Question 1

Which of the following is a tool that is best used by the audit team to determine if the client has included all disclosures?

Accepted Answer

A)  Management representation letter. 
B)  GAAS. 
C)  Inquiry of the CFO. 
D)  Checklists. 
A)  Management representation letter. 
B)  GAAS. 
C)  Inquiry of the CFO. 
D)  Checklists.

Question 2

Testing subsequent events.
List the audit procedures to be performed to determine if subsequent events have occurred and have been appropriately addressed.

Accepted Answer

The audit procedures performed when test

Question 3

The familiarity threat is the most relevant issue for mandatory partner or audit firm rotation.

Accepted Answer

A) True 
 B)False

Question 4

Analytical procedures conducted at the end of an audit are performed to examine trends and changes. What is typically another purpose of analytical procedures at the end of the audit?

Accepted Answer

A)  To document planning in accordance with GAAS. 
B)  To provide the client with a value added service in conjunction with audit activities. 
C)  To ask "hard questions" about the company's results and its relationship to external factors. 
D)  To increase the amount of items reported in the management letter. 
A)  To document planning in accordance with GAAS. 
B)  To provide the client with a value added service in conjunction with audit activities. 
C)  To ask "hard questions" about the company's results and its relationship to external factors. 
D)  To increase the amount of items reported in the management letter.

Question 5

If the auditor concludes that there may be a going-concern problem, which of the following is not typically evaluated to determine the reasonableness of management's plans to overcome this problem?

Accepted Answer

A)  Management's assumption about increasing prices or market share in relationship to current industry developments. 
B)  Management's assumptions about cost savings related to a reduction in the work force should be recomputed and evaluated to determine any hidden costs. 
C)  Management's past track record related to delaying unnecessary expenditures. 
D)  Management's assumptions about selling off assets and their relationship to current market prices. 
A)  Management's assumption about increasing prices or market share in relationship to current industry developments. 
B)  Management's assumptions about cost savings related to a reduction in the work force should be recomputed and evaluated to determine any hidden costs. 
C)  Management's past track record related to delaying unnecessary expenditures. 
D)  Management's assumptions about selling off assets and their relationship to current market prices.

Question 6

The client makes estimates relative to recorded amounts in the financial statements. Which of the following assumptions best represents the auditor's primary focus regarding the reasonableness of such estimates?

Accepted Answer

A)  That historical trends are followed. 
B)  That income is managed. 
C)  That there is an adequate cushion. 
D)  That management reverses estimates when opportune. 
A)  That historical trends are followed. 
B)  That income is managed. 
C)  That there is an adequate cushion. 
D)  That management reverses estimates when opportune.

Question 7

Misstatements that are detected, but individually are not material, should be ignored when determining the appropriate audit report.

Accepted Answer

A) True 
 B)False

Question 8

A policy providing a reserve for returned products at the original sales price rather than at replacement cost violates GAAP.

Accepted Answer

A) True 
 B)False

Question 9

If a client makes payments to a middle-man who uses the funds to obtain corporate tax refunds for the client from government officials, this is not considered a violation of the Foreign Corrupt Practices Act of 1977 (FCPA).

Accepted Answer

A) True 
 B)False

Question 10

Review activities that are completed towards the end of the audit are quite varied.

Accepted Answer

A) True 
 B)False

Question 11

When responding to the auditor as a result of the audit client's letter of inquiry, how might the attorney limit the response?

Accepted Answer

A)  Limit the response to litigations in process. 
B)  Limit the response to asserted claims. 
C)  Limit the response to matters to which the attorney has given substantive attention in the form of legal consultation or representation. 
D)  Limit the response to items which the attorney believes will result in loss to the client. 
A)  Limit the response to litigations in process. 
B)  Limit the response to asserted claims. 
C)  Limit the response to matters to which the attorney has given substantive attention in the form of legal consultation or representation. 
D)  Limit the response to items which the attorney believes will result in loss to the client.

Question 12

The materiality of a misstatement is based on only the quantitative amount of the misstatement.

Accepted Answer

A) True 
 B)False

Question 13

The auditor's report specifically covers the statements and disclosures made by management in the "Management Discussion and Analysis" (MD&A) section of the annual report.

Accepted Answer

A) True 
 B)False

Question 14

Contingent liabilities.
The auditor will discuss contingencies with the appropriate executives and management of the company. Identify at least five sources of evidence to corroborate management's representations regarding contingencies.

Accepted Answer

Corroborating evidence of contingent lia

Question 15

Type I subsequent events.
Provide two examples of a Type I subsequent event and explain how these events would be treated in the financial statements.

Accepted Answer

The instructor must review the student's

Question 16

An additional procedure related to subsequent events is the reading of the meeting minutes for the board of directors meeting.

Accepted Answer

A) True 
 B)False

Question 17

Auditors should obtain a management representation letter at the end of each audit.

Accepted Answer

A) True 
 B)False

Question 18

When it is discovered that an important audit procedure was not performed, the SEC imposes sanctions against the audit firm responsible.

Accepted Answer

A) True 
 B)False

Question 19

Disclosures can be made either on the face of the financial statements in the form of classifications or in parenthetical notations and/or in the notes to the statements.

Accepted Answer

A) True 
 B)False

Question 20

The auditor's expectations in final analytical procedures must be more precise than those for substantive analytics.

Accepted Answer

A) True 
 B)False

Which of the following is a tool that is best used by the audit team to determine if the client has included all disclosures?

Testing subsequent events. List the audit procedures to be performed to determine if subsequent events have occurred and have been appropriately addressed.

The familiarity threat is the most relevant issue for mandatory partner or audit firm rotation.

Analytical procedures conducted at the end of an audit are performed to examine trends and changes. What is typically another purpose of analytical procedures at the end of the audit?

If the auditor concludes that there may be a going-concern problem, which of the following is not typically evaluated to determine the reasonableness of management's plans to overcome this problem?

The client makes estimates relative to recorded amounts in the financial statements. Which of the following assumptions best represents the auditor's primary focus regarding the reasonableness of such estimates?

Misstatements that are detected, but individually are not material, should be ignored when determining the appropriate audit report.

A policy providing a reserve for returned products at the original sales price rather than at replacement cost violates GAAP.

If a client makes payments to a middle-man who uses the funds to obtain corporate tax refunds for the client from government officials, this is not considered a violation of the Foreign Corrupt Practices Act of 1977 (FCPA).

Review activities that are completed towards the end of the audit are quite varied.

When responding to the auditor as a result of the audit client's letter of inquiry, how might the attorney limit the response?

The materiality of a misstatement is based on only the quantitative amount of the misstatement.

The auditor's report specifically covers the statements and disclosures made by management in the "Management Discussion and Analysis" (MD&A) section of the annual report.

Contingent liabilities. The auditor will discuss contingencies with the appropriate executives and management of the company. Identify at least five sources of evidence to corroborate management's representations regarding contingencies.

Type I subsequent events. Provide two examples of a Type I subsequent event and explain how these events would be treated in the financial statements.

An additional procedure related to subsequent events is the reading of the meeting minutes for the board of directors meeting.

Auditors should obtain a management representation letter at the end of each audit.

When it is discovered that an important audit procedure was not performed, the SEC imposes sanctions against the audit firm responsible.

Disclosures can be made either on the face of the financial statements in the form of classifications or in parenthetical notations and/or in the notes to the statements.

The auditor's expectations in final analytical procedures must be more precise than those for substantive analytics.

Auditing: Integral to the Economy

The Auditors Responsibilities Regarding Fraud and Mechanisms to Address Fraud: Regulation and Corporate Governance

Internal Control Over Financial Reporting: Responsibilities of Management and the External Auditors

Professional Liability, Auditor Judgment Frameworks, and Professional Responsibilities

Professional Auditing Standards and the Audit Opinion Formulation Process

A Framework for Audit Evidence

Planning the Audit: Identifying and Responding to the Risks of Material Misstatement

Specialized Audit Tools: Sampling and Generalized Audit Software

Auditing the Revenue Cycle

Auditing Cash and Marketable Securities

Auditing Inventory, Goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, Use, Impairment, and Disposal

Auditing Debt Obligations and Stockholders Equity Transactions

Audit Reports on Financial Statements

Advanced Topics Concerning Complex Auditing Judgments

Other Services Provided by Audit Firms

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Exam 14: Activities Required in Completing a Quality Audit

Which of the following is a tool that is best used by the audit team to determine if the client has included all disclosures?

Testing subsequent events. List the audit procedures to be performed to determine if subsequent events have occurred and have been appropriately addressed.

The familiarity threat is the most relevant issue for mandatory partner or audit firm rotation.

Analytical procedures conducted at the end of an audit are performed to examine trends and changes. What is typically another purpose of analytical procedures at the end of the audit?

If the auditor concludes that there may be a going-concern problem, which of the following is not typically evaluated to determine the reasonableness of management's plans to overcome this problem?

The client makes estimates relative to recorded amounts in the financial statements. Which of the following assumptions best represents the auditor's primary focus regarding the reasonableness of such estimates?

Misstatements that are detected, but individually are not material, should be ignored when determining the appropriate audit report.

A policy providing a reserve for returned products at the original sales price rather than at replacement cost violates GAAP.

If a client makes payments to a middle-man who uses the funds to obtain corporate tax refunds for the client from government officials, this is not considered a violation of the Foreign Corrupt Practices Act of 1977 (FCPA).

Review activities that are completed towards the end of the audit are quite varied.

When responding to the auditor as a result of the audit client's letter of inquiry, how might the attorney limit the response?

The materiality of a misstatement is based on only the quantitative amount of the misstatement.

The auditor's report specifically covers the statements and disclosures made by management in the "Management Discussion and Analysis" (MD&A) section of the annual report.

Contingent liabilities. The auditor will discuss contingencies with the appropriate executives and management of the company. Identify at least five sources of evidence to corroborate management's representations regarding contingencies.

Type I subsequent events. Provide two examples of a Type I subsequent event and explain how these events would be treated in the financial statements.

An additional procedure related to subsequent events is the reading of the meeting minutes for the board of directors meeting.

Auditors should obtain a management representation letter at the end of each audit.

When it is discovered that an important audit procedure was not performed, the SEC imposes sanctions against the audit firm responsible.

Disclosures can be made either on the face of the financial statements in the form of classifications or in parenthetical notations and/or in the notes to the statements.

The auditor's expectations in final analytical procedures must be more precise than those for substantive analytics.

Auditing: Integral to the Economy

The Auditors Responsibilities Regarding Fraud and Mechanisms to Address Fraud: Regulation and Corporate Governance

Internal Control Over Financial Reporting: Responsibilities of Management and the External Auditors

Professional Liability, Auditor Judgment Frameworks, and Professional Responsibilities

Professional Auditing Standards and the Audit Opinion Formulation Process

A Framework for Audit Evidence

Planning the Audit: Identifying and Responding to the Risks of Material Misstatement

Specialized Audit Tools: Sampling and Generalized Audit Software

Auditing the Revenue Cycle

Auditing Cash and Marketable Securities

Auditing Inventory, Goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, Use, Impairment, and Disposal

Auditing Debt Obligations and Stockholders Equity Transactions

Audit Reports on Financial Statements

Advanced Topics Concerning Complex Auditing Judgments

Other Services Provided by Audit Firms

Filters