Question 1

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

Question 2

State the three purposes of the management representation letter.

Accepted Answer

•To impress upon management its responsi

Question 3

Client representation letters are required by professional auditing standards,whereas management letters are optional.

Accepted Answer

A) True 
 B)False

Question 4

If the client refuses to prepare and sign a letter of representation,the auditor would be required to issue either a qualified opinion or a disclaimer of opinion.

Accepted Answer

A) True 
 B)False

Question 5

When subsequent events are used to evaluate the amounts included in the year-end financial statements,auditors must distinguish between conditions that existed at the balance sheet date and those that came into being after the balance sheet date.

Accepted Answer

A) True 
 B)False

Question 6

There are three reasons why an experienced member of the audit firm must thoroughly review audit documentation of the completion of the audit,including

Accepted Answer

A) to evaluate the performance of inexperienced personnel. 
B) to make sure that the audit meets the CPA firm's standard of performance. 
C) to counteract the bias that often enters into the auditor's judgment. 
D) all of the above. 
A) to evaluate the performance of inexperienced personnel. 
B) to make sure that the audit meets the CPA firm's standard of performance. 
C) to counteract the bias that often enters into the auditor's judgment. 
D) all of the above.

Question 7

Which of the following is an accurate statement regarding audit documentation review?

Accepted Answer

A) The audit partner must review the work of the least experienced auditor in more detail than the work of the audit supervisor. 
B) The audit senior must review all audit documentation. 
C) For larger audits,it is common to have the financial statements and the entire set of audit files reviewed by someone who has not participated in the audit,but is a member of the audit firm doing the audit. 
D) Checklists can never be used to verify that all financial statement disclosures have been made. 
A) The audit partner must review the work of the least experienced auditor in more detail than the work of the audit supervisor. 
B) The audit senior must review all audit documentation. 
C) For larger audits,it is common to have the financial statements and the entire set of audit files reviewed by someone who has not participated in the audit,but is a member of the audit firm doing the audit. 
D) Checklists can never be used to verify that all financial statement disclosures have been made.

Question 8

The auditor's responsibility for reviewing subsequent events is normally limited to thirty days after the balance sheet date.

Accepted Answer

A) True 
 B)False

Question 9

Auditing standards require auditors to evaluate whether there is substantial doubt about a client's ability to continue as a going concern.One of the most important audit procedures to perform to assess the going concern question is

Accepted Answer

A) analytical procedures. 
B) confirmations from creditors. 
C) statistical sampling procedures. 
D) tests of internal controls. 
A) analytical procedures. 
B) confirmations from creditors. 
C) statistical sampling procedures. 
D) tests of internal controls.

Question 10

An independent review must be performed of all audits.

Accepted Answer

A) True 
 B)False

Question 11

If a potential loss on a contingent liability is remote,the liability usually is

Accepted Answer

A) disclosed in footnotes,but not accrued. 
B) neither accrued nor disclosed in footnotes. 
C) accrued and indicated in the body of the financial statements. 
D) disclosed in the auditor's report but not disclosed on the financial statements. 
A) disclosed in footnotes,but not accrued. 
B) neither accrued nor disclosed in footnotes. 
C) accrued and indicated in the body of the financial statements. 
D) disclosed in the auditor's report but not disclosed on the financial statements.

Question 12

Auditing standards require that the auditor 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 balance sheet date. 
B) one quarter beyond the date of the auditor's report. 
C) one year beyond the balance sheet date. 
D) one year beyond the date of the auditor's report. 
A) one quarter beyond the balance sheet date. 
B) one quarter beyond the date of the auditor's report. 
C) one year beyond the balance sheet date. 
D) one year beyond the date of the auditor's report.

Question 13

The fieldwork for the December 31,2016 audit of Treble Corporation ended on March 17,2017.The financial statements and auditor's report were issued and mailed to stockholders on March 29,2017.In each of the material situations (1 through 5)below,indicate the appropriate action (a,b,c,d,or e).The possible actions are as follows:
a. Adjust the December 31,2016 financial statements.
b. Disclose the information in a footnote in the December 31,2016 financial statements.
c. Request the client revise and reissue the December 31,2016 financial statements.The revision should involve an adjustment to the December 31,2016 financial statements.
d. Request the client revise and reissue the December 31,2016 financial statements.The revision should involve the addition of a footnote,but no adjustment,to the December 31,2016 financial statements.
e. No action is required.
The situations are as follows:
________ 1.On January 16,2017 a lawsuit was filed against Treble for a patent infringement action that allegedly took place in early 2014.In the opinion of Treble's attorneys,there is a reasonable (but not probable)danger of a significant loss to Treble.
________ 2.On February 19,2017,Treble settled a lawsuit out of court that had originated in 2015 and is currently listed as a contingent liability.
________ 3.On March 30,2017,Treble settled a lawsuit out of court that had originated in 2014 and is currently listed as a contingent liability.
________ 4.On February 2,2017,you discovered an uninsured lawsuit against Treble that had originated on August 30,2013.There is a reasonable (but not probable)danger of a significant loss to Treble.
________ 5.On April 7,2017,you discovered that a debtor of Treble went bankrupt on January 22,2017,due to a major uninsured fire that occurred on January 2,2017.

Accepted Answer

The answer of The fieldwork for the December 31,2016 audit...

Question 14

When communicating with the audit committee and management,

Accepted Answer

A) only material fraud and illegal acts are required by auditing standards to be communicated. 
B) all internal control deficiencies are required by auditing standards to be communicated. 
C) the communications should be made in a timely manner to allow those charged with governance to take appropriate actions. 
D) all communications with the audit committee and management must be in writing. 
A) only material fraud and illegal acts are required by auditing standards to be communicated. 
B) all internal control deficiencies are required by auditing standards to be communicated. 
C) the communications should be made in a timely manner to allow those charged with governance to take appropriate actions. 
D) all communications with the audit committee and management must be in writing.

Question 15

Which of the following is correct regarding supplementary information?

Accepted Answer

A) The auditor must express an opinion on the supplementary information. 
B) When reporting on supplementary information,the auditor uses a different materiality threshold from that used in forming an opinion on the basic financial statements. 
C) If the auditor's report on the audited financial statements contains an adverse opinion,the auditor can still issue an unqualified opinion on the supplementary information. 
D) The auditor can issue a separate report on the supplementary information;it does not need to be part of the report on the financial statements. 
A) The auditor must express an opinion on the supplementary information. 
B) When reporting on supplementary information,the auditor uses a different materiality threshold from that used in forming an opinion on the basic financial statements. 
C) If the auditor's report on the audited financial statements contains an adverse opinion,the auditor can still issue an unqualified opinion on the supplementary information. 
D) The auditor can issue a separate report on the supplementary information;it does not need to be part of the report on the financial statements.

Question 16

Attorneys in recent years have become reluctant to provide certain information to auditors because of their own exposure to legal liability for providing incorrect or confidential information.State the two main reasons that attorneys refuse to provide the auditors with complete information.

Accepted Answer

•The attorneys refuse to respo

Question 17

Which of the following is not one of the categories of items included in the letter of representation?

Accepted Answer

A) subsequent events 
B) completeness of information 
C) recognition,measurement,and disclosure 
D) materiality 
A) subsequent events 
B) completeness of information 
C) recognition,measurement,and disclosure 
D) materiality

Question 18

Which of the following groups has the responsibility for identifying and deciding the appropriate accounting treatment for recording or disclosing contingent liabilities?

Accepted Answer

A) auditors 
B) legal counsel 
C) management 
D) management and the auditors 
A) auditors 
B) legal counsel 
C) management 
D) management and the auditors

Question 19

With which of the following client personnel would it generally not be appropriate to inquire about commitments or contingent liabilities?

Accepted Answer

A) controller 
B) president 
C) accounts receivable clerk 
D) vice president of sales 
A) controller 
B) president 
C) accounts receivable clerk 
D) vice president of sales

Question 20

Which of the following is an accurate statement regarding presentation and disclosure?

Accepted Answer

A) Auditors generally set the risk as low that all required information may not be completely disclosed in the footnotes. 
B) Audit tests performed in earlier audit phases provides sufficient appropriate evidence about contingent liabilities and subsequent events. 
C) Auditors do not conduct tests of controls related to disclosures when the initial assessment of control risk is below maximum. 
D) In phase IV (completing the audit),auditors evaluate whether the overall presentation of the financial statements and related footnotes complies with accounting standards. 
A) Auditors generally set the risk as low that all required information may not be completely disclosed in the footnotes. 
B) Audit tests performed in earlier audit phases provides sufficient appropriate evidence about contingent liabilities and subsequent events. 
C) Auditors do not conduct tests of controls related to disclosures when the initial assessment of control risk is below maximum. 
D) In phase IV (completing the audit),auditors evaluate whether the overall presentation of the financial statements and related footnotes complies with accounting standards.

Exam 24: Completing the Audit

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

State the three purposes of the management representation letter.

Client representation letters are required by professional auditing standards,whereas management letters are optional.

If the client refuses to prepare and sign a letter of representation,the auditor would be required to issue either a qualified opinion or a disclaimer of opinion.

When subsequent events are used to evaluate the amounts included in the year-end financial statements,auditors must distinguish between conditions that existed at the balance sheet date and those that came into being after the balance sheet date.

There are three reasons why an experienced member of the audit firm must thoroughly review audit documentation of the completion of the audit,including

Which of the following is an accurate statement regarding audit documentation review?

The auditor's responsibility for reviewing subsequent events is normally limited to thirty days after the balance sheet date.

Auditing standards require auditors to evaluate whether there is substantial doubt about a client's ability to continue as a going concern.One of the most important audit procedures to perform to assess the going concern question is

An independent review must be performed of all audits.

If a potential loss on a contingent liability is remote,the liability usually is

Auditing standards require that the auditor evaluate whether there is a substantial doubt about a client's ability to continue as a going concern for at least

When communicating with the audit committee and management,

Which of the following is correct regarding supplementary information?

Attorneys in recent years have become reluctant to provide certain information to auditors because of their own exposure to legal liability for providing incorrect or confidential information.State the two main reasons that attorneys refuse to provide the auditors with complete information.

Which of the following is not one of the categories of items included in the letter of representation?

Which of the following groups has the responsibility for identifying and deciding the appropriate accounting treatment for recording or disclosing contingent liabilities?

With which of the following client personnel would it generally not be appropriate to inquire about commitments or contingent liabilities?

Which of the following is an accurate statement regarding presentation and disclosure?

The Demand for Audit and Other Assurance Services

The Cpa Profession

Audit Reports

Professional Ethics

Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Audit Planning and Analytical Procedures

Materiality and Risk

Fraud Auditing

Internal Control and Coso Framework

Assessing Control Risk and Reporting on Internal Controls

Overall Audit Strategy and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls

Audit Sampling for Tests of Controls and Substantive Tests of Transactions

Completing the Tests in the Sales and Collection Cycle: Accounts Receivable

Audit Sampling for Tests of Details of Balances

Audit of the Acquisition and Payment Cycle: Tests of Controls,

Completing the Tests in the Acquisition and Payment Cycle:

Audit of the Payroll and Personnel Cycle

Audit of the Inventory and Warehousing Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash and Financial Instruments

Other Assurance Services

Internal and Governmental Financial Auditing and Operational Auditing

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