An auditor most likely would perform substantive tests of details on payroll transactions when:

Audit procedures that center on observation and inspection include all of the following except:

evaluating whether the financial statements as a whole are presented fairly, in all material respects, in conformity with generally accepted accounting principles.

Reports that could be read to support inquiries of management include which of the following? I. Quarterly management report II. Interim financial reports III. Board of directors meeting minutes IV. New-hire training materials prepared by HR

An auditor generally tests the segregation of duties related to inventory by:

personal inquiry and observation.

In performing a count of negotiable securities, an auditor records the details of the count on a security count worksheet. What other information is usually included on this worksheet?

An acknowledgment by a client representative that the securities were returned intact

In testing plant and equipment balances, an auditor may inspect new additions listed on the analysis of plant and equipment. This procedure is designed to obtain evidence concerning management's assertions of: I. presentation and disclosure. II. existence or occurrence.

In testing for unrecorded retirements of equipment, an auditor most likely would:

select items of equipment from the accounting records and then locate them during the plant tour.

In performing a search for unrecorded retirements of fixed assets, an auditor most likely would:

inspect the property ledger and the insurance and tax records and then tour the client's facilities.

Which of the following is an engagement attribute for an audit of an entity that processes most of its financial data in electronic form without any paper documentation?

Performance of audit tests on a continual basis

Which of the following characteristics most likely would be indicative of check kiting?

Low average balance compared to high level of deposits

Which of the following fraudulent activities most likely could be perpetrated due to the lack of effective internal controls in the revenue cycle?

Authorization of credit memos by personnel who receive cash may permit the misappropriation of cash.

In determining the effectiveness of an entity's policies and procedures relating to the existence assertion for payroll transactions, an auditor most likely would inquire about and:

observe the segregation of duties concerning personnel responsibilities and payroll disbursement.

A weakness in internal control over recording retirements of equipment may cause an auditor to:

select certain items of equipment from the accounting records and locate them in the plant.

Which of the following controls would an entity most likely use to assist in satisfying the completeness assertion related to long-term investments?

The internal auditor compares the securities in the bank safe-deposit box with recorded investments.

An auditor most likely would perform substantive tests of details on payroll transactions when:

analytical procedures indicate unusual fluctuations in recurring payroll entries.

In auditing long-term bonds payable, an auditor most likely would:

compare interest expense with the bond payable amount for reasonableness.

Regardless of the assessed risk of material misstatement, an auditor would perform:

substantive tests to restrict detection risk for significant transaction classes.

In determining whether transactions have been recorded, the direction of the audit testing should be from the:

original source documents.

AU-C 501, Audit Evidence—Specific Considerations to Selected Items, states that the procedures an auditor performs to obtain evidence about the existence, ownership, and completeness of investments will vary depending on: I. type of investments involved. II. auditor's assessment of audit risk.

In accordance with the AICPA Audit Guide: Special Considerations in Auditing Financial Instruments. a primary consideration in determining the appropriate classification of investments depends on:

management's intent in purchasing and holding the investments.

Which of the following questions would an auditor least likely include on an internal control questionnaire concerning the initiation and execution of equipment transactions?

Are procedures in place to monitor and properly restrict access to equipment?

To provide assurance that each voucher is submitted and paid only once, an auditor most likely would examine a sample of paid vouchers and determine whether each voucher is:

stamped “paid” by the check signer.

After accounting for a sequence of inventory tags, an auditor traces a sample of tags to the physical inventory listing to obtain evidence that all items:

represented by inventory tags are included in the listing.

While observing a client's annual physical inventory, an auditor recorded test counts for several items and noticed that certain test counts were higher than the recorded quantities in the client's perpetual records. This situation could be the result of the client's failure to record:

To gain assurances that all inventory items in a client's inventory listing schedule are valid, an auditor most likely would trace:

items listed in the inventory listing schedule to inventory tags and the auditor's recorded count sheets.

In auditing a manufacturing entity, which of the following procedures would an auditor least likely perform to determine whether slow-moving, defective, and obsolete items included in inventory are properly identified?

Test the computation of standard overhead rates.

The most reliable procedure for an auditor to use to test the existence of a client's inventory at an outside location would be to:

observe physical counts of the inventory items

The auditor's inventory observation test counts are traced to the client's inventory listing to test for which of the following financial statement assertions?

Under which of the following conditions may an auditor's observation procedure for inventory be performed during or after the end of the period under audit?

When well-kept perpetual inventory records are checked by the client periodically by comparisons with physical counts

As part of the process of observing a client's physical inventories, an auditor should be alert to:

the inclusion of any obsolete or damaged goods.

A CPA had the management of Paper Plate Corp. prepare a letter requesting Paper Plate's external counsel to identify any pending and/or unasserted claims against Paper Plate. The CPA received a letter from the external counsel with the following response: "We are only aware of the following: Paper Plate was named as the defendant in a class action lawsuit for an alleged defective product manufactured two years ago. There is a remote possibility that Paper Plate will suffer any damages, because this firm has successfully defended similar cases in the past. However, similar cases that have been brought against competitors were settled between $1.5 and $2 million." Should the CPA accept the letter from the external counsel?

Yes, even though the CPA did not get a specific amount of loss