Question 1

After considering management's plans, if auditors determine there is substantial doubt about the entity's ability to continue as a going concern, _______.

Accepted Answer

A) the auditor should consider withdrawing from the engagement 
B) the next steps are to consider the possible effects on the financial statements and on the auditor's report 
C) the next steps are to consider the possible effects on the financial statements and on the internal auditor's report 
D) the auditor should attempt to locate alternative lines of debt and equity capital for the client 
A) the auditor should consider withdrawing from the engagement 
B) the next steps are to consider the possible effects on the financial statements and on the auditor's report 
C) the next steps are to consider the possible effects on the financial statements and on the internal auditor's report 
D) the auditor should attempt to locate alternative lines of debt and equity capital for the client

Question 2

The nature of the specific procedures performed for the subsequent events review _______.

Accepted Answer

A) will depend on the individual circumstances of each client 
B) should be uniform across all clients, to increase consistency 
C) should be agreed with management, with respect to areas to focus audit resources and effort 
D) will be determined and handled by the internal audit function 
A) will depend on the individual circumstances of each client 
B) should be uniform across all clients, to increase consistency 
C) should be agreed with management, with respect to areas to focus audit resources and effort 
D) will be determined and handled by the internal audit function

Question 3

What is the going concern assumption?

Accepted Answer

A) The viability of an entity to remain in business for the foreseeable future 
B) The period of time required by the applicable financial reporting framework 
C) The responsibility to perform any audit procedures 
D) An overall conclusion on the audit drawn by auditors 
A) The viability of an entity to remain in business for the foreseeable future 
B) The period of time required by the applicable financial reporting framework 
C) The responsibility to perform any audit procedures 
D) An overall conclusion on the audit drawn by auditors

Question 4

Tinley Corporation is being audited for the calendar year 2018.Among other items related to the audit, Tinley Corporation was being sued for personal injury resulting from the malfunction of one of their products.The lawsuit was initiated by Mr.John Jones in September 2018.
Tinley's senior management and their outside legal counsel estimated the loss from the suit to be approximately $200,000.This amount is accrued and properly disclosed in the footnotes of the financial statements.The auditors have no reason to believe that the estimate is inaccurate.
The audit is completed, and the report is dated February 1, 2019.The financial statements were issued on February 14, 2019.On March 30, 2019, the auditor reads an article in a trade journal about the Tinley Corporation and the recent jury award to Mr.John Jones for $1.5 million his personal injury lawsuit.
Discuss the nature of these events and what responsibility, if any, does the auditor have regarding the news of the jury award on March 30, 2019.

Accepted Answer

The outcome of the lawsuit would ordinar

Question 5

Explain briefly (a) management representations, (b) internal control communications, and (c) management letters.In your answer, include the general content of the communication, the parties involved with the communication, the required form of the communication, and whether the communication is required under generally accepted auditing standards.

Accepted Answer

Management representations normally take

Question 6

Responsibility for evaluating the going concern assumption in accordance with the applicable financial reporting framework rests with _______.

Accepted Answer

A) the auditor 
B) management 
C) the internal audit function 
D) the clients legal counsel 
A) the auditor 
B) management 
C) the internal audit function 
D) the clients legal counsel

Question 7

With respect to the going concern assumption, under Generally Accepted Accounting Principles (GAAP), a reasonable period of time is _______.

Accepted Answer

A) considered to be 90 days 
B) considered to be 180 days 
C) one year from the date the client issues financial statements 
D) two years from the date the client issues financial statements 
A) considered to be 90 days 
B) considered to be 180 days 
C) one year from the date the client issues financial statements 
D) two years from the date the client issues financial statements

Question 8

If the auditors withdraw from an engagement, _______.

Accepted Answer

A) they will inform the appropriate level of management or those charged with governance and provide reasons for the withdrawal 
B) they will inform the appropriate level of management only and will provide reasons for the withdrawal 
C) the auditor should immediately cease communication with the client, and refer them to another auditor 
D) they are not entitled to receive compensation for services performed 
A) they will inform the appropriate level of management or those charged with governance and provide reasons for the withdrawal 
B) they will inform the appropriate level of management only and will provide reasons for the withdrawal 
C) the auditor should immediately cease communication with the client, and refer them to another auditor 
D) they are not entitled to receive compensation for services performed

Question 9

If a loss contingency is reasonably possible or the amount cannot be reasonably estimated, _______.

Accepted Answer

A) disclosure should occur in both the financial statements and the notes to the financial statements 
B) disclosure should occur in the financial statements only 
C) only a disclosure in the notes is required 
D) then no disclosure is required 
A) disclosure should occur in both the financial statements and the notes to the financial statements 
B) disclosure should occur in the financial statements only 
C) only a disclosure in the notes is required 
D) then no disclosure is required

Question 10

Large publicly traded companies are under great scrutiny _______.

Accepted Answer

A) from the SEC only 
B) from both the public and the SEC 
C) from the public only 
D) from the internal audit function 
A) from the SEC only 
B) from both the public and the SEC 
C) from the public only 
D) from the internal audit function

Question 11

A _______ is a letter from management to the auditor acknowledging management's responsibility for the preparation of the financial statements and details of any verbal representations made by management during the course of the audit.

Accepted Answer

management

Question 12

As the audit is being performed, the engagement partner should conduct timely reviews of work completed on accounts, transactions, or disclosures that require extensive judgment or involve significant risks.

Accepted Answer

A) True 
 B)False

Question 13

The responses to the inquiries that auditors have made of management throughout the course of the audit _______.

Accepted Answer

A) are recorded in the client's permanent file 
B) are confidential and not shared with senior management 
C) are documented in the auditor's working papers 
D) are sent to the prior auditor to be checked for prior year consistency 
A) are recorded in the client's permanent file 
B) are confidential and not shared with senior management 
C) are documented in the auditor's working papers 
D) are sent to the prior auditor to be checked for prior year consistency

Question 14

Specific audit procedures to identify subsequent events include _______.

Accepted Answer

A) obtaining an understanding of how management identifies subsequent events 
B) reading the client's subsequent interim financial statements, if available, and other data such as budgets and cash flow forecasts 
C) inquiring of the client's legal counsel regarding litigation, claims, and assessments 
D) All of these answer choices are correct. 
A) obtaining an understanding of how management identifies subsequent events 
B) reading the client's subsequent interim financial statements, if available, and other data such as budgets and cash flow forecasts 
C) inquiring of the client's legal counsel regarding litigation, claims, and assessments 
D) All of these answer choices are correct.

Question 15

Attorneys and their clients have a ______, which means attorneys cannot talk about their client's cases to anyone without permission from the client.

Accepted Answer

A) privileged relationship 
B) no permission agreement 
C) confidential rapport 
D) legal right 
A) privileged relationship 
B) no permission agreement 
C) confidential rapport 
D) legal right

Question 16

If the auditors decide to issue a modified auditor's report due to doubt about an entity's ability to continue as a going concern _______.

Accepted Answer

A) the report should always be adverse 
B) the report should always be a disclaimer of opinion 
C) the matter should be communicated with those charged with governance 
D) the should be communicated to the client's legal counsel for disclosure to senior management 
A) the report should always be adverse 
B) the report should always be a disclaimer of opinion 
C) the matter should be communicated with those charged with governance 
D) the should be communicated to the client's legal counsel for disclosure to senior management

Question 17

Type _______ subsequent events are those that provide evidence about conditions that developed subsequent to year-end.

Accepted Answer

The answer of Type _______ subsequent events are those that...

Question 18

A/an _______ is an audit inquiry sent to a firm's in-house legal counsel to obtain information about litigation, assessments, and claims.

Accepted Answer

The answer of A/an _______ is an audit inquiry sent...

Question 19

A Type I subsequent event refers to _______.

Accepted Answer

A) an event that occurred after the date of the financial statements 
B) an event that most likely occurred before the date of the financial statements 
C) a contingent event, that may or may not occur 
D) an event that is typified by debit entries to contra-revenue accounts 
A) an event that occurred after the date of the financial statements 
B) an event that most likely occurred before the date of the financial statements 
C) a contingent event, that may or may not occur 
D) an event that is typified by debit entries to contra-revenue accounts

Question 20

What is a written representation?

Accepted Answer

A) A written statement by management provided to the auditor to confirm certain matters or to support other audit evidence. 
B) A letter from management to the auditor acknowledging management's responsibility for the preparation of the financial statements. 
C) A written statement containing details of any verbal representations made by management during the course of the audit. 
D) A letter from auditor to the management informing their concerns. 
A) A written statement by management provided to the auditor to confirm certain matters or to support other audit evidence. 
B) A letter from management to the auditor acknowledging management's responsibility for the preparation of the financial statements. 
C) A written statement containing details of any verbal representations made by management during the course of the audit. 
D) A letter from auditor to the management informing their concerns.

After considering management's plans, if auditors determine there is substantial doubt about the entity's ability to continue as a going concern, _______.

The nature of the specific procedures performed for the subsequent events review _______.

What is the going concern assumption?

Responsibility for evaluating the going concern assumption in accordance with the applicable financial reporting framework rests with _______.

With respect to the going concern assumption, under Generally Accepted Accounting Principles (GAAP), a reasonable period of time is _______.

If the auditors withdraw from an engagement, _______.

If a loss contingency is reasonably possible or the amount cannot be reasonably estimated, _______.

Large publicly traded companies are under great scrutiny _______.

A _______ is a letter from management to the auditor acknowledging management's responsibility for the preparation of the financial statements and details of any verbal representations made by management during the course of the audit.

As the audit is being performed, the engagement partner should conduct timely reviews of work completed on accounts, transactions, or disclosures that require extensive judgment or involve significant risks.

The responses to the inquiries that auditors have made of management throughout the course of the audit _______.

Specific audit procedures to identify subsequent events include _______.

Attorneys and their clients have a ______, which means attorneys cannot talk about their client's cases to anyone without permission from the client.

If the auditors decide to issue a modified auditor's report due to doubt about an entity's ability to continue as a going concern _______.

Type _______ subsequent events are those that provide evidence about conditions that developed subsequent to year-end.

A/an _______ is an audit inquiry sent to a firm's in-house legal counsel to obtain information about litigation, assessments, and claims.

A Type I subsequent event refers to _______.

What is a written representation?

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

After considering management's plans, if auditors determine there is substantial doubt about the entity's ability to continue as a going concern, _______.

The nature of the specific procedures performed for the subsequent events review _______.

What is the going concern assumption?

Responsibility for evaluating the going concern assumption in accordance with the applicable financial reporting framework rests with _______.

With respect to the going concern assumption, under Generally Accepted Accounting Principles (GAAP), a reasonable period of time is _______.

If the auditors withdraw from an engagement, _______.

If a loss contingency is reasonably possible or the amount cannot be reasonably estimated, _______.

Large publicly traded companies are under great scrutiny _______.

A _______ is a letter from management to the auditor acknowledging management's responsibility for the preparation of the financial statements and details of any verbal representations made by management during the course of the audit.

As the audit is being performed, the engagement partner should conduct timely reviews of work completed on accounts, transactions, or disclosures that require extensive judgment or involve significant risks.

The responses to the inquiries that auditors have made of management throughout the course of the audit _______.

Specific audit procedures to identify subsequent events include _______.

Attorneys and their clients have a ______, which means attorneys cannot talk about their client's cases to anyone without permission from the client.

If the auditors decide to issue a modified auditor's report due to doubt about an entity's ability to continue as a going concern _______.

Type _______ subsequent events are those that provide evidence about conditions that developed subsequent to year-end.

A/an _______ is an audit inquiry sent to a firm's in-house legal counsel to obtain information about litigation, assessments, and claims.

A Type I subsequent event refers to _______.

What is a written representation?

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