Question 1

Which of the following is not a typical communication between the auditor and the audit committee?

Accepted Answer

A) The auditor should clearly communicate the auditor's responsibility under Generally Accepted Auditing Standards (GAAS). 
B) The auditor should clearly communicate the planned scope of the audit engagement with the audit committee and discuss its adequacy. 
C) The auditor and management should discuss issues related to the retention of both client staff and audit firm staff during the period of audit. 
D) All major accounting disagreements with management,even if eventually resolved,should be discussed with the audit committee. 
A) The auditor should clearly communicate the auditor's responsibility under Generally Accepted Auditing Standards (GAAS). 
B) The auditor should clearly communicate the planned scope of the audit engagement with the audit committee and discuss its adequacy. 
C) The auditor and management should discuss issues related to the retention of both client staff and audit firm staff during the period of audit. 
D) All major accounting disagreements with management,even if eventually resolved,should be discussed with the audit committee.

Question 2

The Public Company Accounting Oversight Board (PCAOB)requires mandatory audit firm rotation after six years,with a cooling off period of four years.

Accepted Answer

A) True 
 B)False

Question 3

Analytical procedures What is the purpose of using analytical review procedures in the final review stages of the audit?

Accepted Answer

Analytical review procedures are require

Question 4

The auditor's report specifically covers the statements and disclosures made by management in the "Management Discussion and Analysis" (MD&A)section of the annual report.

Accepted Answer

A) True 
 B)False

Question 5

It is important that the external auditor have a constructive and detailed dialogue with the audit committee on important aspects of the audit.

Accepted Answer

A) True 
 B)False

Question 6

By performing a final analytical review,the audit firm will identify any unusual,unexpected,or unexplained relationships that should be resolved before the issuance of the audit report.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following parties has the responsibility for designing and maintaining policies and procedures to identify,evaluate,and account for contingencies?

Accepted Answer

A) Management. 
B) The auditor. 
C) The audit committee. 
D) The client's attorney. 
A) Management. 
B) The auditor. 
C) The audit committee. 
D) The client's attorney.

Question 8

After the auditor completes the current audit,an issue of importance for subsequent year audits is mandatory partner rotation.

Accepted Answer

A) True 
 B)False

Question 9

If an auditor becomes aware of violations of the Foreign Corrupt Practices Act of 1977 (FCPA),the auditor should notify the CFO about the violations,their circumstance,and the effect on the financial statements.

Accepted Answer

A) True 
 B)False

Question 10

The auditor is responsible for evaluating the likelihood of a client not being a going concern for the next 12 months.What basis will the auditor use to assess this issue?

Accepted Answer

A) Management integrity. 
B) Control environment. 
C) Absolute assurance. 
D) Substantial doubt. 
A) Management integrity. 
B) Control environment. 
C) Absolute assurance. 
D) Substantial doubt.

Question 11

Which of the following items does the auditor ask the client to send to its legal counsel requesting information about asserted claims?

Accepted Answer

A) A letter of audit inquiry. 
B) A management representation letter. 
C) A management letter. 
D) A loss reserve confirmation. 
A) A letter of audit inquiry. 
B) A management representation letter. 
C) A management letter. 
D) A loss reserve confirmation.

Question 12

All major accounting disagreements with management,even if eventually resolved,should be discussed with the audit committee.

Accepted Answer

A) True 
 B)False

Question 13

The engagement quality review is a risk-based review.

Accepted Answer

A) True 
 B)False

Question 14

Which one of the following is false regarding the adequacy of disclosures in a financial statement audit?

Accepted Answer

A) The auditor should consider matters for disclosure while gathering evidence during the course of the audit,not just at the end of the audit. 
B) One of the key disclosures is a summary of significant accounting policies used by the company. 
C) Disclosures should be limited to only checklist items. 
D) The auditor's report does not specifically cover the statements made by management in the "Management Discussion and Analysis" (MD&
A) section of the annual report. 
A) The auditor should consider matters for disclosure while gathering evidence during the course of the audit,not just at the end of the audit. 
B) One of the key disclosures is a summary of significant accounting policies used by the company. 
C) Disclosures should be limited to only checklist items. 
D) The auditor's report does not specifically cover the statements made by management in the "Management Discussion and Analysis" (MD&
A) section of the annual report.

Question 15

In a quality audit,the auditor will review management's processes for certification to provide reasonable assurance that those processes are adequate and that they can be relied upon.

Accepted Answer

A) True 
 B)False

Question 16

If an audit firm accepts or continues to provide audits to a client firm with ineffective internal controls over financial reporting,the management representation letter will note that an adverse opinion will likely be issued.

Accepted Answer

A) True 
 B)False

Question 17

The primary sourceof evidence concerning contingencies is the client's external attorney.

Accepted Answer

A) True 
 B)False

Question 18

When a subsequent event provides evidence about conditions that existed at the balance sheet date,what is the best course of action for the auditor to follow?

Accepted Answer

A) Assign a specialist. 
B) Ensure that the financial statements are adjusted to reflect the information,including any necessary footnote disclosures. 
C) Shop for an opinion that fits the desired type of event. 
D) Provide management with a new engagement letter to document the terms of the revised arrangement. 
A) Assign a specialist. 
B) Ensure that the financial statements are adjusted to reflect the information,including any necessary footnote disclosures. 
C) Shop for an opinion that fits the desired type of event. 
D) Provide management with a new engagement letter to document the terms of the revised arrangement.

Question 19

An additional procedure related to subsequent events is the reading of the meeting minutes for the board of directors meeting.

Accepted Answer

A) True 
 B)False

Question 20

An audit firm culture that emphasizes "doing the right thing," encourages auditors to deal with difficult issues in a short period of time.

Accepted Answer

A) True 
 B)False

Which of the following is not a typical communication between the auditor and the audit committee?

The Public Company Accounting Oversight Board (PCAOB)requires mandatory audit firm rotation after six years,with a cooling off period of four years.

Analytical procedures What is the purpose of using analytical review procedures in the final review stages of the audit?

The auditor's report specifically covers the statements and disclosures made by management in the "Management Discussion and Analysis" (MD&A)section of the annual report.

It is important that the external auditor have a constructive and detailed dialogue with the audit committee on important aspects of the audit.

By performing a final analytical review,the audit firm will identify any unusual,unexpected,or unexplained relationships that should be resolved before the issuance of the audit report.

Which of the following parties has the responsibility for designing and maintaining policies and procedures to identify,evaluate,and account for contingencies?

After the auditor completes the current audit,an issue of importance for subsequent year audits is mandatory partner rotation.

If an auditor becomes aware of violations of the Foreign Corrupt Practices Act of 1977 (FCPA),the auditor should notify the CFO about the violations,their circumstance,and the effect on the financial statements.

The auditor is responsible for evaluating the likelihood of a client not being a going concern for the next 12 months.What basis will the auditor use to assess this issue?

Which of the following items does the auditor ask the client to send to its legal counsel requesting information about asserted claims?

All major accounting disagreements with management,even if eventually resolved,should be discussed with the audit committee.

The engagement quality review is a risk-based review.

Which one of the following is false regarding the adequacy of disclosures in a financial statement audit?

In a quality audit,the auditor will review management's processes for certification to provide reasonable assurance that those processes are adequate and that they can be relied upon.

If an audit firm accepts or continues to provide audits to a client firm with ineffective internal controls over financial reporting,the management representation letter will note that an adverse opinion will likely be issued.

The primary sourceof evidence concerning contingencies is the client's external attorney.

When a subsequent event provides evidence about conditions that existed at the balance sheet date,what is the best course of action for the auditor to follow?

An additional procedure related to subsequent events is the reading of the meeting minutes for the board of directors meeting.

An audit firm culture that emphasizes "doing the right thing," encourages auditors to deal with difficult issues in a short period of time.

Auditing: Integral to the Economy

The Risk of Fraud and Mechanisms to Address Fraud: Regulation,corporate Governance,and Audit Quality

Internal Control Over Financial Reporting: Managements Responsibilities and Importance to the External Auditors

Professional Liability and the Need for Quality Auditor Judgments and Ethical Decisions

Professional Auditing Standards and the Audit Opinion Formulation Process

A Framework for Audit Evidence

Planning the Audit: Identifying and Responding to the Risks of Material Misstatement

Specialized Audit Tools: Sampling and Generalized Audit Software

Auditing the Revenue Cycle

Auditing Cash and Marketable Securities

Auditing Inventory, goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, use, impairment, and Disposal

Auditing Debt Obligations and Stockholders Equity Transactions

Audit Reports on Financial Statements

Advanced Topics Concerning Complex Auditing Judgments

Other Services Provided by Audit Firms

Filters

Exam 14: Activities Required in Completing a Quality Audit

Which of the following is not a typical communication between the auditor and the audit committee?

The Public Company Accounting Oversight Board (PCAOB)requires mandatory audit firm rotation after six years,with a cooling off period of four years.

Analytical procedures What is the purpose of using analytical review procedures in the final review stages of the audit?

The auditor's report specifically covers the statements and disclosures made by management in the "Management Discussion and Analysis" (MD&A)section of the annual report.

It is important that the external auditor have a constructive and detailed dialogue with the audit committee on important aspects of the audit.

By performing a final analytical review,the audit firm will identify any unusual,unexpected,or unexplained relationships that should be resolved before the issuance of the audit report.

Which of the following parties has the responsibility for designing and maintaining policies and procedures to identify,evaluate,and account for contingencies?

After the auditor completes the current audit,an issue of importance for subsequent year audits is mandatory partner rotation.

If an auditor becomes aware of violations of the Foreign Corrupt Practices Act of 1977 (FCPA),the auditor should notify the CFO about the violations,their circumstance,and the effect on the financial statements.

The auditor is responsible for evaluating the likelihood of a client not being a going concern for the next 12 months.What basis will the auditor use to assess this issue?

Which of the following items does the auditor ask the client to send to its legal counsel requesting information about asserted claims?

All major accounting disagreements with management,even if eventually resolved,should be discussed with the audit committee.

The engagement quality review is a risk-based review.

Which one of the following is false regarding the adequacy of disclosures in a financial statement audit?

In a quality audit,the auditor will review management's processes for certification to provide reasonable assurance that those processes are adequate and that they can be relied upon.

If an audit firm accepts or continues to provide audits to a client firm with ineffective internal controls over financial reporting,the management representation letter will note that an adverse opinion will likely be issued.

The primary sourceof evidence concerning contingencies is the client's external attorney.

When a subsequent event provides evidence about conditions that existed at the balance sheet date,what is the best course of action for the auditor to follow?

An additional procedure related to subsequent events is the reading of the meeting minutes for the board of directors meeting.

An audit firm culture that emphasizes "doing the right thing," encourages auditors to deal with difficult issues in a short period of time.

Auditing: Integral to the Economy

The Risk of Fraud and Mechanisms to Address Fraud: Regulation,corporate Governance,and Audit Quality

Internal Control Over Financial Reporting: Managements Responsibilities and Importance to the External Auditors

Professional Liability and the Need for Quality Auditor Judgments and Ethical Decisions

Professional Auditing Standards and the Audit Opinion Formulation Process

A Framework for Audit Evidence

Planning the Audit: Identifying and Responding to the Risks of Material Misstatement

Specialized Audit Tools: Sampling and Generalized Audit Software

Auditing the Revenue Cycle

Auditing Cash and Marketable Securities

Auditing Inventory, goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, use, impairment, and Disposal

Auditing Debt Obligations and Stockholders Equity Transactions

Audit Reports on Financial Statements

Advanced Topics Concerning Complex Auditing Judgments

Other Services Provided by Audit Firms

Filters