Question 1

An auditor might is most likely to suspect the existence of undisclosed related parties by noticing:

Accepted Answer

A) Large sales transactions. 
B) Abnormal long collection terms for a receivable. 
C) A large number of sales to numbered corporations. 
D) A significant increase in sales over the prior year. 
A) Large sales transactions. 
B) Abnormal long collection terms for a receivable. 
C) A large number of sales to numbered corporations. 
D) A significant increase in sales over the prior year. B

Question 2

The Orange Corporation was audited for the year ended December 31, the fieldwork was completed on January 25, and the audit report was delivered on February 15.The auditor learned about a two-for-one stock split on February 1.How should the report be dated?

Accepted Answer

A) December 31 and January 25. 
B) January 25 and February 1. 
C) January 25 and February 15. 
D) February 1 and February 15. 
A) December 31 and January 25. 
B) January 25 and February 1. 
C) January 25 and February 15. 
D) February 1 and February 15. B

Question 3

When a report is double-dated, the auditor has no responsibility for other events that have occurred after the end of fieldwork.

Accepted Answer

A) True 
 B)False  True

Question 4

A type I subsequent event requires only footnote disclosure.

Accepted Answer

A) True 
 B)False

Question 5

The primary purpose of the second partner review is to help in forming the audit opinion.

Accepted Answer

A) True 
 B)False

Question 6

Procedures for the audit of warranty expense are generally coordinated with which of the following audit programs?

Accepted Answer

A) Inventory, accruals, and payables. 
B) Inventory, sales, and repairs and maintenance. 
C) Sales, cost of goods sold, and interest expense. 
D) Sales, inventory, and interest expense. 
A) Inventory, accruals, and payables. 
B) Inventory, sales, and repairs and maintenance. 
C) Sales, cost of goods sold, and interest expense. 
D) Sales, inventory, and interest expense.

Question 7

Green CA is auditing the financial statements of Red Corporation for the year ended December 31, 2009.Green plans to complete the fieldwork and sign the auditor's report around May 10, 2010.Green is concerned about events and transactions occurring after December 31, 2009 that may affect the 2009 financial statements.
Required:
A) What are the subsequent events that require Green's consideration and evaluation? B) What are the auditing procedures Green should perform to gather evidence about subsequent events?

Accepted Answer

A) The first type of subsequent event in

Question 8

Briefly explain the auditor's responsibility for the subsequent discovery of facts existing at the date of the auditor's report.

Accepted Answer

The auditor actively seeks audit evidenc

Question 9

A written letter of representation from a client can provide a good defence for not performing audit procedures.

Accepted Answer

A) True 
 B)False

Question 10

A second-partner review of the working papers and financial statements is performed to ensure that the

Accepted Answer

A) To-do lists are reviewed and cleared. 
B) Audit program procedures are signed off as evidence of completion. 
C) Tick-mark notations are cleared. 
D) Audit work meets the quality standards of the firm. 
A) To-do lists are reviewed and cleared. 
B) Audit program procedures are signed off as evidence of completion. 
C) Tick-mark notations are cleared. 
D) Audit work meets the quality standards of the firm.

Question 11

An entity's income statements were misstated due to the recording of a journal entry that involved debits and credits to an unusual combination of expense and revenue accounts.The auditor is likely to most likely to detect this irregularity by

Accepted Answer

A) Tracing a sample of journal entries to the general ledger. 
B) Evaluating the effectiveness of the internal control system policies and procedures. 
C) Investigating the reconciliation of control accounts with the subsidiary records. 
D) Performing analytical procedures designed to disclose differences between the balances in the accounts and budgeted amounts. 
A) Tracing a sample of journal entries to the general ledger. 
B) Evaluating the effectiveness of the internal control system policies and procedures. 
C) Investigating the reconciliation of control accounts with the subsidiary records. 
D) Performing analytical procedures designed to disclose differences between the balances in the accounts and budgeted amounts.

Question 12

A major means by which an auditor obtains evidence about material contingencies is

Accepted Answer

A) Examining documents in the client's possession concerning contingencies. 
B) Enquiring and discussing them with management. 
C) Obtaining a response from the client's lawyer to the client's letter of enquiry. 
D) Reading minutes of stockholders' meeting. 
A) Examining documents in the client's possession concerning contingencies. 
B) Enquiring and discussing them with management. 
C) Obtaining a response from the client's lawyer to the client's letter of enquiry. 
D) Reading minutes of stockholders' meeting.

Question 13

At the review stage of an audit, the application of analytical procedures is

Accepted Answer

A) Recommended by auditing standards. 
B) Not mentioned by auditing standards. 
C) Not useful, since detailed substantive tests have already been performed. 
D) Required by auditing standards. 
A) Recommended by auditing standards. 
B) Not mentioned by auditing standards. 
C) Not useful, since detailed substantive tests have already been performed. 
D) Required by auditing standards.

Question 14

Subsequent to the issuance of the audit report, the auditor became aware of facts existing at the report date that would have affected the report had the auditor then been aware of such facts.After determining that the information is reliable, the auditor should

Accepted Answer

A) Determine whether there are persons relying or likely to rely on the financial statements who would attach importance to the information. 
B) Request that management disclose the newly discovered information by issuing revised financial statements. 
C) Issue revised pro forma financial statements taking into consideration the newly discovered information. 
D) Give public notice that the auditor is no longer associated with the financial statements. 
A) Determine whether there are persons relying or likely to rely on the financial statements who would attach importance to the information. 
B) Request that management disclose the newly discovered information by issuing revised financial statements. 
C) Issue revised pro forma financial statements taking into consideration the newly discovered information. 
D) Give public notice that the auditor is no longer associated with the financial statements.

Question 15

Auditors draft the letter of representation that will be prepared on company letterhead and signed by the officers of the company.

Accepted Answer

A) True 
 B)False

Question 16

You are auditing Green Corporation for the calendar year 2009.Among other items related to the audit, Green is being sued for personal injury resulting from the malfunction of one of its products.Sue Ewe filed the lawsuit in September 2001.The officers of the company and its outside legal counsel estimate that the loss from the suit will be approximately
$250,000.This amount has been accrued and properly disclosed in the footnotes of the financial statements.You have no reason to believe that the estimate is wrong.You completed your audit and dated your report March 2, 2010.The financial statements were issued on March 14, 2010.The trial was in progress at that date.On March 20, 2010 you read in a national business periodical that the jury in the trial awarded Sue Ewe $1.5 million.
Required:
Discuss the nature of these events and what responsibility you have, if any, regarding the news of March 20.

Accepted Answer

The auditor has no responsibility with r

Question 17

What procedures should an auditor perform if they are auditing the financial statements of a company and find out that the company has several clearing accounts?

Accepted Answer

Clearing and other miscellaneous account

Question 18

Auditors have a responsibility to perform audit procedures

Accepted Answer

A) After the report date. 
B) Until the report date. 
C) After the report issuance date. 
D) After the report date for events between the report date and a later dual dated event. 
A) After the report date. 
B) Until the report date. 
C) After the report issuance date. 
D) After the report date for events between the report date and a later dual dated event.

Question 19

For audit purposes, subsequent events are defined as events that occur after the

Accepted Answer

A) Balance sheet date. 
B) Date of the audit report. 
C) Balance sheet date but prior to the date of the audit report. 
D) Date of the audit report and concern contingencies that are not reflected in the financial statements. 
A) Balance sheet date. 
B) Date of the audit report. 
C) Balance sheet date but prior to the date of the audit report. 
D) Date of the audit report and concern contingencies that are not reflected in the financial statements.

Question 20

In the audit of revenue and expense accounts, a number of accounts will have been audited in connection with related balance sheet accounts.For each of the revenue and expense accounts listed in column A, indicate the related balance sheet account(s).If no account is specifically related, indicate if the account should be analyzed in detail or simply compared to the balance in the previous year.

Accepted Answer

The answer of In the audit of revenue and expense...

An auditor might is most likely to suspect the existence of undisclosed related parties by noticing:

The Orange Corporation was audited for the year ended December 31, the fieldwork was completed on January 25, and the audit report was delivered on February 15.The auditor learned about a two-for-one stock split on February 1.How should the report be dated?

When a report is double-dated, the auditor has no responsibility for other events that have occurred after the end of fieldwork.

A type I subsequent event requires only footnote disclosure.

The primary purpose of the second partner review is to help in forming the audit opinion.

Procedures for the audit of warranty expense are generally coordinated with which of the following audit programs?

Briefly explain the auditor's responsibility for the subsequent discovery of facts existing at the date of the auditor's report.

A written letter of representation from a client can provide a good defence for not performing audit procedures.

A second-partner review of the working papers and financial statements is performed to ensure that the

An entity's income statements were misstated due to the recording of a journal entry that involved debits and credits to an unusual combination of expense and revenue accounts.The auditor is likely to most likely to detect this irregularity by

A major means by which an auditor obtains evidence about material contingencies is

At the review stage of an audit, the application of analytical procedures is

Subsequent to the issuance of the audit report, the auditor became aware of facts existing at the report date that would have affected the report had the auditor then been aware of such facts.After determining that the information is reliable, the auditor should

Auditors draft the letter of representation that will be prepared on company letterhead and signed by the officers of the company.

What procedures should an auditor perform if they are auditing the financial statements of a company and find out that the company has several clearing accounts?

Auditors have a responsibility to perform audit procedures

For audit purposes, subsequent events are defined as events that occur after the

Introduction to Auditing

Audit, Assurance, and Quality Control Standards

Reports on Audited Financial Statements and Audited Internal Controlt

Professional Ethics and Auditor Responsibilities

Legal Liability

Preliminary Audit Planning: Understanding the Auditee

Assessing Risks and Internal Control

Audit Evidence and Assurance

Control Assessment and Testing

Audit Sampling

Revenues, Receivables, and Receipts Process

Purchases, Payables, and Payments Processtrue

Production and Payroll Process

Finance and Investment Process

Other Public Accounting Services and Reports

Fraud Awareness Auditing

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Exam 15: Completing the Audit

An auditor might is most likely to suspect the existence of undisclosed related parties by noticing:

The Orange Corporation was audited for the year ended December 31, the fieldwork was completed on January 25, and the audit report was delivered on February 15.The auditor learned about a two-for-one stock split on February 1.How should the report be dated?

When a report is double-dated, the auditor has no responsibility for other events that have occurred after the end of fieldwork.

A type I subsequent event requires only footnote disclosure.

The primary purpose of the second partner review is to help in forming the audit opinion.

Procedures for the audit of warranty expense are generally coordinated with which of the following audit programs?

Briefly explain the auditor's responsibility for the subsequent discovery of facts existing at the date of the auditor's report.

A written letter of representation from a client can provide a good defence for not performing audit procedures.

A second-partner review of the working papers and financial statements is performed to ensure that the

An entity's income statements were misstated due to the recording of a journal entry that involved debits and credits to an unusual combination of expense and revenue accounts.The auditor is likely to most likely to detect this irregularity by

A major means by which an auditor obtains evidence about material contingencies is

At the review stage of an audit, the application of analytical procedures is

Subsequent to the issuance of the audit report, the auditor became aware of facts existing at the report date that would have affected the report had the auditor then been aware of such facts.After determining that the information is reliable, the auditor should

Auditors draft the letter of representation that will be prepared on company letterhead and signed by the officers of the company.

What procedures should an auditor perform if they are auditing the financial statements of a company and find out that the company has several clearing accounts?

Auditors have a responsibility to perform audit procedures

For audit purposes, subsequent events are defined as events that occur after the

Introduction to Auditing

Audit, Assurance, and Quality Control Standards

Reports on Audited Financial Statements and Audited Internal Controlt

Professional Ethics and Auditor Responsibilities

Legal Liability

Preliminary Audit Planning: Understanding the Auditee

Assessing Risks and Internal Control

Audit Evidence and Assurance

Control Assessment and Testing

Audit Sampling

Revenues, Receivables, and Receipts Process

Purchases, Payables, and Payments Processtrue

Production and Payroll Process

Finance and Investment Process

Other Public Accounting Services and Reports

Fraud Awareness Auditing

Filters