Question 1

In working with the minutes of meetings of stockholders, board of directors, and its subcommittees, the auditor should:

Accepted Answer

A)  read the minutes of all important meetings. 
B)  read the minutes of all meetings. 
C)  read the significant items in all meetings. 
D)  read the minutes of all stockholders' meetings. 
E)  scan the minutes of all meetings. 
A)  read the minutes of all important meetings. 
B)  read the minutes of all meetings. 
C)  read the significant items in all meetings. 
D)  read the minutes of all stockholders' meetings. 
E)  scan the minutes of all meetings. B

Question 2

Management's refusal to furnish written representations may be sufficient, in the auditor's judgment, to cause the auditor to withdraw from the engagement.

Accepted Answer

A) True 
 B)False  True

Question 3

When material, type 1 subsequent events require disclosure and type 2 subsequent events require adjustment.

Accepted Answer

A) True 
 B)False  False

Question 4

Gain contingencies present very little problem to the auditor.

Accepted Answer

A) True 
 B)False

Question 5

Matters relevant to management letters should be noted in the audit working papers as the audit progresses to ensure that they are not overlooked.

Accepted Answer

A) True 
 B)False

Question 6

If the client refuses to disclose newly discovered facts, the auditor should withdraw from the engagement.

Accepted Answer

A) True 
 B)False

Question 7

By definition, subsequent events occur between:

Accepted Answer

A)  the interim and balance sheet date. 
B)  the balance sheet date and the report date. 
C)  the report date and the date the report is issued. 
D)  the date the report is approved and the date the report is issued. 
E)  the balance sheet date and the date the report is issued. 
A)  the interim and balance sheet date. 
B)  the balance sheet date and the report date. 
C)  the report date and the date the report is issued. 
D)  the date the report is approved and the date the report is issued. 
E)  the balance sheet date and the date the report is issued.

Question 8

A letter of audit inquiry should be sent to a sample of lawyers who have been engaged by the client and have given substantive attention during the year to LCA.

Accepted Answer

A) True 
 B)False

Question 9

Match between columns
                        Premises: Failure to safeguard assets from loss, damage, or misappropriation.
Absence of appropriate segregation of duties consistent with appropriate control objectives.
Intentional override of the internal control system by those in authority to the detriment of the overall objectives of the system.
Failure to perform tasks that are part of the internal controls, such as reconciliations not prepared or not prepared on a timely basis.
Inadequate procedures for appropriately assessing and applying accounting principles.
Willful wrongdoing by employees or management.
Manipulation, falsification, or alteration of accounting records or supporting documents.
Absence of other control techniques considered appropriate for the type and level of transaction activity.
Inadequate provisions for the safeguarding of assets.
Intentional misapplication of accounting principles.
Misrepresentation by client personnel to the auditor.
A system fails to provide complete and accurate output consistent with objectives and current needs because of design flaws.
Employees or management lack the qualifications and training to fulfill their assigned functions.

Accepted Answer

The Answer of Failures in the Operation of Internal Control is...

Question 10

The auditor, concluding that substantial doubt does not exist, usually decides to disclose all of the following except:

Accepted Answer

A)  possible discontinuance of operations. 
B)  the possible effects of pertinent conditions and events. 
C)  information about the recoverability or classification of recorded expense amounts or the amounts or classification of income amounts. 
D)  management's plans. 
E)  management's evaluation of the significance of pertinent conditions and events and any mitigating factors. 
A)  possible discontinuance of operations. 
B)  the possible effects of pertinent conditions and events. 
C)  information about the recoverability or classification of recorded expense amounts or the amounts or classification of income amounts. 
D)  management's plans. 
E)  management's evaluation of the significance of pertinent conditions and events and any mitigating factors.

Question 11

Identify the audit procedures normally associated with subsequent events.

Accepted Answer

The procedures include:
1.reading the la

Question 12

An attorney's letter will have no impact on the audit report when the response indicates that there is a high probability of favorable outcome.

Accepted Answer

A) True 
 B)False

Question 13

If, after considering identified conditions and management's plans, the auditor concludes that substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time remains, the audit report is usually a qualified audit opinion with an explanatory paragraph about the uncertainty (following the opinion paragraph) to reflect that conclusion.

Accepted Answer

A) True 
 B)False

Question 14

Professional standards require the auditor to communicate certain matters pertaining to the audit to those who have responsibility for overseeing the financial reporting process. This communication would normally include all of the following except:

Accepted Answer

A)  the auditor's responsibility under GAAS. 
B)  specific audit procedures performed. 
C)  significant audit adjustments. 
D)  difficulties encountered in performing the audit. 
E)  significant accounting policies. 
A)  the auditor's responsibility under GAAS. 
B)  specific audit procedures performed. 
C)  significant audit adjustments. 
D)  difficulties encountered in performing the audit. 
E)  significant accounting policies.

Question 15

In regard to identifying and evaluating subsequent events, AU 560.12 specifies that the auditor inquires of management having responsibility for financial and accounting matters as to all of the following except:

Accepted Answer

A)  any substantial contingent liabilities or commitments existing at the balance sheet date or date of inquiry. 
B)  any significant changes in capital stock, long-term debt, or working capital to the date of inquiry. 
C)  the minutes of meetings of directors, stockholders, and other appropriate committees. 
D)  the current status of items previously accounted for on the basis of tentative, preliminary, or inconclusive data. 
E)  whether any unusual adjustments have been made since the balance sheet date. 
A)  any substantial contingent liabilities or commitments existing at the balance sheet date or date of inquiry. 
B)  any significant changes in capital stock, long-term debt, or working capital to the date of inquiry. 
C)  the minutes of meetings of directors, stockholders, and other appropriate committees. 
D)  the current status of items previously accounted for on the basis of tentative, preliminary, or inconclusive data. 
E)  whether any unusual adjustments have been made since the balance sheet date.

Question 16

Listed below are examples of matters that may be reportable conditions. Indicate the nature of each event by using the following code letters:
Deficiencies in Internal Control Design
Failures in the Operation of Internal Control
-A system fails to provide complete and accurate output consistent with objectives and current needs because of design flaws.
A
_____

Accepted Answer

A) Failures in the Operation of Internal Control 
B) A system fails to provide complete and accurate output consistent with the 
A) Failures in the Operation of Internal Control 
B) A system fails to provide complete and accurate output consistent with the

Question 17

In regard to identifying and evaluating subsequent events, AU 560.12 specifies that the auditor inquires of management having responsibility for financial and accounting matters as to:

Accepted Answer

A)  any substantial contingent liabilities or commitments existing at the balance sheet date or report date. 
B)  any significant changes in capital stock, long-term debt, or working capital to the date of inquiry. 
C)  the current status of items previously accounted for on the basis of tentative, preliminary, or conclusive data. 
D)  whether any unusual adjustments have been made since the report date. 
E)  litigation, claims, and assessments. 
A)  any substantial contingent liabilities or commitments existing at the balance sheet date or report date. 
B)  any significant changes in capital stock, long-term debt, or working capital to the date of inquiry. 
C)  the current status of items previously accounted for on the basis of tentative, preliminary, or conclusive data. 
D)  whether any unusual adjustments have been made since the report date. 
E)  litigation, claims, and assessments.

Question 18

The management letter is least likely to include comments on:

Accepted Answer

A)  internal control matters that are not considered to be reportable conditions. 
B)  recommendations regarding the management of resources. 
C)  tax-related matters. 
D)  recommendations regarding the management of value-added services noted during the audit. 
E)  the auditor's rationale for proposed additional statement disclosures. 
A)  internal control matters that are not considered to be reportable conditions. 
B)  recommendations regarding the management of resources. 
C)  tax-related matters. 
D)  recommendations regarding the management of value-added services noted during the audit. 
E)  the auditor's rationale for proposed additional statement disclosures.

Question 19

In making the technical review of the financial statements, the auditor is likely to use a detailed financial statement checklist provided by the:

Accepted Answer

A)  CPA firm. 
B)  client. 
C)  AICPA. 
D)  SEC. 
E)  internal auditors. 
A)  CPA firm. 
B)  client. 
C)  AICPA. 
D)  SEC. 
E)  internal auditors.

Question 20

Obtaining a management representation letter is an optional audit procedure.

Accepted Answer

A) True 
 B)False

In working with the minutes of meetings of stockholders, board of directors, and its subcommittees, the auditor should:

Management's refusal to furnish written representations may be sufficient, in the auditor's judgment, to cause the auditor to withdraw from the engagement.

When material, type 1 subsequent events require disclosure and type 2 subsequent events require adjustment.

Gain contingencies present very little problem to the auditor.

Matters relevant to management letters should be noted in the audit working papers as the audit progresses to ensure that they are not overlooked.

If the client refuses to disclose newly discovered facts, the auditor should withdraw from the engagement.

By definition, subsequent events occur between:

A letter of audit inquiry should be sent to a sample of lawyers who have been engaged by the client and have given substantive attention during the year to LCA.

The auditor, concluding that substantial doubt does not exist, usually decides to disclose all of the following except:

Identify the audit procedures normally associated with subsequent events.

An attorney's letter will have no impact on the audit report when the response indicates that there is a high probability of favorable outcome.

Professional standards require the auditor to communicate certain matters pertaining to the audit to those who have responsibility for overseeing the financial reporting process. This communication would normally include all of the following except:

In regard to identifying and evaluating subsequent events, AU 560.12 specifies that the auditor inquires of management having responsibility for financial and accounting matters as to all of the following except:

In regard to identifying and evaluating subsequent events, AU 560.12 specifies that the auditor inquires of management having responsibility for financial and accounting matters as to:

The management letter is least likely to include comments on:

In making the technical review of the financial statements, the auditor is likely to use a detailed financial statement checklist provided by the:

Obtaining a management representation letter is an optional audit procedure.

Auditing and the Public Accounting

Financial Statement Audits and

Professional Ethics

Auditors Legal Liability

Overview of the Audit Process

Audit Evidence, Audit Objectives,

Accepting the Engagement and

Materiality Decisions and Performing Analytical Procedures

Audit Risk, Including the Risk of Fraud

Understanding Internal Controls

Audit Procedures in Response to Assessed Risks: Tests of Controls

Audit Procedures in Response to Assessed Risks: Substantive Tests

Audit Sampling in Substantive Tests

Auditing the Revenue Cycle

Auditing the Expenditure Cycle

Auditing the Production and

Auditing the Investing and

Auditing Investments and

Attest and Assurance Services, and Related Reports

Internal, Operational, and

Filters

Exam 19: Completing the Audit and Postaudit

In working with the minutes of meetings of stockholders, board of directors, and its subcommittees, the auditor should:

Management's refusal to furnish written representations may be sufficient, in the auditor's judgment, to cause the auditor to withdraw from the engagement.

When material, type 1 subsequent events require disclosure and type 2 subsequent events require adjustment.

Gain contingencies present very little problem to the auditor.

Matters relevant to management letters should be noted in the audit working papers as the audit progresses to ensure that they are not overlooked.

If the client refuses to disclose newly discovered facts, the auditor should withdraw from the engagement.

By definition, subsequent events occur between:

A letter of audit inquiry should be sent to a sample of lawyers who have been engaged by the client and have given substantive attention during the year to LCA.

The auditor, concluding that substantial doubt does not exist, usually decides to disclose all of the following except:

Identify the audit procedures normally associated with subsequent events.

An attorney's letter will have no impact on the audit report when the response indicates that there is a high probability of favorable outcome.

Professional standards require the auditor to communicate certain matters pertaining to the audit to those who have responsibility for overseeing the financial reporting process. This communication would normally include all of the following except:

In regard to identifying and evaluating subsequent events, AU 560.12 specifies that the auditor inquires of management having responsibility for financial and accounting matters as to all of the following except:

In regard to identifying and evaluating subsequent events, AU 560.12 specifies that the auditor inquires of management having responsibility for financial and accounting matters as to:

The management letter is least likely to include comments on:

In making the technical review of the financial statements, the auditor is likely to use a detailed financial statement checklist provided by the:

Obtaining a management representation letter is an optional audit procedure.

Auditing and the Public Accounting

Financial Statement Audits and

Professional Ethics

Auditors Legal Liability

Overview of the Audit Process

Audit Evidence, Audit Objectives,

Accepting the Engagement and

Materiality Decisions and Performing Analytical Procedures

Audit Risk, Including the Risk of Fraud

Understanding Internal Controls

Audit Procedures in Response to Assessed Risks: Tests of Controls

Audit Procedures in Response to Assessed Risks: Substantive Tests

Audit Sampling in Substantive Tests

Auditing the Revenue Cycle

Auditing the Expenditure Cycle

Auditing the Production and

Auditing the Investing and

Auditing Investments and

Attest and Assurance Services, and Related Reports

Internal, Operational, and

Filters