On-Line Quiz 1

The following are paths of a typical audit for a company with a fiscal year-end of
July 31.
1. Understand internal control and assess control risk.
2. Perform analytical procedures for accounts payable.
3. Confirm accounts payable.
4. Perform tests of controls and substantive tests of transactions for the
acquisition and payment and payroll and personnel cycles.
5. Perform other tests of details of balances for accounts payable.
6. Perform tests for review of subsequent events.
7. Accept the client.
8. Issue the audit report.
9. Set acceptable audit risk and decide preliminary judgment about materiality
and performance materiality.
Required:
a. Identify the phase of the audit in which each activity occurs.
b. Put parts 1 through 9 of the audit in the sequential order in which you will
expect them to be performed in a typical audit.
c. Identify those parts that will frequently be done before July 31.
ANSWER:
1. Identify the phase of the audit in which each activity occurs.
a. Understanding client and its environment phase
- Understand internal control and assess control risk
b. Pre-planning phase
- Accept the client.
c. Planning Phase
- Perform analytical procedures for accounts payable
- Set acceptable audit risk and decide preliminary judgment about
materiality and performance materiality.
d. Executing the plan phase
- Confirm accounts payable
- Perform tests of controls and substantive tests of transactions for the
acquisition and payment and payroll and personnel cycles
- Perform other tests of details of balances for accounts payable

e. Completion of Audit Phase

- Perform tests for review of subsequent events
f. Issuance of audit report phase
- Issue the audit report
2. Put parts 1 through 9 of the audit in the sequential order in which you will
expect them to be performed in a typical audit.
1. Accept the client.
2. Understand internal control and assess control risk.
3. Set acceptable audit risk and decide preliminary judgment about
materiality and performance materiality.
4. Perform analytical procedures for accounts payable.
5. Perform tests of controls and substantive tests of transactions for the
acquisition and payment and payroll and personnel cycles.
6. Confirm accounts payable.
7. Perform other tests of details of balances for accounts payable.
8. Perform tests for review of subsequent events.
9. Issue the audit report
3. Identify those parts that will frequently be done before July 31.
- Accepting the client
- Set acceptable audit risk and decide preliminary judgment about
materiality and performance materiality
- Understand internal control and assess control risk
Perform tests of controls and substantive tests of transactions for the
acquisition and payment and payroll and personnel cycles