Question 1

Which of the following procedures would an auditor most likely perform while evaluating audit findings at the conclusion of an audit?

Accepted Answer

A) Obtain assurance from the entity's attorney that all material litigation has been disclosed in the financial statements. 
B) Verify the clerical accuracy of the entity's proof of cash and its bank cutoff statement. 
C) Determine whether reportable conditions have been corrected. 
D) Calculate an estimate the total of uncorrected misstatements in the financial statements. 
A) Obtain assurance from the entity's attorney that all material litigation has been disclosed in the financial statements. 
B) Verify the clerical accuracy of the entity's proof of cash and its bank cutoff statement. 
C) Determine whether reportable conditions have been corrected. 
D) Calculate an estimate the total of uncorrected misstatements in the financial statements.

Question 2

Effective internal control over the payroll function would include which of the following?

Accepted Answer

A) Total time recorded on time clock cards should be reconciled to job reports by employees responsible for those specific jobs. 
B) Payroll department employees should be supervised by the management of the personnel department. 
C) Payroll department employees should be responsible for maintaining employee personnel records. 
D) Total time spent on jobs should be compared with total time indicated on time clock punch cards. 
A) Total time recorded on time clock cards should be reconciled to job reports by employees responsible for those specific jobs. 
B) Payroll department employees should be supervised by the management of the personnel department. 
C) Payroll department employees should be responsible for maintaining employee personnel records. 
D) Total time spent on jobs should be compared with total time indicated on time clock punch cards.

Question 3

Which of the following ledger accounts would be least likely to be analyzed in detail by auditors?

Accepted Answer

A) Miscellaneous revenue. 
B) Professional fees. 
C) Supplies expense. 
D) Repairs and maintenance. 
A) Miscellaneous revenue. 
B) Professional fees. 
C) Supplies expense. 
D) Repairs and maintenance.

Question 4

Authorization of which of the following is least likely to be found during a review of the minutes of the board of directors?

Accepted Answer

A) Dividends. 
B) New debt issuance. 
C) New bank accounts. 
D) Write-off of trade accounts receivable. 
A) Dividends. 
B) New debt issuance. 
C) New bank accounts. 
D) Write-off of trade accounts receivable.

Question 5

Which of the following is not a procedure normally performed while completing the audit of a public company?

Accepted Answer

A) Obtain a lawyer's letter. 
B) Obtain a representations letter. 
C) Perform an overall review using analytical procedures. 
D) Update internal control questionnaire. 
A) Obtain a lawyer's letter. 
B) Obtain a representations letter. 
C) Perform an overall review using analytical procedures. 
D) Update internal control questionnaire.

Question 6

Which of the following types of matters do not generally require disclosure in the financial statements?

Accepted Answer

A) General risk contingencies. 
B) Commitments. 
C) Loss contingencies. 
D) Liabilities to related parties. 
A) General risk contingencies. 
B) Commitments. 
C) Loss contingencies. 
D) Liabilities to related parties.

Question 7

Auditors should perform audit procedures relating to subsequent events?

Accepted Answer

A) Through year-end. 
B) Through issuance of the audit report. 
C) Through the date of the audit report. 
D) For a reasonable period after year-end. 
A) Through year-end. 
B) Through issuance of the audit report. 
C) Through the date of the audit report. 
D) For a reasonable period after year-end.

Question 8

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) Accept responsibility for year-end adjusting entries. 
C) Permit inclusion of a note captioned: event (unaudited)subsequent to the date of the auditor's report. 
D) Assume responsibility for resolving all events subsequent to the issuance of the auditor's report. 
A) Extend auditing procedures. 
B) Accept responsibility for year-end adjusting entries. 
C) Permit inclusion of a note captioned: event (unaudited)subsequent to the date of the auditor's report. 
D) Assume responsibility for resolving all events subsequent to the issuance of the auditor's report.

Question 9

An example of an internal control weakness is to assign the human resource department responsibility for:

Accepted Answer

A) Maintaining time cards. 
B) Hiring personnel. 
C) Authorizing deductions from pay. 
D) Interviewing employees for jobs. 
A) Maintaining time cards. 
B) Hiring personnel. 
C) Authorizing deductions from pay. 
D) Interviewing employees for jobs.

Question 10

In evaluating whether there is a sufficiently low probability of material misstatement in the financial statements,the auditors accumulate:

Accepted Answer

A) Factual misstatements in the financial statements. 
B) Judgmental misstatements in the financial statements. 
C) Factual and judgmental misstatements in the financial statements. 
D) Factual,judgmental and projected misstatements and an allowance for undetected misstatements in the financial statements. 
A) Factual misstatements in the financial statements. 
B) Judgmental misstatements in the financial statements. 
C) Factual and judgmental misstatements in the financial statements. 
D) Factual,judgmental and projected misstatements and an allowance for undetected misstatements in the financial statements.

Question 11

Material loss contingencies should be recorded in the financial statements if available information indicates it is probable that a loss had been sustained prior to the balance sheet date and the amount of such loss can be reasonably estimated.For a public company these considerations will affect the audit report as follows:

Accepted Answer

A) If a loss meets these criteria,the auditor may issue an unqualified opinion but is required to point out the contingency in an explanatory paragraph of the report. 
B) If a loss meets these criteria and is disclosed in the financial statement notes,the auditor may issue an unqualified opinion,but is required to point out the contingency in an explanatory paragraph of the report. 
C) If a loss meets these criteria and is disclosed in the financial statement notes,the auditor may issue an unqualified opinion,but should consider adding an explanatory paragraph as a means of emphasizing the disclosure. 
D) If a loss is probable but the amount cannot be reasonably estimated and is disclosed in the notes to the financial statements,the auditor may issue an unqualified opinion. 
A) If a loss meets these criteria,the auditor may issue an unqualified opinion but is required to point out the contingency in an explanatory paragraph of the report. 
B) If a loss meets these criteria and is disclosed in the financial statement notes,the auditor may issue an unqualified opinion,but is required to point out the contingency in an explanatory paragraph of the report. 
C) If a loss meets these criteria and is disclosed in the financial statement notes,the auditor may issue an unqualified opinion,but should consider adding an explanatory paragraph as a means of emphasizing the disclosure. 
D) If a loss is probable but the amount cannot be reasonably estimated and is disclosed in the notes to the financial statements,the auditor may issue an unqualified opinion.

Question 12

Which of the following auditing procedures is ordinarily performed last?

Accepted Answer

A) Reading of the minutes of the directors' meetings. 
B) Confirming accounts payable. 
C) Obtaining a management representation letter. 
D) Testing of the purchasing function. 
A) Reading of the minutes of the directors' meetings. 
B) Confirming accounts payable. 
C) Obtaining a management representation letter. 
D) Testing of the purchasing function.

Question 13

The purpose of segregating the duties of distributing payroll checks and hiring personnel is to:

Accepted Answer

A) Separate the custody of assets from the accounting for those assets. 
B) Establish clear lines of authority and responsibility. 
C) Separate duties within the accounting function. 
D) Separate the authorization of transactions from the custody of related assets. 
A) Separate the custody of assets from the accounting for those assets. 
B) Establish clear lines of authority and responsibility. 
C) Separate duties within the accounting function. 
D) Separate the authorization of transactions from the custody of related assets.

Question 14

To minimize the opportunities for fraud,unclaimed cash payroll should be:

Accepted Answer

A) Deposited in a safe deposit box. 
B) Held by the payroll custodian. 
C) Deposited in a special bank account. 
D) Held by the controller. 
A) Deposited in a safe deposit box. 
B) Held by the payroll custodian. 
C) Deposited in a special bank account. 
D) Held by the controller.

Question 15

Subsequent events that provide additional evidence as to conditions that existed at the balance sheet date may result in adjusting journal entries.

Accepted Answer

A) True 
 B)False

Question 16

Analytical procedures are often used for verification of income statement accounts.

Accepted Answer

A) True 
 B)False

Question 17

The auditors' primary means of obtaining corroboration of management's information concerning litigation is a:

Accepted Answer

A) Letter of audit inquiry to the client's lawyer. 
B) Letter of corroboration from the auditor's lawyer upon review of the legal documentation. 
C) Confirmation of claims and assessments from the other parties to the litigation. 
D) Confirmation of claims and assessments from an officer of the court presiding over the litigation. 
A) Letter of audit inquiry to the client's lawyer. 
B) Letter of corroboration from the auditor's lawyer upon review of the legal documentation. 
C) Confirmation of claims and assessments from the other parties to the litigation. 
D) Confirmation of claims and assessments from an officer of the court presiding over the litigation.

Question 18

Management estimates the company's allowance for doubtful accounts as $200,000,and the auditors develop an estimate that suggests that the amount should be between $230,000 and $250,000.The factual misstatement in this situation is:

Accepted Answer

A) $0. 
B) $30,000. 
C) $40,000. 
D) $50,000. 
A) $0. 
B) $30,000. 
C) $40,000. 
D) $50,000.

Question 19

Which of the following statements ordinarily is not included among the written client representations made by the chief executive officer and the chief financial officer?

Accepted Answer

A) "Sufficient audit evidence has been made available to the auditor to permit the issuance of an unqualified opinion." 
B) "There are no unasserted claims or assessments that our lawyer has advised us are probable of assertion and must be disclosed." 
C) "We have no plans or intentions that may materially affect the carrying value or classification of assets and liabilities." 
D) "No events have occurred subsequent to the balance sheet date that would require adjustment to,or disclosure in,the financial statements." 
A) "Sufficient audit evidence has been made available to the auditor to permit the issuance of an unqualified opinion." 
B) "There are no unasserted claims or assessments that our lawyer has advised us are probable of assertion and must be disclosed." 
C) "We have no plans or intentions that may materially affect the carrying value or classification of assets and liabilities." 
D) "No events have occurred subsequent to the balance sheet date that would require adjustment to,or disclosure in,the financial statements."

Question 20

The proper use of prenumbered termination forms by the payroll department should provide assurance that all:

Accepted Answer

A) Uncashed payroll checks were issued to employees who have not been terminated. 
B) Personnel files are kept up to date. 
C) Employees who have not been terminated receive their payroll checks. 
D) Terminated employees are removed from payroll. 
A) Uncashed payroll checks were issued to employees who have not been terminated. 
B) Personnel files are kept up to date. 
C) Employees who have not been terminated receive their payroll checks. 
D) Terminated employees are removed from payroll.

Which of the following procedures would an auditor most likely perform while evaluating audit findings at the conclusion of an audit?

Effective internal control over the payroll function would include which of the following?

Which of the following ledger accounts would be least likely to be analyzed in detail by auditors?

Authorization of which of the following is least likely to be found during a review of the minutes of the board of directors?

Which of the following is not a procedure normally performed while completing the audit of a public company?

Which of the following types of matters do not generally require disclosure in the financial statements?

Auditors should perform audit procedures relating to subsequent events?

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

An example of an internal control weakness is to assign the human resource department responsibility for:

In evaluating whether there is a sufficiently low probability of material misstatement in the financial statements,the auditors accumulate:

Which of the following auditing procedures is ordinarily performed last?

The purpose of segregating the duties of distributing payroll checks and hiring personnel is to:

To minimize the opportunities for fraud,unclaimed cash payroll should be:

Subsequent events that provide additional evidence as to conditions that existed at the balance sheet date may result in adjusting journal entries.

Analytical procedures are often used for verification of income statement accounts.

The auditors' primary means of obtaining corroboration of management's information concerning litigation is a:

Management estimates the company's allowance for doubtful accounts as $200,000,and the auditors develop an estimate that suggests that the amount should be between $230,000 and $250,000.The factual misstatement in this situation is:

Which of the following statements ordinarily is not included among the written client representations made by the chief executive officer and the chief financial officer?

The proper use of prenumbered termination forms by the payroll department should provide assurance that all:

The Role of the Public Accountant in the American Economy

Professional Standards

Professional Ethics

Legal Liability of Cpas

Audit Evidence and Documentation

Audit Planning, understanding the Client, assessing Risks, and Responding

Internal Control

Consideration of Internal Control in an Information Technology Environment

Audit Sampling

Cash and Financial Investments

Accounts Receivable, notes Receivable, and Revenue

Inventories and Cost of Goods Sold

Property,plant,and Equipment: Depreciation and Depletion

Accounts Payable and Other Liabilities

Debt and Equity Capital

Auditors Reports

Integrated Audits of Public Companies

Additional Assurance Services: Historical Financial Information

Additional Assurance Services: Other Information

Internal, operational, and Compliance Auditing

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Exam 16: Auditing Operations and Completing the Audit

Which of the following procedures would an auditor most likely perform while evaluating audit findings at the conclusion of an audit?

Effective internal control over the payroll function would include which of the following?

Which of the following ledger accounts would be least likely to be analyzed in detail by auditors?

Authorization of which of the following is least likely to be found during a review of the minutes of the board of directors?

Which of the following is not a procedure normally performed while completing the audit of a public company?

Which of the following types of matters do not generally require disclosure in the financial statements?

Auditors should perform audit procedures relating to subsequent events?

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

An example of an internal control weakness is to assign the human resource department responsibility for:

In evaluating whether there is a sufficiently low probability of material misstatement in the financial statements,the auditors accumulate:

Which of the following auditing procedures is ordinarily performed last?

The purpose of segregating the duties of distributing payroll checks and hiring personnel is to:

To minimize the opportunities for fraud,unclaimed cash payroll should be:

Subsequent events that provide additional evidence as to conditions that existed at the balance sheet date may result in adjusting journal entries.

Analytical procedures are often used for verification of income statement accounts.

The auditors' primary means of obtaining corroboration of management's information concerning litigation is a:

Management estimates the company's allowance for doubtful accounts as $200,000,and the auditors develop an estimate that suggests that the amount should be between $230,000 and $250,000.The factual misstatement in this situation is:

Which of the following statements ordinarily is not included among the written client representations made by the chief executive officer and the chief financial officer?

The proper use of prenumbered termination forms by the payroll department should provide assurance that all:

The Role of the Public Accountant in the American Economy

Professional Standards

Professional Ethics

Legal Liability of Cpas

Audit Evidence and Documentation

Audit Planning, understanding the Client, assessing Risks, and Responding

Internal Control

Consideration of Internal Control in an Information Technology Environment

Audit Sampling

Cash and Financial Investments

Accounts Receivable, notes Receivable, and Revenue

Inventories and Cost of Goods Sold

Property,plant,and Equipment: Depreciation and Depletion

Accounts Payable and Other Liabilities

Debt and Equity Capital

Auditors Reports

Integrated Audits of Public Companies

Additional Assurance Services: Historical Financial Information

Additional Assurance Services: Other Information

Internal, operational, and Compliance Auditing

Filters