Question 1

An example of a loss contingency includes _______.

Accepted Answer

A) guarantees of debt of others 
B) collection of accounts receivable 
C) payment of accounts payable 
D) repurchasing outstanding shares 
A) guarantees of debt of others 
B) collection of accounts receivable 
C) payment of accounts payable 
D) repurchasing outstanding shares

Question 2

FASB ASC Topic 450, Contingencies, provides accounting guidance for _______.

Accepted Answer

A) the accounting treatment for intangible assets 
B) depreciable methods for property, plant and equipment 
C) events, or potential events, that create uncertainty for a company 
D) business combinations 
A) the accounting treatment for intangible assets 
B) depreciable methods for property, plant and equipment 
C) events, or potential events, that create uncertainty for a company 
D) business combinations

Question 3

If auditors determine there is substantial doubt about the entity continuing as a going concern, _______.

Accepted Answer

A) then the auditor should immediately notify the Securities and Exchange Commission (SE
C)  
B) the next step is to obtain information about management's plans to mitigate or minimize the adverse effects of the situation 
C) the next step is to obtain information about the auditor's plans to mitigate or minimize the adverse effects of the situation. 
D) the next step is to ensure the client is immediately billed for all services performed, to ensure payment 
A) then the auditor should immediately notify the Securities and Exchange Commission (SE
C)  
B) the next step is to obtain information about management's plans to mitigate or minimize the adverse effects of the situation 
C) the next step is to obtain information about the auditor's plans to mitigate or minimize the adverse effects of the situation. 
D) the next step is to ensure the client is immediately billed for all services performed, to ensure payment

Question 4

A management representation letter is a letter _______.

Accepted Answer

A) that is sent from the auditor to management, and then signed off on by the client's legal counsel 
B) that is sent from management to the auditor, and then signed off on by the client's legal counsel 
C) from management to the auditor acknowledging management's responsibility for the preparation of the financial statements 
D) from the auditor to management acknowledging management's responsibility for the preparation of the financial statements 
A) that is sent from the auditor to management, and then signed off on by the client's legal counsel 
B) that is sent from management to the auditor, and then signed off on by the client's legal counsel 
C) from management to the auditor acknowledging management's responsibility for the preparation of the financial statements 
D) from the auditor to management acknowledging management's responsibility for the preparation of the financial statements

Question 5

An example of a _______ would be the bankruptcy of a client's customer after year-end as a result of poor financial condition that existed as of the balance sheet date.

Accepted Answer

Type I sub

Question 6

In the given table, match the sections of a legal letter on the left with the corresponding explanations on the right.

Accepted Answer

The legal letter is prepared on the clie

Question 7

Auditors report fraud _______.

Accepted Answer

A) to the Securities and Exchange Commission (SE
C)  within 72 hours 
B) to a level of management at least one level above the level where the fraud occurred 
C) directly to the manager that is suspected of involvement in the fraud 
D) to the level below where the auditor suspects the fraud is occurring 
A) to the Securities and Exchange Commission (SE
C)  within 72 hours 
B) to a level of management at least one level above the level where the fraud occurred 
C) directly to the manager that is suspected of involvement in the fraud 
D) to the level below where the auditor suspects the fraud is occurring

Question 8

The final step for the auditor to perform with respect to doubts about an entity's ability to remain a going concern is to communicate_______.

Accepted Answer

A) all relevant findings to the internal audit function 
B) all relevant findings to common stockholders 
C) with those charged with governance 
D) with all preferred stockholders 
A) all relevant findings to the internal audit function 
B) all relevant findings to common stockholders 
C) with those charged with governance 
D) with all preferred stockholders

Question 9

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) is typically a person with minimal audit expertise and experience 
D) should be appointed by the client 
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) is typically a person with minimal audit expertise and experience 
D) should be appointed by the client

Question 10

The management representation letter _______.

Accepted Answer

A) can sometimes serve as a substitute for certain audit procedures that were not able to be performed 
B) is a letter from management to the auditor acknowledging management's responsibility for the preparation of the financial statements 
C) is a letter from the auditor to management acknowledging management's responsibility for the preparation of the financial statements 
D) should only be sent to the client's legal counsel; not directly to the client 
A) can sometimes serve as a substitute for certain audit procedures that were not able to be performed 
B) is a letter from management to the auditor acknowledging management's responsibility for the preparation of the financial statements 
C) is a letter from the auditor to management acknowledging management's responsibility for the preparation of the financial statements 
D) should only be sent to the client's legal counsel; not directly to the client

Question 11

A legal representation is a written statement by management provided to the auditor to confirm certain matters or to support other audit evidence.

Accepted Answer

A) True 
 B)False

Question 12

The Financial Accounting Standards Board (FASB) defines a loss contingency as an existing condition or situation involving uncertainty as to possible loss that will ultimately be resolved when one or more future events occur or fail to occur.

Accepted Answer

A) True 
 B)False

Question 13

An example of a Type I subsequent event would be _______.

Accepted Answer

A) a sudden change in senior management after the financial statement date 
B) a filing with the Securities and Exchange Commission (SE
C)  of an amended form 10K after the financial statement date 
C) the bankruptcy of a client's customer after year-end as a result of poor financial condition that existed as of the balance sheet date 
D) the bankruptcy of a client's customer after year-end as a result of poor financial condition that existed after the balance sheet date 
A) a sudden change in senior management after the financial statement date 
B) a filing with the Securities and Exchange Commission (SE
C)  of an amended form 10K after the financial statement date 
C) the bankruptcy of a client's customer after year-end as a result of poor financial condition that existed as of the balance sheet date 
D) the bankruptcy of a client's customer after year-end as a result of poor financial condition that existed after the balance sheet date

Question 14

Analytical procedures during risk assessment may identify negative trends such as working capital deficiencies, adverse key financial ratios, and decreasing cash flow from operations

Accepted Answer

A) True 
 B)False

Question 15

During the risk response phase, _______.

Accepted Answer

A) all analytical procedures have been conducted 
B) analytical procedures can be used, but are not required, as a substantive test to gather audit evidence 
C) analytical procedures can be used, and are required, as a substantive test to gather audit evidence 
D) the auditor should begin testing internal control 
A) all analytical procedures have been conducted 
B) analytical procedures can be used, but are not required, as a substantive test to gather audit evidence 
C) analytical procedures can be used, and are required, as a substantive test to gather audit evidence 
D) the auditor should begin testing internal control

Question 16

Who considers whether work has been performed in accordance with appropriate audit standards?

Accepted Answer

A) Working paper reviewer 
B) Engagement partner 
C) Quality control reviewer 
D) Audit partner 
A) Working paper reviewer 
B) Engagement partner 
C) Quality control reviewer 
D) Audit partner

Question 17

Which statement defines a Type 1 subsequent event?

Accepted Answer

A) An event that provides evidence of conditions that arose after the date of the financial statements 
B) An event that provides evidence of unreported earnings that arose after the date of the financial statements. 
C) An event that provides evidence of conditions that existed at the date of the financial statements.A Type I event requires an adjustment to the financial statements. 
D) An event that provides evidence of conditions that did not exist at the date of the financial statements.A Type I event requires an adjustment to the financial statements. 
A) An event that provides evidence of conditions that arose after the date of the financial statements 
B) An event that provides evidence of unreported earnings that arose after the date of the financial statements. 
C) An event that provides evidence of conditions that existed at the date of the financial statements.A Type I event requires an adjustment to the financial statements. 
D) An event that provides evidence of conditions that did not exist at the date of the financial statements.A Type I event requires an adjustment to the financial statements.

Question 18

If auditors determine there is substantial doubt about the entity continuing as a going concern, _______.

Accepted Answer

A) the next step is to obtain information about management's plans to mitigate or minimize the adverse effects of the situation 
B) the next step is to obtain information about the auditor's plans to mitigate or minimize the adverse effects of the situation 
C) they should immediately issue an adverse opinion and withdraw from the engagement 
D) the auditors should immediately invoice the client for the cost of the audit and request payment within 30 days 
A) the next step is to obtain information about management's plans to mitigate or minimize the adverse effects of the situation 
B) the next step is to obtain information about the auditor's plans to mitigate or minimize the adverse effects of the situation 
C) they should immediately issue an adverse opinion and withdraw from the engagement 
D) the auditors should immediately invoice the client for the cost of the audit and request payment within 30 days

Question 19

For public companies, the SEC (Securities and Exchange Commission) has strict deadlines for the filing of Form 10-K, which is the document that contains the company's audited annual financial statements.

Accepted Answer

A) True 
 B)False

Question 20

Under the _______, an entity is viewed as continuing in business for the foreseeable future with neither the intention nor the need for liquidation.

Accepted Answer

going conc

An example of a loss contingency includes _______.

FASB ASC Topic 450, Contingencies, provides accounting guidance for _______.

If auditors determine there is substantial doubt about the entity continuing as a going concern, _______.

A management representation letter is a letter _______.

An example of a _______ would be the bankruptcy of a client's customer after year-end as a result of poor financial condition that existed as of the balance sheet date.

In the given table, match the sections of a legal letter on the left with the corresponding explanations on the right.

Auditors report fraud _______.

The final step for the auditor to perform with respect to doubts about an entity's ability to remain a going concern is to communicate_______.

An engagement quality control reviewer _______.

The management representation letter _______.

A legal representation is a written statement by management provided to the auditor to confirm certain matters or to support other audit evidence.

The Financial Accounting Standards Board (FASB) defines a loss contingency as an existing condition or situation involving uncertainty as to possible loss that will ultimately be resolved when one or more future events occur or fail to occur.

An example of a Type I subsequent event would be _______.

Analytical procedures during risk assessment may identify negative trends such as working capital deficiencies, adverse key financial ratios, and decreasing cash flow from operations

During the risk response phase, _______.

Who considers whether work has been performed in accordance with appropriate audit standards?

Which statement defines a Type 1 subsequent event?

If auditors determine there is substantial doubt about the entity continuing as a going concern, _______.

For public companies, the SEC (Securities and Exchange Commission) has strict deadlines for the filing of Form 10-K, which is the document that contains the company's audited annual financial statements.

Under the _______, an entity is viewed as continuing in business for the foreseeable future with neither the intention nor the need for liquidation.

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

An example of a loss contingency includes _______.

FASB ASC Topic 450, Contingencies, provides accounting guidance for _______.

If auditors determine there is substantial doubt about the entity continuing as a going concern, _______.

A management representation letter is a letter _______.

An example of a _______ would be the bankruptcy of a client's customer after year-end as a result of poor financial condition that existed as of the balance sheet date.

In the given table, match the sections of a legal letter on the left with the corresponding explanations on the right.

Auditors report fraud _______.

The final step for the auditor to perform with respect to doubts about an entity's ability to remain a going concern is to communicate_______.

An engagement quality control reviewer _______.

The management representation letter _______.

A legal representation is a written statement by management provided to the auditor to confirm certain matters or to support other audit evidence.

The Financial Accounting Standards Board (FASB) defines a loss contingency as an existing condition or situation involving uncertainty as to possible loss that will ultimately be resolved when one or more future events occur or fail to occur.

An example of a Type I subsequent event would be _______.

Analytical procedures during risk assessment may identify negative trends such as working capital deficiencies, adverse key financial ratios, and decreasing cash flow from operations

During the risk response phase, _______.

Who considers whether work has been performed in accordance with appropriate audit standards?

Which statement defines a Type 1 subsequent event?

If auditors determine there is substantial doubt about the entity continuing as a going concern, _______.

For public companies, the SEC (Securities and Exchange Commission) has strict deadlines for the filing of Form 10-K, which is the document that contains the company's audited annual financial statements.

Under the _______, an entity is viewed as continuing in business for the foreseeable future with neither the intention nor the need for liquidation.

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