Question 1

In the phrase subsequent events period, the word subsequent relates to the report date.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following events in the subsequent period is an example of a Type 2 subsequent event?

Accepted Answer

A)  realization of recorded year-end receivables at a different amount than recorded 
B)  settlement of recorded year-end estimated product warranty liabilities at a different amount than recorded 
C)  purchase of a machine 
D)  purchase of a business 
E)  sale of equipment 
A)  realization of recorded year-end receivables at a different amount than recorded 
B)  settlement of recorded year-end estimated product warranty liabilities at a different amount than recorded 
C)  purchase of a machine 
D)  purchase of a business 
E)  sale of equipment

Question 3

Listed below are material events that pertain to the financial statements of the Henry Corporation as of December 31, 20X5. Your field work on this audit ended on January 31, 20X6, and your report was issued February 10, 20X6. Indicate the nature of each event by using the following code letters:
-method of accounting

Accepted Answer

A) Postaudit discovery of existing facts 
B) None of the above 
C) None of the above. 
D) Sale of a subsidiary on January 20 
A) Postaudit discovery of existing facts 
B) None of the above 
C) None of the above. 
D) Sale of a subsidiary on January 20

Question 4

Listed below are material events that pertain to the financial statements of the Henry Corporation as of December 31, 20X5. Your field work on this audit ended on January 31, 20X6, and your report was issued February 10, 20X6. Indicate the nature of each event by using the following code letters:
-Arrest of two company officers for fraud on February 15
_____

Accepted Answer

A) Postaudit discovery of existing facts 
B) None of the above 
C) None of the above. 
D) Sale of a subsidiary on January 20 
A) Postaudit discovery of existing facts 
B) None of the above 
C) None of the above. 
D) Sale of a subsidiary on January 20

Question 5

The auditor is required to obtain evidential matter on litigation, claims, and assessments. This information need not include the:

Accepted Answer

A)  existence of the condition or situation. 
B)  period in which the underlying cause for legal action occurred. 
C)  degree of probability of an unfavorable outcome. 
D)  description and evaluation of the situation. 
E)  amount or range of potential loss. 
A)  existence of the condition or situation. 
B)  period in which the underlying cause for legal action occurred. 
C)  degree of probability of an unfavorable outcome. 
D)  description and evaluation of the situation. 
E)  amount or range of potential loss.

Question 6

Analytical procedures performed during the final review are normally performed at the detailed-account level.

Accepted Answer

A) True 
 B)False

Question 7

Complete the summary of auditor's responsibilities shown below by labeling the boxes.

Accepted Answer

The answer of Complete the summary of auditor's responsibilities shown...

Question 8

When an investigation of the discovery of facts existing at the report date confirms the existence of the fact and the auditor believes the information is important to those relying or likely to rely on the financial statements, the auditor should immediately:

Accepted Answer

A)  take steps to prevent future reliance on the audit report. 
B)  notify the SEC or other regulatory agency. 
C)  notify the audit committee. 
D)  resign from the engagement. 
E)  take no action since the auditor is not responsible for such matters. 
A)  take steps to prevent future reliance on the audit report. 
B)  notify the SEC or other regulatory agency. 
C)  notify the audit committee. 
D)  resign from the engagement. 
E)  take no action since the auditor is not responsible for such matters.

Question 9

Analytical procedures in the overall review should be:

Accepted Answer

A)  applied to every item on the financial statements. 
B)  performed by the partner or manager on the engagement. 
C)  based on financial statement data before all audit adjustments and reclassifications have been recognized. 
D)  performed only when material misstatement is expected. 
E)  performed only when unusual or unexpected balances and relationships are anticipated. 
A)  applied to every item on the financial statements. 
B)  performed by the partner or manager on the engagement. 
C)  based on financial statement data before all audit adjustments and reclassifications have been recognized. 
D)  performed only when material misstatement is expected. 
E)  performed only when unusual or unexpected balances and relationships are anticipated.

Question 10

Listed below are material events that pertain to the financial statements of the Henry Corporation as of December 31, 20X5. Your field work on this audit ended on January 31, 20X6, and your report was issued February 10, 20X6. Indicate the nature of each event by using the following code letters:
-Sale on January 25 of common stock investment accounted for under the equity

Accepted Answer

A) Postaudit discovery of existing facts 
B) None of the above 
C) None of the above. 
D) Sale of a subsidiary on January 20 
A) Postaudit discovery of existing facts 
B) None of the above 
C) None of the above. 
D) Sale of a subsidiary on January 20

Question 11

Listed below are material events that pertain to the financial statements of the Henry Corporation as of December 31, 20X5. Your field work on this audit ended on January 31, 20X6, and your report was issued February 10, 20X6. Indicate the nature of each event by using the following code letters:
-Write-off of an account receivable on January 17 resulting from bankruptcy proceeding begun in 20X5
_____

Accepted Answer

A) Postaudit discovery of existing facts 
B) None of the above 
C) None of the above. 
D) Sale of a subsidiary on January 20 
A) Postaudit discovery of existing facts 
B) None of the above 
C) None of the above. 
D) Sale of a subsidiary on January 20

Question 12

A client has provided a client representation letter to the auditor, but the auditor is not able to support a management representation that is material to the financial statements. This will normally require the auditor to:

Accepted Answer

A)  issue an unqualified opinion with an explanatory paragraph. 
B)  issue a qualified opinion or a disclaimer of opinion. 
C)  issue a qualified or adverse opinion. 
D)  issue a standard three-paragraph unqualified opinion. 
E)  withdraw from the engagement. 
A)  issue an unqualified opinion with an explanatory paragraph. 
B)  issue a qualified opinion or a disclaimer of opinion. 
C)  issue a qualified or adverse opinion. 
D)  issue a standard three-paragraph unqualified opinion. 
E)  withdraw from the engagement.

Question 13

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
-Failure to perform tasks that are part of the internal controls, such as
reconciliations not prepared or not prepared on a timely basis.
_____

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 14

Listed below are material events that pertain to the financial statements of the Henry Corporation as of December 31, 20X5. Your field work on this audit ended on January 31, 20X6, and your report was issued February 10, 20X6. Indicate the nature of each event by using the following code letters:
-Bankruptcy of major customer due to fire loss on January 15 _____

Accepted Answer

A) Postaudit discovery of existing facts 
B) None of the above 
C) None of the above. 
D) Sale of a subsidiary on January 20 
A) Postaudit discovery of existing facts 
B) None of the above 
C) None of the above. 
D) Sale of a subsidiary on January 20

Question 15

Listed below are material events that pertain to the financial statements of the Henry Corporation as of December 31, 20X5. Your field work on this audit ended on January 31, 20X6, and your report was issued February 10, 20X6. Indicate the nature of each event by using the following code letters:
-Sale of marketable equity securities at a loss on January 8 _____

Accepted Answer

A) Postaudit discovery of existing facts 
B) None of the above 
C) None of the above. 
D) Sale of a subsidiary on January 20 
A) Postaudit discovery of existing facts 
B) None of the above 
C) None of the above. 
D) Sale of a subsidiary on January 20

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
-Intentional misapplication of accounting principles. _____

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

The letter of audit inquiry to the client's lawyer(s) is the auditor's primary means of obtaining:

Accepted Answer

A)  initial information about litigation, claims, and assessments. 
B)  initial information about unasserted claims. 
C)  corroboration of the information on litigation, claims, and assessments provided by the other party to the matter. 
D)  corroboration of the information on litigation, claims, and assessments provided by management. 
E)  corroboration of the information on litigation, claims, and assessments provided by the auditor's attorneys. 
A)  initial information about litigation, claims, and assessments. 
B)  initial information about unasserted claims. 
C)  corroboration of the information on litigation, claims, and assessments provided by the other party to the matter. 
D)  corroboration of the information on litigation, claims, and assessments provided by management. 
E)  corroboration of the information on litigation, claims, and assessments provided by the auditor's attorneys.

Question 18

The auditor's reading of the minutes of meetings of stockholders, the board of directors, and its subcommittees, should be documented in the working papers.

Accepted Answer

A) True 
 B)False

Question 19

Ordinarily, type 1 subsequent events require:

Accepted Answer

A)  adjustment. 
B)  adjustment and disclosure. 
C)  a disclaimer. 
D)  inclusion as a reportable condition. 
E)  Disclosure. 
A)  adjustment. 
B)  adjustment and disclosure. 
C)  a disclaimer. 
D)  inclusion as a reportable condition. 
E)  Disclosure.

Question 20

When the auditor concludes that audit risk is at an acceptable level, he or she can proceed to formulate the opinion supported by the findings.

Accepted Answer

A) True 
 B)False

In the phrase subsequent events period, the word subsequent relates to the report date.

Which of the following events in the subsequent period is an example of a Type 2 subsequent event?

The auditor is required to obtain evidential matter on litigation, claims, and assessments. This information need not include the:

Analytical procedures performed during the final review are normally performed at the detailed-account level.

Complete the summary of auditor's responsibilities shown below by labeling the boxes.

When an investigation of the discovery of facts existing at the report date confirms the existence of the fact and the auditor believes the information is important to those relying or likely to rely on the financial statements, the auditor should immediately:

Analytical procedures in the overall review should be:

A client has provided a client representation letter to the auditor, but the auditor is not able to support a management representation that is material to the financial statements. This will normally require the auditor to:

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 -Intentional misapplication of accounting principles. _____

The letter of audit inquiry to the client's lawyer(s) is the auditor's primary means of obtaining:

The auditor's reading of the minutes of meetings of stockholders, the board of directors, and its subcommittees, should be documented in the working papers.

Ordinarily, type 1 subsequent events require:

When the auditor concludes that audit risk is at an acceptable level, he or she can proceed to formulate the opinion supported by the findings.

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 the phrase subsequent events period, the word subsequent relates to the report date.

Which of the following events in the subsequent period is an example of a Type 2 subsequent event?

The auditor is required to obtain evidential matter on litigation, claims, and assessments. This information need not include the:

Analytical procedures performed during the final review are normally performed at the detailed-account level.

Complete the summary of auditor's responsibilities shown below by labeling the boxes.

When an investigation of the discovery of facts existing at the report date confirms the existence of the fact and the auditor believes the information is important to those relying or likely to rely on the financial statements, the auditor should immediately:

Analytical procedures in the overall review should be:

A client has provided a client representation letter to the auditor, but the auditor is not able to support a management representation that is material to the financial statements. This will normally require the auditor to:

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 -Intentional misapplication of accounting principles. _____

The letter of audit inquiry to the client's lawyer(s) is the auditor's primary means of obtaining:

The auditor's reading of the minutes of meetings of stockholders, the board of directors, and its subcommittees, should be documented in the working papers.

Ordinarily, type 1 subsequent events require:

When the auditor concludes that audit risk is at an acceptable level, he or she can proceed to formulate the opinion supported by the findings.

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