Blog

Compare two evidence collection strategies for a LOW risk client in the acquisition & payment cycle: (Strategy 1) analytical procedures + inquiry with management versus (Strategy 2) inspection of physical items + confirmation with external organizations True or False? Strategy 1 will be cheaper and will be of higher quality compared to Strategy 2. Strategy 2 will be more expensive but will be of lower quality compared to Strategy 1. 

Consider the following situation: The consensus analysts’ forecast for the company’s stock is equal to $5.06 per share. The earnings per share based on the unadjusted trial balance is $5.07. True or False? It is reasonable to expect conflict between management and the auditor about the validity of booking a 0.02 per share income decreasing adjusting entry to correct a detected misstatement.

Assume two situations in which the auditor is trying to determine the appropriate sample size for testing controls.  Situation 1. The expected deviation rate is 0% and the tolerable deviation rate is 2%. Situation 2. The expected deviation rate is 0% and the tolerable deviation rate is 20%.  True or False? Situation 2 will require a larger sample size than Situation 1.

In deciding how to test an assertion for a given account balance in a transaction cycle, PCAOB standards specify that the auditor may only conduct one procedure that is the most applicable.

One of the reasons that the Peregrine Financial fraud remained undiscovered for many years was because the industry regulator had not yet transitioned to requiring electronic bank confirmations.

The Longtop Financial case (Chapter 6) illustrates the generalization that while external confirmations of cash accounts typically yield reliable audit evidence, this is not always the case.  

Compare the following two conclusions based on sampling risks relevant to tests of controls:  Situation 1: The auditor assesses control risk based on sample evidence as LOW, and the actual state of controls is that they are EFFECTIVE. Situation 2: The auditor assesses control risk based on sample evidence as HIGH, and the actual state of controls is that they are INEFFECTIVE. True or False?  Situation 1 will result in an audit that is inefficient while Situation 2 will result in an audit that is ineffective.

Evidence from within the client’s organization (such as the monthly bank reconciliation for a cash account) is considered to be more reliable than evidence from an independent outside source (such as a confirmation obtained directly from the bank).

What blood vessel is the white arrow pointing to? Capture.PNG

Hyperkalemia is a contraindication for which of the following drugs?