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CPA Auditing Multiple Choice Questions and Case Study Analysis

Description: This assignment includes multiple choice questions and case studies focused on CPA auditing concepts.

Emma Thompson
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CPA Auditing Multiple Choice Questions and Case Study AnalysisChapter 8 CPA Multiple Choice Questions8-1Which of the following is an effective audit planning procedure that helps prevent misunderstandingsand inefficient use of auditpersonnel?(1) Arrange to make copies, for inclusion in the audit files, of those client supporting documentsexamined by the auditor.(2) Arrange to provide the client with copies of the audit programs to be used during the audit.(3) Arrange a preliminary conference with the client to discuss audit objectives, fees, timing, and otherinformation.(4) Arrange to have the auditor prepare and post any necessary adjusting or reclassification entries priorto the final closing.8-2When auditing related party transactions, an auditor places primary emphasis on(1) Confirming the existence of the related parties.(2) Verifying the valuation of related party transactions.(3) Evaluating the disclosure of the related party transactions.(4) Ascertaining the rights and obligations of the related parties.8-3Which of the following will most likely indicate the existence of related parties?(1) Writing down obsolete inventory prior to year end.(2) Failing to correct weaknesses in the client’s internal control.(3) An unexplained increase in gross margin.(4) Borrowing money at a rate significantly below the market rate.8-4When using the work of a specialist, the auditor may identify and refer to the specialist in the auditor’sreport if the(1) Auditor expresses a qualified opinion as a result of the specialist’s findings.(2) Specialist is not independent of the client.(3) Auditor wishes to indicate a division of responsibility.(4) Specialist’s work provides the auditor greater assurance ofreliability.8-5In assessing whether to accept a client for an audit engagement, a CPA should considerClient Business Risk Acceptable Audit Risk(1) Yes Yes(2) Yes No

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