23 Best Audit Questions and Answers (Q&A) - ProProfs Discuss

How do the tests of controls and substantive tests of transactions affect the tests of details of balances?

John Smith
Answered: Mar 24, 2023

Tests of details of balances are designed to determine the reasonableness of the balances in sales, accounts receivable, and other account balances that are affected by the sales and collection...Read More

3 Answers

2830 views

What major difference between (a) tests of controls and substantive tests of tranactions and (b) tests of details of balances makes attributes sampling inappropriate for tests of details of balances?

John Smith
Answered: Mar 24, 2023

The most important difference between (a) tests of controls and substantive tests of transactions and (b) tests of details of balances is in what the auditor wants to measure. in tests of controls...Read More

1 Answer

1697 views

Why are the proper cutoff of purchases and sales heavily dependent on physical inventory observation? What information should be obtained during the physical count to make sure that cutoff is...

John Smith
Answered: Mar 24, 2023

A proper cutoff of purchases and sales is heavily dependent on the physical inventory observation because a proper cutoff of sales requires that finished goods inventory included in the physical...Read More

1 Answer

1413 views

What is meant by acceptable risk of incorrect acceptance. Also, what are the major audit factors affecting ARIA?

John Smith
Answered: Mar 24, 2023

Acceptable risk of incorrect acceptance (aria) is the risk the auditor is willing to take of accepting a balance as correct when the true misstatement in the balance is greater than tolerable...Read More

1 Answer

917 views

Why it is common for auditors to send confirmation requests with zero balances on the clients accounts payable listing but uncommon to follow the same approach in verifying accounts receivable?

Matz Lewis Clark, College student
Answered: Jan 17, 2019

This type of approach may be considered more conservative but will be absolutely necessary to make sure that people will be paying for the items that they have ordered on time. Accounts payable...Read More

2 Answers

828 views

How would you describe an auditor's responsibility to detect errors, fraud, and illegal acts?

H.Jennifer
Answered: Feb 03, 2018

An audit is an assessment of a business or a company that analyzes the place and assess whether it is functioning at certain standards or not. When it comes to an auditor’s responsibility,...Read More

2 Answers

793 views

What are the major analytical procedures for testing the overall reasonableness of inventory?

John Smith
Answered: Mar 24, 2023

Analytical procedure/type of potential misstatemen. Compare gross margin percentage with previous years. Overstatement or understatement of inventory amounts (prices and/or quantities). Com...Read More

1 Answer

509 views

Can you define monetary unit sampling and explain its importance in auditing?

John Smith
Answered: Mar 24, 2023

Monetary unit sampling is a method whereby the population is defined as the individual dollars (or other currency) making up the account balance. A random sample is drawn of these individual...Read More

1 Answer

438 views

What major considerations sould the auditor take into account in determining how extensive the review of subsequent events should be?

John Smith
Answered: Mar 24, 2023

The major considerations the auditor should take into account in determining how extensive the subsequent events review should be are: the companys financial strength and stability of earnings the...Read More

2 Answers

386 views

Why the emphasis in auditing property, plant and equipment is on the current period acquisitions and disposals rather than on the balances in the account carried forward from the proceeding year?

John Smith
Answered: Mar 24, 2023

The reason for the emphasis on current period acquisitions in auditing property, plant, and equipment is that there is an expectation that permanent assets will be kept and maintained on the records...Read More

1 Answer

368 views

What is the financial systems?

Zidepah
Answered: Mar 24, 2023

Both statements are wrong.

1 Answer

367 views

What does information asymmetry refer to?

L. Brett, Sales Manager
Answered: Jan 03, 2019

Asymmetry often refers to the imbalance of the details and information acquired by the stockholders and the management of the company. There are moments when this occurs because of mismanagement...Read More

3 Answers

309 views

Why is the analysis of differences important in the confirmation of accounts receivable, even if the misstatements in the sample are not material?

John Smith
Answered: Mar 24, 2023

Confirmation of accounts receivable is normally performed on only a sample of the total population. The purpose of the confirmation is to obtain outside verification of the balance of the account...Read More

1 Answer

280 views

What is the difference between Audit and Evaluation?

I. Klose, Accountant
Answered: Jul 05, 2019

Both audits and evaluations are carried out to ensure that there are no financial abnormalities in a financial institution. Evaluation can be performed in any organization. Audit and assessment...Read More

1 Answer

277 views

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