QUESTION: 33 Exam Topic: 1, Volume A

The following is an excerpt from an audit engagement workpaper:
- A Company
- Accounts Receivable
- Date
Objective. To determine if the computer system is correctly recording all accounts receivable transactions.
Procedures: Judgmental selection of a sample of all accounts receivable balances greater than $50,000 for positive confirmation of balances.
Conclusion: Based on the results of testing wherein all but three confirmations were returned, the accounts receivable balance is fairly presented in all material respects.
Which of the following is true regarding the workpaper?

It is not appropriate to judgmentally select a sample when testing accounts receivable.
A conclusion should be reached only for the results of overall testing, not for individual procedures.
The audit procedures used are not consistent with the audit objective.
The format of the workpaper does not conform to the standard format for workpapers.

Answer(s): C

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QUESTION: 34 Exam Topic: 1, Volume A

Which of the following trends found on financial reports would most likely indicate a possible problem?

A material decrease in the receivables turnover.
A material increase in inventory turnover.
A material increase in daily sales compared to total outstanding receivables.
A material increase in the acid-test ratio.

Answer(s): A

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QUESTION: 35 Exam Topic: 1, Volume A

Which of the following situations would best support the decision of a chief audit executive (CAE) to defer follow-up activity at a branch office until the next audit engagement?

An audit of the branch office is routinely scheduled every three years.
On-site follow-up of a remote branch may not be feasible due to travel costs.
Branch office management states that correction of the audit issue may take longer than expected.
The CAE and management agree that the corrective action taken to date is sufficient.

Answer(s): D

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QUESTION: 36 Exam Topic: 1, Volume A

When conducting research, which of the following is most important?

Using computer databases or the Internet to find all relevant sources.
Providing documentation of the reference sources.
Presenting only those facts that support the conclusion.
Presenting all contrary views to balance the opinion.

Answer(s): B

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QUESTION: 33 Exam Topic: 1, Volume A

QUESTION: 34 Exam Topic: 1, Volume A

QUESTION: 35 Exam Topic: 1, Volume A

QUESTION: 36 Exam Topic: 1, Volume A