Exam 24: Completing the Audit

An example of a presentation and disclosure-related objective is determining that current and noncurrent receivables are classified, separately, and any factoring or discounting of notes receivable is disclosed.

If an auditor discovers that previously issued financial statements are misleading, the most desirable approach to follow is to request that the client issue an immediate revision of the financial statements containing an explanation of the reasons for the revision.

Financial statement disclosure is required if the likelihood of occurrence of an event is probable, reasonably possible, or remote.

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

Many of the audit procedures for finding contingencies are usually performed as an integral part of various segments of the audit rather than as a separate activity near the end of the audit.

The audit procedures for the subsequent events review can be divided into two categories: (1) procedures 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 of the following procedures is in the first category?

A lawsuit has been filed but not yet resolved against an audit client. This lawsuit does not meet the conditions required for a contingent liability.

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?

In connection with the annual audit, which of the following is not a "subsequent events" procedure?

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

Inquiries of management regarding the possibility of unrecorded contingencies will be useful in uncovering

When dealing with contingencies,

What two steps must an auditor take if they have reservations about the audit client continuing as a going concern?

Auditors will generally send a standard inquiry to the client's attorney letter to

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.

If, during the completion phase of the audit, the auditor determines that he or she has not obtained sufficient evidence to draw a conclusion about the fairness of the client's financial statements, there are two choices: accumulate additional evidence or issue either a qualified or an adverse opinion.

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

Audit procedures related to contingent liabilities are initially focused on

List the four principal purposes of the required communication with the audit committee regarding certain additional information obtained during the audit.

One of the primary approaches in dealing with uncertainties in loss contingencies uses a(n) ________ threshold.