Which Of The Following Approaches Is Most Suitable For Auditing The Finance And Investment Cycle?

Similarly, What are the approaches of auditing?

The substantive processes approach, the balance sheet method, the systems-based approach, and the risk-based approach are the four basic audit approaches. This is also known as the direct verification strategy or the vouching approach.

Also, it is asked, Which of the following is most likely to be an audit objective in the audit of owner’s equity?

In an audit of owners’ equity, which of the following is most likely to be an audit objective? Ascertain that all long-term loan and equity amounts are included in the reported owners’ equity. Determine the current market value of a common stock.

Secondly, Which of the following controls would be most effective in assuring that the proper custody of assets in the investing cycle is maintained?

Independently reconciling reported balances in the investment subsidiary ledger with actual assets per the safe deposit box is one of the most effective controls for insuring correct custody of securities.

Also, What does the term cycle approach to auditing mean?

The cycle approach is a strategy of splitting the audit into cycles that comprise closely related categories of activities and account balances. The sales and collection cycle includes transactions like as sales, sales returns, and cash receipts, as well as the A/R balance.

People also ask, What is the best audit approach?

The most common method is risk-based. The goal is to decrease audit risks and concentrate on fewer projects. Risk assessments are required by auditors to ensure that all potential risks of misstatement are detected. Understanding the client’s company, environment, and internal control is key to a risk-based approach’s success.

Related Questions and Answers

What is the mostly used approach in external audit?

Risk-based Audit Strategy: The risk-based audit approach is probably the one you’ve heard about the most, and it’s also the one you’ve seen used the most.

Which of the following most likely would approve the issuance of notes payable?

Which of the following would most likely authorize the issuing of payable notes? Treasurer. Internal bond payable control is more effective when: A bond trustee is employed by the corporation.

Which audit technique is most closely connected to management’s allegation about liability presentation? Restrictive covenants are being examined in lending contracts.

disclosure and presentation The minutes of board of directors meetings are frequently reviewed by an auditor to acquire proof of shareholders’ equity transactions.

Which of the following controls would a company most likely use to safeguard marketable securities when an independent trust agent is not employed?

The best choice is (b). If an independent trust agent is not hired, the corporation will most likely rely on two corporate officers with shared authority. See the whole response below.

Which of the following controls is most effective in providing assurance that recorded purchases are free of material errors?

Which of the following controls is the most successful at ensuring that recorded purchases are error-free? In order to prepare vouchers, purchase orders, receiving reports, and vendor invoices are all separately matched.

Which management assertion is of most importance to auditors in examining long term debt?

-Occurrence, authorisation, completeness, value, and categorization are the most essential statements to the auditor for long-term debt.

Which auditing phase is the most important?

phase of planning

What is the audit process step by step?

Process of Auditing The first step is to plan. Prior audits in your region, as well as professional literature, will be reviewed by the auditor. The second step is to send out a notification. Step 3: Hold a first meeting. Step 4: Go out onto the field. Step 5: Write a report. Step 6: Management’s Reaction Step 7: Hold a wrap-up meeting. Step 8: Distribute the final audit report.

What are the 5 stages of an audit?

Internal audit performs assurance audits using a five-phase procedure that comprises selection, planning, fieldwork, reporting, and corrective action plan implementation.

What is combined approach audit?

A blended strategy that includes both control tests and substantive processes is beneficial. The auditor must create and conduct substantial processes for each significant class of transactions, account balance, and disclosure, regardless of the technique used.

What are two types of auditing methods?

External audits, internal audits, and Internal Revenue Service (IRS) audits are the three basic kinds of audits. Certified Public Accounting (CPA) firms often conduct external audits, which result in an auditor’s opinion that is included in the audit report.

What is the approach of an internal audit?

Internal Auditing: A Definition It assists a company in achieving its goals by using a systematic, disciplined approach to evaluating and improving the efficacy of risk management, control, and governance systems.

What is involved in an external audit?

An external auditor is a third-party specialist who conducts an unbiased evaluation of a company’s financial records. He or she usually reports to a company’s audit committee, which is made up of executives. He’s in charge of looking over payroll, bookkeeping, and buying records.

What are external audits used for?

The job of an external auditor, according to the Association of Certified Fraud Examiners, is to “inspect clients’ accounting records and offer a judgment as to whether financial statements are presented honestly in compliance with the entity’s relevant accounting standards.

What are the types of external audit?

Financial statement audits, operational audits, and compliance audits are all common kinds of audits performed by external auditors. A financial statement audit (also known as an attest audit) checks financial statements, records, and associated activities for compliance with generally accepted accounting standards.

Which of the following would most likely be an appropriate addressee for an audit report?

Which of the following is the most probable recipient of an audit report’s addressee? The company’s stockholders, whose financial accounts were scrutinized. In an audit report, the word “except for” means: In a qualified view, this term is used.

Which procedure is an auditor most likely to use to detect a check outstanding at year end that was not recorded as outstanding on the year end bank reconciliation?

Which approach is most likely to be used by an auditor to discover a check that was outstanding at year’s end but was not noted as such on the year’s end bank reconciliation? Directly from the client’s bank, get a cutoff statement.

Which of the following is the best reason why the auditors should consider observing a client’s distribution of regular payroll checks?

Which of the following is the most compelling reason for auditors to observe a client’s routine payroll check distribution? For efficient internal control, the separation of payroll functions is insufficient.

Which of the following is most likely to be an audit objective in the audit of owners equity?

In an audit of owners’ equity, which of the following is most likely to be an audit objective? Ascertain that all long-term loan and equity amounts are included in the reported owners’ equity. Determine the current market value of a common stock.

Which of the following procedures would an auditor most likely perform prior to balance sheet date?

Which of the following processes is most likely to be performed by an auditor prior to the balance sheet date? Significant travel and entertainment costs may be audited throughout a period of time, with processes applied to transactions that occur between the testing and the conclusion of the period, if needed.

When auditing contingent liabilities which of the following procedures would be least effective?

Which of the following approaches would be the least successful for auditing contingent liabilities? Examining confirmation responses from customers.

Which of the following choices is most important for an is auditor to understand when auditing an e commerce environment?

When auditing an e-commerce environment, which of the following is the MOST necessary for an IS auditor to understand? The type and importance of the business process that the application supports.

Which of the following types of audit evidence is the most persuasive?

Which of the following audit evidence kinds is the most convincing? The client’s bank statements were retrieved.

When auditing a private company the auditor should obtain an understanding of internal control sufficient to?

27. The auditor must obtain sufficient competent evidence about the design and operating effectiveness of controls over all relevant financial statement assertions related to all significant accounts and disclosures in the financial statements during an audit of internal control over financial reporting.

Which of the following controls would a company most likely use to safeguard marketable?

Which of the following controls would a company most likely adopt to protect marketable securities against loss? – Using an independent trust firm to retain the securities is the greatest precaution against the loss of the securities among the options given.

Conclusion

The “which of the following is not an estimate required in the finance and investment cycle?” is a question that has been asked many times. The answer to this question is “none.”

This Video Should Help:

The “an audit team would most likely verify the interest earned on bond investments by” is an approach that a financial auditor might take.

  • an audit plan to examine long-term debt most likely would include steps that require
  • estimates in the finance and investment cycle include
  • which of the following is not a primary objective in the audit of interest-bearing debt
  • which of the following procedures is least likely in the audit of capital stock?
  • when auditing the market value of an investment, an auditor would be least likely to:
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