Question 1

When fraud is discovered, _______.

Accepted Answer

A) auditors should immediately contact the Securities and Exchange Commission (SE
C)  
B) auditors should determine the amounts involved, and then decide whether to report the fraud to management 
C) auditors gather sufficient appropriate evidence to support their conclusion 
D) the matter should immediately be referred to the internal audit function 
A) auditors should immediately contact the Securities and Exchange Commission (SE
C)  
B) auditors should determine the amounts involved, and then decide whether to report the fraud to management 
C) auditors gather sufficient appropriate evidence to support their conclusion 
D) the matter should immediately be referred to the internal audit function

Question 2

Marcella Good is the audit manager on the Green Tree Landscaping audit.Management has refused to sign the management representation letter.Draft a short letter to the Green Tree management explaining the purpose of the management representation letter and the ramifications of refusing to sign the letter.

Accepted Answer

Student answers will vary but should cov

Question 3

A form 8-K is used _______.

Accepted Answer

A) to file a company's audited financial statements 
B) for management to report a change of auditors, and the reason for the change 
C) for management to report a change of internal auditors, and the reason for the change 
D) to disclose fraudulent transactions that have occurred within a company to the Securities and Exchange Commission (SE
C)  
A) to file a company's audited financial statements 
B) for management to report a change of auditors, and the reason for the change 
C) for management to report a change of internal auditors, and the reason for the change 
D) to disclose fraudulent transactions that have occurred within a company to the Securities and Exchange Commission (SE
C)

Question 4

The management representation letter _______.

Accepted Answer

A) can sometimes be used as a substitute for the gathering of audit evidence 
B) is not a substitute for obtaining sufficient, appropriate evidence regarding the financial statements through other audit procedures 
C) can replace analytical procedures conducted as part of the audit, but cannot replace the audit of internal control 
D) can replace the audit of internal control conducted as part of the audit, but cannot replace the analytical procedures 
A) can sometimes be used as a substitute for the gathering of audit evidence 
B) is not a substitute for obtaining sufficient, appropriate evidence regarding the financial statements through other audit procedures 
C) can replace analytical procedures conducted as part of the audit, but cannot replace the audit of internal control 
D) can replace the audit of internal control conducted as part of the audit, but cannot replace the analytical procedures

Question 5

The individual responsible for the audit engagement, its performance, and for the auditor's report that is issued on behalf the firm is _______.

Accepted Answer

A) the senior audit manager 
B) the audit partner 
C) the Chief Executive Officer (CEO) of the client firm 
D) the Chief Financial Officer (CFO) of the client firm 
A) the senior audit manager 
B) the audit partner 
C) the Chief Executive Officer (CEO) of the client firm 
D) the Chief Financial Officer (CFO) of the client firm

Question 6

At the end of the audit, which of the following is NOT reevaluated by the auditors?

Accepted Answer

A) Misstatements found during the audit 
B) Materiality decisions made during the audit 
C) Inherent risk based on audit findings 
D) Fraud risk based on audit findings 
A) Misstatements found during the audit 
B) Materiality decisions made during the audit 
C) Inherent risk based on audit findings 
D) Fraud risk based on audit findings

Question 7

The nature of the critical accounting estimates is _______ due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change.

Accepted Answer

The answer of The nature of the critical accounting estimates...

Question 8

Explain briefly auditors' responsibility for subsequent discovery of facts existing at the date of the auditors' reports.

Accepted Answer

If auditors become aware of facts that e

Question 9

Governance structures will _______.

Accepted Answer

A) typically be the same for each client 
B) typically be the same within an industry 
C) typically vary by client 
D) be determined by auditor recommendations 
A) typically be the same for each client 
B) typically be the same within an industry 
C) typically vary by client 
D) be determined by auditor recommendations

Question 10

Analytical procedures during risk assessment of a going concern _______.

Accepted Answer

A) May identify negative trends such as working capital deficiencies, adverse key financial ratios, and decreasing cash flow from operations 
B) May identify positive trends such as working capital deficiencies, adverse key financial ratios, and decreasing cash flow from operations 
C) May identify only external matters that have occurred such as loss of a key franchise, loss of a principal customer, or work stoppages due to natural disaster 
D) May identify internal matters that have occurred such as legal proceedings 
A) May identify negative trends such as working capital deficiencies, adverse key financial ratios, and decreasing cash flow from operations 
B) May identify positive trends such as working capital deficiencies, adverse key financial ratios, and decreasing cash flow from operations 
C) May identify only external matters that have occurred such as loss of a key franchise, loss of a principal customer, or work stoppages due to natural disaster 
D) May identify internal matters that have occurred such as legal proceedings

Question 11

A Type II subsequent event _______.

Accepted Answer

A) provides evidence of conditions that arose after the date of the financial statements 
B) provides evidence of conditions that arose before the date of the financial statements 
C) provides evidence of conditions that arose after the date of the auditor's report 
D) provides evidence of conditions that arose before the date of the auditor's report 
A) provides evidence of conditions that arose after the date of the financial statements 
B) provides evidence of conditions that arose before the date of the financial statements 
C) provides evidence of conditions that arose after the date of the auditor's report 
D) provides evidence of conditions that arose before the date of the auditor's report

Question 12

Estimating the amount of a loss contingency from a material litigation situation is not a critical accounting estimate.

Accepted Answer

A) True 
 B)False

Question 13

If auditors determine there is substantial doubt about the entity continuing as a going concern, the next step is to obtain information about management's plans to mitigate or minimize the adverse effects of the situation.

Accepted Answer

A) True 
 B)False

Question 14

Ms.Wood accepted an engagement to audit the 2017 financial statements of XYZ Company.XYZ completed the preparation of the 2017 financial statements on February 5, 2018, and Ms.Wood began the field work on February 20, 2018.Ms.Wood completed gathering sufficient appropriate evidence on March 25, 2018 and issued the report on March 31, 2018.When should management representations be dated and why?

Accepted Answer

Management representations sho

Question 15

At the conclusion of the audit, _______.

Accepted Answer

A) auditors typically revaluate materiality decisions made during the audit to ensure it is still appropriate based on the results of audit procedures 
B) auditors typically attempt to contact the prior auditor 
C) auditors may attempt to contact the client's legal counsel 
D) auditors ask management for recommendations on any needed adjustments to the accounts 
A) auditors typically revaluate materiality decisions made during the audit to ensure it is still appropriate based on the results of audit procedures 
B) auditors typically attempt to contact the prior auditor 
C) auditors may attempt to contact the client's legal counsel 
D) auditors ask management for recommendations on any needed adjustments to the accounts

Question 16

An engagement quality control reviewer _______.

Accepted Answer

A) will review selected areas of working papers prior to the issuance of the audit report 
B) will review all areas of working papers prior to the issuance of the audit report 
C) should be impartial and chosen by the client's senior management 
D) should be chosen from a different audit firm 
A) will review selected areas of working papers prior to the issuance of the audit report 
B) will review all areas of working papers prior to the issuance of the audit report 
C) should be impartial and chosen by the client's senior management 
D) should be chosen from a different audit firm

Question 17

The financial statements are prepared by client management _______.

Accepted Answer

A) on the basis of conditions existing at year-end 
B) on the basis of conditions that existed at the beginning of the year 
C) on the basis of conditions existing throughout the year 
D) and sent to the Securities and Exchange Commission (SE
C)  for approval 
A) on the basis of conditions existing at year-end 
B) on the basis of conditions that existed at the beginning of the year 
C) on the basis of conditions existing throughout the year 
D) and sent to the Securities and Exchange Commission (SE
C)  for approval

Question 18

A Type I subsequent event should _______.

Accepted Answer

A) not require an adjustment to the financial statements 
B) always require an adjustment to the financial statements 
C) be disclosed in the notes to the financial statements only 
D) should be referred to management to determine disclosure requirements 
A) not require an adjustment to the financial statements 
B) always require an adjustment to the financial statements 
C) be disclosed in the notes to the financial statements only 
D) should be referred to management to determine disclosure requirements

Question 19

A form 10-K refers to _______.

Accepted Answer

A) A form filed with the Securities and Exchange Commission (SE
C)  relating to changing of senior management 
B) a firm's audited financial statements, sent to the SEC 
C) a firm only filed with the SEC by privately traded companies 
D) certain required income statement disclosures 
A) A form filed with the Securities and Exchange Commission (SE
C)  relating to changing of senior management 
B) a firm's audited financial statements, sent to the SEC 
C) a firm only filed with the SEC by privately traded companies 
D) certain required income statement disclosures

Question 20

_______ are used near the end of the audit to assist the auditor in forming an overall conclusion about whether the financial statements are consistent with the auditor's understanding of the entity.

Accepted Answer

A) Analytical procedures 
B) Engagement procedures 
C) Quality control procedures 
D) Audit standards 
A) Analytical procedures 
B) Engagement procedures 
C) Quality control procedures 
D) Audit standards

When fraud is discovered, _______.

A form 8-K is used _______.

The management representation letter _______.

The individual responsible for the audit engagement, its performance, and for the auditor's report that is issued on behalf the firm is _______.

At the end of the audit, which of the following is NOT reevaluated by the auditors?

The nature of the critical accounting estimates is _______ due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change.

Explain briefly auditors' responsibility for subsequent discovery of facts existing at the date of the auditors' reports.

Governance structures will _______.

Analytical procedures during risk assessment of a going concern _______.

A Type II subsequent event _______.

Estimating the amount of a loss contingency from a material litigation situation is not a critical accounting estimate.

If auditors determine there is substantial doubt about the entity continuing as a going concern, the next step is to obtain information about management's plans to mitigate or minimize the adverse effects of the situation.

At the conclusion of the audit, _______.

An engagement quality control reviewer _______.

The financial statements are prepared by client management _______.

A Type I subsequent event should _______.

A form 10-K refers to _______.

_______ are used near the end of the audit to assist the auditor in forming an overall conclusion about whether the financial statements are consistent with the auditor's understanding of the entity.

Introduction and Overview of Audit and Assurance

Professionalism, Ethics and Legal Liability

Risk Assessment Part Iaudit Risk and Audit Strategy

Risk Assessment Part Iiunderstanding the Client

Audit Evidence

Understanding of the Clients System of Internal Controls

Data Analyticsoverview and Application

Risk Responseperforming Tests of Controls

Risk Responseperforming Substantive Procedures

Risk Responseaudit Sampling for Substantive Testing

Auditing the Revenue Cycle

Auditing the Purchases Cycle and Payroll Cycle

Auditing Cash, Inventory, Investing and Financing Activities

Reporting on the Audit

Filters

Exam 14: Completing the Audit

When fraud is discovered, _______.

A form 8-K is used _______.

The management representation letter _______.

The individual responsible for the audit engagement, its performance, and for the auditor's report that is issued on behalf the firm is _______.

At the end of the audit, which of the following is NOT reevaluated by the auditors?

The nature of the critical accounting estimates is _______ due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change.

Explain briefly auditors' responsibility for subsequent discovery of facts existing at the date of the auditors' reports.

Governance structures will _______.

Analytical procedures during risk assessment of a going concern _______.

A Type II subsequent event _______.

Estimating the amount of a loss contingency from a material litigation situation is not a critical accounting estimate.

If auditors determine there is substantial doubt about the entity continuing as a going concern, the next step is to obtain information about management's plans to mitigate or minimize the adverse effects of the situation.

At the conclusion of the audit, _______.

An engagement quality control reviewer _______.

The financial statements are prepared by client management _______.

A Type I subsequent event should _______.

A form 10-K refers to _______.

_______ are used near the end of the audit to assist the auditor in forming an overall conclusion about whether the financial statements are consistent with the auditor's understanding of the entity.

Introduction and Overview of Audit and Assurance

Professionalism, Ethics and Legal Liability

Risk Assessment Part Iaudit Risk and Audit Strategy

Risk Assessment Part Iiunderstanding the Client

Audit Evidence

Understanding of the Clients System of Internal Controls

Data Analyticsoverview and Application

Risk Responseperforming Tests of Controls

Risk Responseperforming Substantive Procedures

Risk Responseaudit Sampling for Substantive Testing

Auditing the Revenue Cycle

Auditing the Purchases Cycle and Payroll Cycle

Auditing Cash, Inventory, Investing and Financing Activities

Reporting on the Audit

Filters