiple Choice) The following statements about the nature of control testing determined by the CPA are incorrect ( ). (Chapter 8. Risk Response)

A. The CPA should select the type of audit procedures to be performed based on the nature of the particular control

B. Even if documentation reflecting the operating effectiveness of the control does not exist for certain controls, the CPA may still obtain audit evidence regarding the operating effectiveness of the control

C. In designing control tests, the CPA should consider only those controls that are directly related to the determination of the D. For automated application controls, the CPA can use audit evidence that the control was implemented and audit evidence that the general control is operating effectively as evidence that the control is operating effectively

Reference Answers and Explanations

1. Detailed Explanation:If the implementation of substantive procedures at the end of the period does not reveal that a determination is misstated, it does not indicate that the control is effective, option A is incorrect; if a control changes during the remaining period, the CPA needs to understand and test the impact of the change in control on the mid-period audit evidence, option B is incorrect; the control does not change during the remaining period, but the CPA is testing the control for the entire period, so it is important to obtain additional audit evidence for the remaining period, option D is wrong.

2. Reference Answer:C

Topic Explanation:The weaker the control environment and other relevant controls, the more inappropriate for the CPA to implement substantive procedures in the mid-period, can be seen in determining the timing of substantive procedures need to take into account the situation of the internal control, Option A is incorrect; assessed the risk of material misstatement of a determination of the higher the relevance and reliability of audit evidence required to be obtained in respect of the determination, the higher, option A is incorrect; assessed the risk of material misstatement of a determination of a determination of a determination of a higher relevance and reliability requirements are also higher, option B is incorrect. The higher the assessed risk of material misstatement of a determination, the higher the requirement for the relevance and reliability of the audit evidence to be obtained for the determination, the more the CPA should consider focusing the substantive procedures to be performed at the end of the period, Option B is incorrect; in previous audits to implement the substantive procedures to obtain the audit evidence, usually for the current period of only weak evidence of validity or no evidence of validity, is not sufficient to deal with the risk of material misstatement of the current period, Option D is incorrect.

3. Reference Answer:C

Topic Details:If there are deficiencies in the control environment, the CPA should consider making general modifications to the nature, timing, and extent of the audit procedures to be performed:

(1) Perform more audit procedures at the end of the period rather than mid-period. Deficiencies in the control environment typically diminish the trustworthiness of audit evidence obtained mid-period (Option D).

(2) Obtain a broader range of audit evidence by performing substantive procedures. A good control environment is the basis on which other control elements function. Weaknesses in the control environment usually weaken the other control elements, resulting in the CPA may not be able to rely on internal control, and rely primarily on the implementation of substantive procedures to obtain audit evidence (Option B).

(3) Increase the number of operating locations to be included in the audit scope (Option A).

4. Reference Answer:C

Topic Details:Usually, the CPA can use a comprehensive program to design further audit procedures for cost-effectiveness, i.e., to test the effectiveness of control operations in conjunction with substantive procedures.

5. Answer:C

Topic:The CPA should also consider the controls that are indirectly related to the determination on which those controls depend.