Which of the following engagement planning procedures would most likely assist the auditor in identifying related-party transactions before the balance-sheet date?
a. inspecting communications with the client's legal counsel regarding recorded contingent liabilities
b. scanning the minutes for significant transactions with members of the board of directors
c. reviewing accounting records for recurring transactions occurring near year-end
d. interviewing internal auditors about their reporting responsibilities
Answer: b. scanning the minutes for significant transactions with members of the board of directors
Spreadsheet software would be most useful for which of the following audit activities?
a. drafting a planning memorandum
b. preparing a comparison of current-year expenses with those from the previous year
c. preparing an audit plan
d. testing internal controls over computerised accounting applications
Answer: b. preparing a comparison of current-year expenses with those from the previous year
Which of the following is an advantage of computer-assisted audit techniques (CAATs)?
a. the use of CAATs can be substituted for a relatively large part of the required testing
b. the software can be used for audits of clients that use differing computer equipment and file formats
c. the use of CAATs has reduced the need for the auditor to study input controls for computer-related procedures
d. the CAATs programs are well written in one computer language
Answer: b. the software can be used for audits of clients that use differing computer equipment and file formats
