Exam 18: Completing the Audit

Legal precedent requires the auditor to report not just to management but to an appropriate level of management, any significant matters identified as a result of audit procedures performed. Which of the following cases is the relevant legal precedent?

If the auditor discovers that management intends to liquidate the entity:

ASA 502.3.Audit Evidence - Specific Considerations for Litigation and Claims states that the auditor shall obtain sufficient appropriate audit evidence regarding:

The management representation letter will not normally be:

The event in a subsequent period that is an example of a condition existing at the reporting date is:

The auditor relies on the management representation letter to:

Your client has returned to you the representation letter that they sent to their lawyer. The letter contains the following statement from the client's lawyer: "the directors seem to underestimate the likelihood of losing the case, and the potential financial settlement amount. We believe that there is little chance of successfully defending the matter, and expect that there will be amounts payable in the vicinity of $3.million, not $1.million. We do however remind you that the matter is only in preliminary stages and could still go either way". Has the auditor collected this evidence in the appropriate way? What should the auditor do in regards to the information provided by the lawyer?

Contrast the roles of audit managers and audit partners in the final review stage of the audit. Why would a firm require a second partner review?

Before reaching a final decision on the audit opinion to be issued, a conference is generally held with the client. At this meeting, all of the following may be expected, except:

The representation letter to a lawyer provides the auditor with:

What is the relevant period for assessing whether or not the use of the going concern basis is appropriate? During which stage of the audit does the auditor perform most of the procedures for assessing the use of the going concern basis? Give four examples of such procedures.

Explain the responsibilities of the auditor regarding subsequent events: 1.after reporting date, but before the audit report is signed, 2.after the audit report is signed, but before the financial statements are issued, and 3.after the financial statements are issued.

The auditing standards suggest that management representations are acceptable audit evidence where other sufficient appropriate audit evidence:

The subsequent event that is an example of a condition occurring after the reporting date is:

In regard to identifying and evaluating subsequent events, ASA560.10 (ISA 560) specifies that the auditor make inquiries of management. Which of the following is not an example of a specific inquiry?

Matters that would ordinarily be communicated to an audit committee do not include:

Analytical procedures in the overall review should be:

After the auditor's report has been signed, the auditor has:

Professional standards require the auditor to communicate certain matters pertaining to the audit to those charged with governance. This communication would normally include all of the following except:

Ordinarily, an event indicating a material condition arising after the reporting date requires: