Question 1

When the results of substantive procedures identify misstatements, _______.

Accepted Answer

A) the auditors refer the misstatements to the prior auditor for correction 
B) auditors consider whether the misstatements may be indicative of the need to re-evaluate inherent risk, control risk or fraud risk 
C) auditors consider whether the misstatements may be indicative of the need to re-evaluate inherent risk only 
D) auditors consider whether the misstatements may be indicative of the need to re-evaluate control risk only 
A) the auditors refer the misstatements to the prior auditor for correction 
B) auditors consider whether the misstatements may be indicative of the need to re-evaluate inherent risk, control risk or fraud risk 
C) auditors consider whether the misstatements may be indicative of the need to re-evaluate inherent risk only 
D) auditors consider whether the misstatements may be indicative of the need to re-evaluate control risk only

Question 2

Define subsequent events.

Accepted Answer

A) Events occurring between the date of the financial statements and the date of the auditor's report. 
B) Events that provide evidence of conditions that arose after the date of the auditor's report. 
C) Events that provide evidence of conditions that arose after the date of the financial statements. 
D) Events that never require an adjustment to the financial statements but may require disclosure in the notes to the financial statements. 
A) Events occurring between the date of the financial statements and the date of the auditor's report. 
B) Events that provide evidence of conditions that arose after the date of the auditor's report. 
C) Events that provide evidence of conditions that arose after the date of the financial statements. 
D) Events that never require an adjustment to the financial statements but may require disclosure in the notes to the financial statements.

Question 3

Type II subsequent events occur _______.

Accepted Answer

A) after the date of the financial statements 
B) between the date of the financial statements and the date of the auditor's report 
C) at the date of the financial statements 
D) none of the above are correct 
A) after the date of the financial statements 
B) between the date of the financial statements and the date of the auditor's report 
C) at the date of the financial statements 
D) none of the above are correct

Question 4

An example of a factor that mitigates doubts about an entity's ability to continue as a going concern would be _______.

Accepted Answer

A) a letter of guarantee from a parent company 
B) the ability to raise additional funds through the issuance of more stock 
C) the ability to sell an unprofitable segment of the business 
D) All of these examples are mitigating factors. 
A) a letter of guarantee from a parent company 
B) the ability to raise additional funds through the issuance of more stock 
C) the ability to sell an unprofitable segment of the business 
D) All of these examples are mitigating factors.

Question 5

The written representation from management _______.

Accepted Answer

A) supplements the inquiries made of management regarding subsequent events and the evidence gathered from audit procedures 
B) supplements the inquiries made of the auditor regarding subsequent events and the evidence gathered from audit procedures 
C) can be drafted by the auditor and signed by the internal audit function on behalf of management 
D) transfers legal liability for any financial statement errors to the auditor 
A) supplements the inquiries made of management regarding subsequent events and the evidence gathered from audit procedures 
B) supplements the inquiries made of the auditor regarding subsequent events and the evidence gathered from audit procedures 
C) can be drafted by the auditor and signed by the internal audit function on behalf of management 
D) transfers legal liability for any financial statement errors to the auditor

Question 6

A Type I subsequent event requires an adjustment to the financial statements.

Accepted Answer

A) True 
 B)False

Question 7

Type II subsequent events are those events that _______.

Accepted Answer

A) likely occurred before the financial statement date 
B) likely occurred after the financial statement date 
C) are unlikely to require adjustment to the financial statements 
D) should be reported to the Securities and Exchange Commission (SE
C)  
A) likely occurred before the financial statement date 
B) likely occurred after the financial statement date 
C) are unlikely to require adjustment to the financial statements 
D) should be reported to the Securities and Exchange Commission (SE
C)

Question 8

Auditors communicate significant findings or issues from the audit to those charged with governance _______.

Accepted Answer

A) typically at the beginning of the audit 
B) typically during the audit 
C) typically towards the end of the audit 
D) via the client's legal counsel 
A) typically at the beginning of the audit 
B) typically during the audit 
C) typically towards the end of the audit 
D) via the client's legal counsel

Question 9

What is Type I subsequent event?

Accepted Answer

A) An event that provides evidence of conditions that existed at the date of the financial statements. 
B) An event occurring between the date of the financial statements and the date of the auditor's report. 
C) An event that provides evidence of conditions that arose after the date of the financial statements. 
D) An event that does not require an adjustment to the financial statements but may require disclosure in the notes to the financial statements. 
A) An event that provides evidence of conditions that existed at the date of the financial statements. 
B) An event occurring between the date of the financial statements and the date of the auditor's report. 
C) An event that provides evidence of conditions that arose after the date of the financial statements. 
D) An event that does not require an adjustment to the financial statements but may require disclosure in the notes to the financial statements.

Question 10

What is loss contingency?

Accepted Answer

A) An existing condition or situation involving uncertainty to possible loss that will ultimately be resolved when one or more future events occur or fail to occur. 
B) An opinion expressed by the auditor when the auditor concludes that the financial statements are presented fairly, in all material respects, in accordance with the applicable financial reporting framework. 
C) Lack of confidence in the audit process that intended users place in the financial statements. 
D) A statement in the auditor's report that is required by generally accepted auditing standards. 
A) An existing condition or situation involving uncertainty to possible loss that will ultimately be resolved when one or more future events occur or fail to occur. 
B) An opinion expressed by the auditor when the auditor concludes that the financial statements are presented fairly, in all material respects, in accordance with the applicable financial reporting framework. 
C) Lack of confidence in the audit process that intended users place in the financial statements. 
D) A statement in the auditor's report that is required by generally accepted auditing standards.

Question 11

Subsequent events refer to _______.

Accepted Answer

A) events occurring between the date of the financial statements and the date of the auditor's report 
B) events occurring before the financial statement date 
C) events occurring after the financial statement date 
D) events occurring after completion of the audit and issuance of the audit report 
A) events occurring between the date of the financial statements and the date of the auditor's report 
B) events occurring before the financial statement date 
C) events occurring after the financial statement date 
D) events occurring after completion of the audit and issuance of the audit report

Question 12

When evaluating the effect of uncorrected misstatements, _______.

Accepted Answer

A) only quantitative factors are considered 
B) only qualitative factors are considered 
C) both quantitative and qualitative factors are considered 
D) neither quantitative and qualitative factors are considered 
A) only quantitative factors are considered 
B) only qualitative factors are considered 
C) both quantitative and qualitative factors are considered 
D) neither quantitative and qualitative factors are considered

Question 13

A written representation is _______.

Accepted Answer

A) a written statement by management provided to the auditor to confirm certain matters or to support other audit evidence 
B) a written statement drafted by the internal audit function, and provided to the auditor to confirm certain matters or to support other audit evidence 
C) should be filed as part of court filings by the client, to confirm the details of the representing attorney 
D) a statement from the prior auditor, confirming there were no material misstatements found in prior audits 
A) a written statement by management provided to the auditor to confirm certain matters or to support other audit evidence 
B) a written statement drafted by the internal audit function, and provided to the auditor to confirm certain matters or to support other audit evidence 
C) should be filed as part of court filings by the client, to confirm the details of the representing attorney 
D) a statement from the prior auditor, confirming there were no material misstatements found in prior audits

Question 14

If controls are weak, _______.

Accepted Answer

A) auditors will perform less substantive testing as a result 
B) auditors will increase the control risk assessment and perform additional substantive tests to detect material misstatements 
C) auditors will decrease the control risk assessment and perform additional substantive tests to detect material misstatements 
D) auditors will increase the control risk assessment and perform fewer substantive tests to detect material misstatements 
A) auditors will perform less substantive testing as a result 
B) auditors will increase the control risk assessment and perform additional substantive tests to detect material misstatements 
C) auditors will decrease the control risk assessment and perform additional substantive tests to detect material misstatements 
D) auditors will increase the control risk assessment and perform fewer substantive tests to detect material misstatements

Question 15

Which of the following refer(s) to accounting policies and practices that are most important to the portrayal of the company's financial condition and results and that require management's most difficult, subjective, or complex judgments?

Accepted Answer

A) Critical accounting policies and practices 
B) Critical accounting estimates 
C) Critical accounting projections 
D) A disclosure agreement 
A) Critical accounting policies and practices 
B) Critical accounting estimates 
C) Critical accounting projections 
D) A disclosure agreement

Question 16

Final analytical procedures are intended

Accepted Answer

A) to corroborate audit evidence obtained during the audit only 
B) to corroborate audit evidence obtained during the audit, and to confirm the financial statements are consistent with the auditor's revised expectations based on evidence evaluated during the audit 
C) to refute audit evidence obtained during the audit, and to confirm the financial statements are consistent with the auditor's revised expectations based on evidence evaluated during the audit 
D) to corroborate audit evidence obtained during the audit, and to confirm the financial statements are inconsistent with the auditor's revised expectations based on evidence evaluated during the audit. 
A) to corroborate audit evidence obtained during the audit only 
B) to corroborate audit evidence obtained during the audit, and to confirm the financial statements are consistent with the auditor's revised expectations based on evidence evaluated during the audit 
C) to refute audit evidence obtained during the audit, and to confirm the financial statements are consistent with the auditor's revised expectations based on evidence evaluated during the audit 
D) to corroborate audit evidence obtained during the audit, and to confirm the financial statements are inconsistent with the auditor's revised expectations based on evidence evaluated during the audit.

Question 17

Generally, a written representation _______.

Accepted Answer

A) is sufficient evidence to issue an unmodified audit report 
B) complements other audit procedures that were performed and generally does not provide sufficient appropriate audit evidence on its own 
C) replaces other audit procedures that were performed and generally does provide sufficient appropriate audit evidence on its own 
D) should be drafted by the client's legal counsel and signed with the auditor 
A) is sufficient evidence to issue an unmodified audit report 
B) complements other audit procedures that were performed and generally does not provide sufficient appropriate audit evidence on its own 
C) replaces other audit procedures that were performed and generally does provide sufficient appropriate audit evidence on its own 
D) should be drafted by the client's legal counsel and signed with the auditor

Question 18

The most common user of a private company's financial statements _______.

Accepted Answer

A) is a bank or other lender 
B) are regulatory agencies such as the Internal Revenue Service (IRS) 
C) are competing companies 
D) are employees of the company 
A) is a bank or other lender 
B) are regulatory agencies such as the Internal Revenue Service (IRS) 
C) are competing companies 
D) are employees of the company

Question 19

Determining the likelihood of a loss contingency occurring and trying to estimate a reasonable amount for a future loss _______.

Accepted Answer

A) should be determined by the client's legal counsel 
B) should be determined solely by the external auditor 
C) should be determined solely by the internal auditor 
D) involves significant judgment by management 
A) should be determined by the client's legal counsel 
B) should be determined solely by the external auditor 
C) should be determined solely by the internal auditor 
D) involves significant judgment by management

Question 20

The financial statements are prepared by client management _______.

Accepted Answer

A) based on beginning of year financial conditions 
B) for formal review and issuance of an audit opinion by the internal auditors 
C) on the basis of conditions existing at year-end, which would be December 31 for a calendar year entity 
D) on the basis of conditions existing at year-end, which should always be December 31 
A) based on beginning of year financial conditions 
B) for formal review and issuance of an audit opinion by the internal auditors 
C) on the basis of conditions existing at year-end, which would be December 31 for a calendar year entity 
D) on the basis of conditions existing at year-end, which should always be December 31

When the results of substantive procedures identify misstatements, _______.

Define subsequent events.

Type II subsequent events occur _______.

An example of a factor that mitigates doubts about an entity's ability to continue as a going concern would be _______.

The written representation from management _______.

A Type I subsequent event requires an adjustment to the financial statements.

Type II subsequent events are those events that _______.

Auditors communicate significant findings or issues from the audit to those charged with governance _______.

What is Type I subsequent event?

What is loss contingency?

Subsequent events refer to _______.

When evaluating the effect of uncorrected misstatements, _______.

A written representation is _______.

If controls are weak, _______.

Which of the following refer(s) to accounting policies and practices that are most important to the portrayal of the company's financial condition and results and that require management's most difficult, subjective, or complex judgments?

Final analytical procedures are intended

Generally, a written representation _______.

The most common user of a private company's financial statements _______.

Determining the likelihood of a loss contingency occurring and trying to estimate a reasonable amount for a future loss _______.

The financial statements are prepared by client management _______.

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 the results of substantive procedures identify misstatements, _______.

Define subsequent events.

Type II subsequent events occur _______.

An example of a factor that mitigates doubts about an entity's ability to continue as a going concern would be _______.

The written representation from management _______.

A Type I subsequent event requires an adjustment to the financial statements.

Type II subsequent events are those events that _______.

Auditors communicate significant findings or issues from the audit to those charged with governance _______.

What is Type I subsequent event?

What is loss contingency?

Subsequent events refer to _______.

When evaluating the effect of uncorrected misstatements, _______.

A written representation is _______.

If controls are weak, _______.

Which of the following refer(s) to accounting policies and practices that are most important to the portrayal of the company's financial condition and results and that require management's most difficult, subjective, or complex judgments?

Final analytical procedures are intended

Generally, a written representation _______.

The most common user of a private company's financial statements _______.

Determining the likelihood of a loss contingency occurring and trying to estimate a reasonable amount for a future loss _______.

The financial statements are prepared by client management _______.

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