Dan, an audit partner assigned to the engagement of Bone Enterprises Inc. is discussing the client’s system of internal control with Mandy, an audit staff associate also assigned to the engagement. As a relatively new auditor, Mandy is struggling to understand the idea of the audit firm using a top-down approach to determine which of the client’s internal controls to test as part of the audit. Which of the following would represent Dan’s best response to this question?

As part of any external audit, auditors gather a variety of evidence to support their findings and conclusions. The evidence collected and documented is stored as part of the auditor’s working papers. Which of the following statements most accurately defines the working papers?

Janice, an audit partner assigned to the engagement of Griffin LLC is discussing internal control with one of the audit staff associates also assigned to this client, Ken. Ken is relatively new to the world of auditing and attestation services, and is keen to learn more about internal controls. Ken asks Janice to explain why systems of internal control include preventive and detective controls. Which of the following responses by Janice would best answer Ken’s question?

Anne, an audit partner assigned to the audit of Fortitude Enterprises, LLC is attempting to explain the importance of segregation of duties to a new auditor. Which of the following would represent the best example of segregation of duties for this firm?

Rodney and Co. CPA Firm is currently conducting the audit of Monington Industries, a large, nationwide client with an extremely decentralized structure. The auditors have noted that both the client’s industry and operations are extremely complex, along with the processes the client uses to transact its business. Based on this information, which of the following choices best describes the procedure the auditors are most likely to use to document their understanding of internal control?

As part of the audit of TableTop LLC, a manufacturer of high-end specialized furniture, the partners of the external auditors, CPI Auditing Inc. are meeting to discuss which audit procedures may be more appropriate in this case. The auditors are interested in learning more about the quantities of materials that go into the products sold by TableTop LLC. A method the auditor could use to achieve this would be to ________.

A major contributor to any firm’s operational and financial success is an effective system of internal control. Controls are often split into IT general controls and IT application controls. Which of the following best describes the difference between these two types of controls?

Compare the advantages and disadvantages of narratives, flowcharts, and internal control questionnaires.

What are the primary procedures auditors use in the fraud risk assessment process?

John and Caroline, two audit staff associates assigned to the audit of King Enterprises are discussing audit risk. As newly-hired employees, both John and Caroline are keen to understand more about this area and how it pertains to their jobs with the firm. Which of the following statements most accurately describes audit risk?