Which of the following would most likely not be considered an inherent limitation of the potential effectiveness of an entities internal control?

A. Incompatible Duties

B. Management Override

C. Mistakes of Judgement

D. Collusion among Employees

A document in the auditor's working papers includes the following statement:  "Our audit is subject to the inherent risk that material errors and fraud, including defalcations, if they exist, will not be detected.  However, we will inform you of fraud that comes to our attention, unless it is inconsequential."

The above passage is most likely from a:

The acceptable level of detection risk is inversely related to the...

A. Assurance provided by substantitive testing

B. Risk of misapplication of audit procedures

C. Preliminary judgment about materiality levels

D. Risk of failing to discover material misstatements

Which of the following procedures would an auditor most likely perform in the initial planning phases of a financial statement audit?

A. Obtaining a written representation letter from the client's management.

B. Examining documents to detect illegal acts having a material effect on the financial statements.

C. Considering whether the client's accounting estimates are reasonable in the circumstances.

D. Determining the extent of involvement of the client's internal auditors.

During the initial planning phase of an audit, a CPA most likely would:

A. Identify specific internal control activities that are likely to prevent fraud.

B. Evaluate the reasonableness of the client's accounting estimates.

C. Discuss the timing of the audit procedure with the client's management.

D. Inquire of the client's attorney as to whether any unrecorded claims are probable of assertion.

A CPA firm evaluates its personnel advancement experience to ascertain whether individuals meeting stated criteria are assigned increased degrees of responsibility.  This is evidence of the firm's adherence to whic of the following prescribed standards?

A. Quality Control

B. Human Resources

C. Acceptance and continuance of clients

D. Independence.

A successor auditor most likley would make specific inquiries of the predecessor auditor regarding:

A. Specialized accounting principles of the client's industry

B. The competency of the client's internal audit staff

C. The uncertainty inherent in applying sampling procedures.

D. Disagreements with management as to auditing procedures.

The third general standard states that due professional care must be exercised in the performance of an audit and the prepatarion of th report.  This standard is ordinarily interpreted to require:

A. Through review of the existing safeguards over access

to assets and record.

B. Limited review of the indications of employee fraud and illegal acts.

C. Objective review of the adequacy of the technical training and proficiency of firm personnel.

D. Critical review of the jedgment exercised at every level of supervision.

D. Critical review of the judgment exercised at every level of supervision.

Which of the following auditor concerns most likely could be so serious that the auditor that the auditor concludes that a financial statement audit cannot be conducted?

A. The entity has no formal code of conduct

B. The integrity of the entity's management is suspect

C. Procedures requiring segregation of duties are subjec to management override.

D. Management fails to modify prescribed controls for changes in conditions

Audit evidence concerning segregation of duties ordinarily is best obtained by:

A. Performing tests of transactions that corroborate management's financial statement assertions.

B. Observing the employees as they apply control procedures.

C. Obtaining a flowchart of activities performed by available personnel

D. Developing audit objectives that reduce control risk

Which of the following controls most likely would be effective in offsetting the tendency of sales personnel to maximize sales volume at the expense of high bad debt write-off?

A. Employee resonsible for authorizing sales and bad debt write-offs are denied access to cash.

B. Shipping documents and sales invoices are matched by an employee who does not have authority to write off bad debt.

C. Employees involved in the credit-granting function are separated from the sales function.

D. Subsidiary accounts receivable records are reconciled to the control account by an employee independent of the authorization of credit.