Question 1

If the auditor concludes that it is highly improbable that the client will continue as a going concern, the auditor should, in accordance with ASA 700:

Accepted Answer

A)  issue a disclaimer of opinion. 
B)  issue an unqualified report but explain the concerns in the opinion paragraph. 
C)  include an emphasis of matter section in the audit report. 
D)  express an adverse opinion. 
A)  issue a disclaimer of opinion. 
B)  issue an unqualified report but explain the concerns in the opinion paragraph. 
C)  include an emphasis of matter section in the audit report. 
D)  express an adverse opinion.

Question 2

The audit procedures for the subsequent events review can be divided into two categories: (1)procedures normally integrated as a part of the verification of year-end account balances and (2)those performed specifically for the purpose of discovering subsequent events.Which one of the following procedures is in the first category?

Accepted Answer

A)  Review journals and ledgers of year 2 to determine the existence of any transaction related to year 1. 
B)  Obtain a management representation letter written by the client. 
C)  Examine subsequent period sales and purchases transactions to determine whether the cutoff is accurate. 
D)  Inquire of the client regarding contingent liabilities. 
A)  Review journals and ledgers of year 2 to determine the existence of any transaction related to year 1. 
B)  Obtain a management representation letter written by the client. 
C)  Examine subsequent period sales and purchases transactions to determine whether the cutoff is accurate. 
D)  Inquire of the client regarding contingent liabilities.

Question 3

Subsequent events which require adjustment to the financial statements provide additional information about significant conditions or events which did not exist at the balance sheet date.

Accepted Answer

A) True 
 B)False

Question 4

What are the five main aspects of the overall evaluation of results at the completion of the audit?

Accepted Answer

.Evaluate the sufficiency of e

Question 5

The subsequent discovery of facts requiring the recall or reissuance of financial statements ________ from developments occurring after the date of the auditor's report.

Accepted Answer

A)  will probably not arise 
B)  will not arise 
C)  will certainly arise 
D)  will probably arise 
A)  will probably not arise 
B)  will not arise 
C)  will certainly arise 
D)  will probably arise

Question 6

Which one of the following is NOT a presentation and disclosure objective?

Accepted Answer

A)  completeness 
B)  rights and obligations 
C)  cutoff 
D)  classification 
A)  completeness 
B)  rights and obligations 
C)  cutoff 
D)  classification

Question 7

Adjustment of the financial statement may be necessary if the contingent liability is:

Accepted Answer

A)  remote. 
B)  probable. 
C)  reasonably possible. 
D)  none of the above 
A)  remote. 
B)  probable. 
C)  reasonably possible. 
D)  none of the above

Question 8

A specific letter of inquiry to the client's external legal counsel would include:

Accepted Answer

A)  management's assessment of the outcome of each identified litigation. 
B)  a list of litigation and claims. 
C)  a request from the client's external legal counsel confirming the reasonableness of management's assessment of the outcome of each identified litigation. 
D)  all of the above 
A)  management's assessment of the outcome of each identified litigation. 
B)  a list of litigation and claims. 
C)  a request from the client's external legal counsel confirming the reasonableness of management's assessment of the outcome of each identified litigation. 
D)  all of the above

Question 9

Often, there is a large number of immaterial errors discovered that do not require an adjustment at the time they are found.

Accepted Answer

A)  Since there are a large number of these, the auditor would recommend adjusting entries to the client. 
B)  The auditor would never combine these individually immaterial amounts because that would mix dissimilar data. 
C)  Since these items are individually immaterial, the auditor would not recommend adjusting entries to the client. 
D)  The auditor must combine the individually immaterial errors and evaluate whether the combined amount is material. 
A)  Since there are a large number of these, the auditor would recommend adjusting entries to the client. 
B)  The auditor would never combine these individually immaterial amounts because that would mix dissimilar data. 
C)  Since these items are individually immaterial, the auditor would not recommend adjusting entries to the client. 
D)  The auditor must combine the individually immaterial errors and evaluate whether the combined amount is material.

Question 10

'A potential future obligation to an outside party for an unknown amount resulting from activities that have already taken place contingent on a future event' is the definition of:

Accepted Answer

A)  a current liability. 
B)  a long-term liability. 
C)  an accrued liability. 
D)  contingent liability 
A)  a current liability. 
B)  a long-term liability. 
C)  an accrued liability. 
D)  contingent liability

Question 11

The management representation letter is prepared on the client's letterhead, addressed to the audit firm, and signed by the chief executive officer and chief financial officer.

Accepted Answer

A) True 
 B)False

Question 12

How many presentation and disclosure objectives are there?

Accepted Answer

A)  two 
B)  four 
C)  one 
D)  three 
A)  two 
B)  four 
C)  one 
D)  three

Question 13

ASA 570 requires the auditor to evaluate whether there is a substantial doubt about a client's ability to continue as a going concern for at LEAST:

Accepted Answer

A)  one quarter beyond the date of the auditor's report. 
B)  one year beyond the date of the auditor's report. 
C)  one year beyond the reporting date. 
D)  one quarter beyond the balance sheet date. 
A)  one quarter beyond the date of the auditor's report. 
B)  one year beyond the date of the auditor's report. 
C)  one year beyond the reporting date. 
D)  one quarter beyond the balance sheet date.

Question 14

Identify and describe the four presentation and disclosure objectives.

Accepted Answer

1.Occurrence and rights and obligations.

Question 15

A letter from the client's external legal counsel requesting information about any litigations or claims of which the lawyer is aware appears in the:

Accepted Answer

A)  lawyer's representation letter. 
B)  management representation letter. 
C)  letter of inquiry. 
D)  letters testamentary. 
A)  lawyer's representation letter. 
B)  management representation letter. 
C)  letter of inquiry. 
D)  letters testamentary.

Question 16

An auditor's decision concerning whether or not to 'dual date' the audit report is based upon the auditor's willingness to:

Accepted Answer

A)  extend auditing procedures. 
B)  permit inclusion of a footnote captioned event (unaudited) subsequent to the date of the auditor's report. 
C)  assume responsibility for events subsequent to the issuance of the auditor's report. 
D)  accept responsibility for subsequent events. 
A)  extend auditing procedures. 
B)  permit inclusion of a footnote captioned event (unaudited) subsequent to the date of the auditor's report. 
C)  assume responsibility for events subsequent to the issuance of the auditor's report. 
D)  accept responsibility for subsequent events.

Question 17

A lawsuit has been filed against your client.If, in the opinion of legal counsel, the likelihood your client will lose the lawsuit is remote, no financial statement accrual or disclosure of the potential loss is required.

Accepted Answer

A) True 
 B)False

Question 18

If the auditor concludes that there are contingent liabilities, he or she must evaluate the significance of the potential liability and the nature of the disclosure needed in the financial statements.Which of the following statements is NOT true?

Accepted Answer

A)  The potential liability is sufficiently well-known in some instances to be included in the financial statements as an actual liability. 
B)  Frequently, the audit firm obtains a separate evaluation of the potential liability from its own legal counsel rather than relying on management or the client's legal counsel. 
C)  Disclosure may be unnecessary if the contingency is highly remote or immaterial. 
D)  The auditor should primarily rely on management's judgement about potential liabilities. 
A)  The potential liability is sufficiently well-known in some instances to be included in the financial statements as an actual liability. 
B)  Frequently, the audit firm obtains a separate evaluation of the potential liability from its own legal counsel rather than relying on management or the client's legal counsel. 
C)  Disclosure may be unnecessary if the contingency is highly remote or immaterial. 
D)  The auditor should primarily rely on management's judgement about potential liabilities.

Question 19

The auditor has a responsibility to review transactions and activities occurring after the balance sheet date to determine whether anything occurred that might affect the valuation or disclosure of the statements being audited.The auditing procedures required to verify these transactions are commonly referred to as the review for:

Accepted Answer

A)  late unusual occurrences. 
B)  subsequent events. 
C)  contingent liabilities. 
D)  subsequent years' transactions. 
A)  late unusual occurrences. 
B)  subsequent events. 
C)  contingent liabilities. 
D)  subsequent years' transactions.

Question 20

Besides the search for contingent liabilities and the review for subsequent events, the auditor has four important final evidence accumulation responsibilities, all of which are required by current auditing standards.Discuss each of these four responsibilities.

Accepted Answer

.Perform final analytical procedures as

If the auditor concludes that it is highly improbable that the client will continue as a going concern, the auditor should, in accordance with ASA 700:

Subsequent events which require adjustment to the financial statements provide additional information about significant conditions or events which did not exist at the balance sheet date.

What are the five main aspects of the overall evaluation of results at the completion of the audit?

The subsequent discovery of facts requiring the recall or reissuance of financial statements ________ from developments occurring after the date of the auditor's report.

Which one of the following is NOT a presentation and disclosure objective?

Adjustment of the financial statement may be necessary if the contingent liability is:

A specific letter of inquiry to the client's external legal counsel would include:

Often, there is a large number of immaterial errors discovered that do not require an adjustment at the time they are found.

'A potential future obligation to an outside party for an unknown amount resulting from activities that have already taken place contingent on a future event' is the definition of:

The management representation letter is prepared on the client's letterhead, addressed to the audit firm, and signed by the chief executive officer and chief financial officer.

How many presentation and disclosure objectives are there?

ASA 570 requires the auditor to evaluate whether there is a substantial doubt about a client's ability to continue as a going concern for at LEAST:

Identify and describe the four presentation and disclosure objectives.

A letter from the client's external legal counsel requesting information about any litigations or claims of which the lawyer is aware appears in the:

An auditor's decision concerning whether or not to 'dual date' the audit report is based upon the auditor's willingness to:

A lawsuit has been filed against your client.If, in the opinion of legal counsel, the likelihood your client will lose the lawsuit is remote, no financial statement accrual or disclosure of the potential loss is required.

If the auditor concludes that there are contingent liabilities, he or she must evaluate the significance of the potential liability and the nature of the disclosure needed in the financial statements.Which of the following statements is NOT true?

Besides the search for contingent liabilities and the review for subsequent events, the auditor has four important final evidence accumulation responsibilities, all of which are required by current auditing standards.Discuss each of these four responsibilities.

Demand for audit and assurance services

Auditors’ legal environment

Audit quality and ethics

Audit responsibilities and objectives

Audit evidence

Audit planning and documentation

Materiality and risk

Internal control and control risk

Fraud auditing

The impact of information technology on the audit process

Overall audit plan and audit program

Audit of the sales and collection cycle: Tests of controls and substantive tests of transactions

Completing tests in the sales and collection cycle: Accounts receivable

Audit sampling

Audit of transaction cycles and financial statement balances I

Audit of transaction cycles and financial statement balances II

Audit reporting

Other auditing and assurance engagements

Filters

Exam 17: Completing the audit

If the auditor concludes that it is highly improbable that the client will continue as a going concern, the auditor should, in accordance with ASA 700:

Subsequent events which require adjustment to the financial statements provide additional information about significant conditions or events which did not exist at the balance sheet date.

What are the five main aspects of the overall evaluation of results at the completion of the audit?

The subsequent discovery of facts requiring the recall or reissuance of financial statements ________ from developments occurring after the date of the auditor's report.

Which one of the following is NOT a presentation and disclosure objective?

Adjustment of the financial statement may be necessary if the contingent liability is:

A specific letter of inquiry to the client's external legal counsel would include:

Often, there is a large number of immaterial errors discovered that do not require an adjustment at the time they are found.

'A potential future obligation to an outside party for an unknown amount resulting from activities that have already taken place contingent on a future event' is the definition of:

The management representation letter is prepared on the client's letterhead, addressed to the audit firm, and signed by the chief executive officer and chief financial officer.

How many presentation and disclosure objectives are there?

ASA 570 requires the auditor to evaluate whether there is a substantial doubt about a client's ability to continue as a going concern for at LEAST:

Identify and describe the four presentation and disclosure objectives.

A letter from the client's external legal counsel requesting information about any litigations or claims of which the lawyer is aware appears in the:

An auditor's decision concerning whether or not to 'dual date' the audit report is based upon the auditor's willingness to:

A lawsuit has been filed against your client.If, in the opinion of legal counsel, the likelihood your client will lose the lawsuit is remote, no financial statement accrual or disclosure of the potential loss is required.

If the auditor concludes that there are contingent liabilities, he or she must evaluate the significance of the potential liability and the nature of the disclosure needed in the financial statements.Which of the following statements is NOT true?

Besides the search for contingent liabilities and the review for subsequent events, the auditor has four important final evidence accumulation responsibilities, all of which are required by current auditing standards.Discuss each of these four responsibilities.

Demand for audit and assurance services

Auditors’ legal environment

Audit quality and ethics

Audit responsibilities and objectives

Audit evidence

Audit planning and documentation

Materiality and risk

Internal control and control risk

Fraud auditing

The impact of information technology on the audit process

Overall audit plan and audit program

Audit of the sales and collection cycle: Tests of controls and substantive tests of transactions

Completing tests in the sales and collection cycle: Accounts receivable

Audit sampling

Audit of transaction cycles and financial statement balances I

Audit of transaction cycles and financial statement balances II

Audit reporting

Other auditing and assurance engagements

Filters