Exam 16: Advanced Topics Concerning Complex Auditing Judgments

An auditor's consideration of materiality is a matter of professional judgment and is influenced by the auditor's perception of the needs of users of financial statements.

If an acquired company remains intact after it has been acquired, it is defined as which of the following types of segments?

Assume that the external auditor decides that because of work performed by internal auditors, the audit risk has been reduced to an acceptable level. As a result of this assessment, the auditor can do which of the following?

Under which of the following approaches is the client expected to estimate fair value based on a model of the future cash flows associated with the instrument or the asset?

Which of the following best describes the nature of assets of held-for-sale operations?

Auditor needs to assess disclosures about what lines of business the company may discontinue.

Evidence of fraud, whether or not material, on the part of senior management, would likely cause the auditor to conclude that the client had a material weakness in internal control over financial reporting.

Assessing Whether Misstatements Are Material. What additional information might the auditor choose to analyze to determine whether or not the financial statements are misstated by a material amount?

Which of the following factors is not considered in assessing the quality of the internal audit?

The partial or complete outsourcing of internal audit activities is most likely made to public accounting firms or to other specialized firms who perform which of the following?

Which of the following is not a key type of evidence that the auditor needs to examine with respect to pensions and postemployment benefits?

Which of the following is least likely to require significant auditor judgment about the dollar amount to be disclosed in the financial statement?

A best practice is to have an oversight of the internal audit function as a responsibility of which of the following?

Current FMV of assets and liabilities of non-goodwill assets is one of the factors affecting goodwill impairment valuations.

Although different audit firms take different approaches, performance materiality could be the same as overall materiality, or could be a percentage of overall materiality. Generally this range is which of the following?

If the auditor believes that misstatements aggregating approximately $50,000 would be material to the income statement, but misstatements aggregating approximately $100,000 would be material to the balance sheet, the auditor typically assesses overall materiality at $100,000 or less.

Which of the following is the international body that sets standards for the practice of internal auditing across the world?

All internal auditors are required to have the CIA designation in order to practice internal auditing.

Which of the following statements is true of external auditing?

Assuming that other assets have been properly valued, if the market value of the reporting unit is equal to the carrying value of the assets of the reporting unit, the presumption is that goodwill has been impaired.