Question 1

After performing all audit procedures in each area, the auditor must integrate the results into an overall conclusion about the financial statements.

Accepted Answer

A) True 
 B)False

Question 2

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

1. b
2. a

Question 3

To make a final evaluation as to whether sufficient appropriate evidence has been accumulated, the auditor will do all of the following except

Accepted Answer

A)  review the audit documentation for the entire audit to determine whether all material classes of transactions have been adequately tested. 
B)  make sure that all parts of the audit program have been accurately completed and documented. 
C)  obtain the management representation letter. 
D)  decide whether the audit program is adequate. 
A)  review the audit documentation for the entire audit to determine whether all material classes of transactions have been adequately tested. 
B)  make sure that all parts of the audit program have been accurately completed and documented. 
C)  obtain the management representation letter. 
D)  decide whether the audit program is adequate.

Question 4

Audit tests performed in earlier audit phases often provide sufficient appropriate evidence about contingent liabilities and subsequent events.

Accepted Answer

A) True 
 B)False

Question 5

PCAOB auditing standards require the auditor to communicate key audit matters or critical audit matters in the standard unqualified audit report.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is not a reason why the auditor requests that the client provide a letter of representation?

Accepted Answer

A)  Professional auditing standards require the auditor to obtain a letter of representation. 
B)  It impresses upon management its responsibility for the accuracy of the information in the financial statements. 
C)  It provides written documentation of the oral responses already received to inquiries of management. 
D)  It determines the type of opinion the auditor will issue on the financial statements. 
A)  Professional auditing standards require the auditor to obtain a letter of representation. 
B)  It impresses upon management its responsibility for the accuracy of the information in the financial statements. 
C)  It provides written documentation of the oral responses already received to inquiries of management. 
D)  It determines the type of opinion the auditor will issue on the financial statements.

Question 7

Which type of subsequent event requires consideration by management and evaluation by the auditor?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 8

An independent review must be performed of all audits.

Accepted Answer

A) True 
 B)False

Question 9

List the three reasons why an experienced member of the audit firm must thoroughly review audit documentation at the completion of the audit.

Accepted Answer

1. To evaluate the performance of inexpe

Question 10

Auditors of accelerated filer public companies

Accepted Answer

A)  are responsible for reviewing subsequent events for a period of up to six months after the balance sheet date. 
B)  must always dual-date their audit reports. 
C)  must inquire about and consider any information about subsequent events that materially affects the effectiveness of internal control over financial reporting. 
D)  must perform all of the above procedures. 
A)  are responsible for reviewing subsequent events for a period of up to six months after the balance sheet date. 
B)  must always dual-date their audit reports. 
C)  must inquire about and consider any information about subsequent events that materially affects the effectiveness of internal control over financial reporting. 
D)  must perform all of the above procedures.

Question 11

An auditor has the responsibility to actively search for subsequent events that occur subsequent to the

Accepted Answer

A)  balance sheet date. 
B)  date of the auditor's report. 
C)  balance sheet date, but prior to the audit report. 
D)  date of the management representation letter. 
A)  balance sheet date. 
B)  date of the auditor's report. 
C)  balance sheet date, but prior to the audit report. 
D)  date of the management representation letter.

Question 12

Define the term contingent liability and discuss the criteria accountants and auditors use to classify these accounting events.

Accepted Answer

A contingent liability is a potential fu

Question 13

The probability threshold for dealing with uncertainty in loss contingencies uses the terms likely and unlikely.

Accepted Answer

A) True 
 B)False

Question 14

Although the letter of representation is typed on the client's letterhead and signed by the client, it is common for the auditor to prepare the letter.

Accepted Answer

A) True 
 B)False

Question 15

Current professional auditing standards require the performance of analytical procedures during the planning and completion phases of the audit.

Accepted Answer

A) True 
 B)False

Question 16

A client has a calendar year-end. Listed below are four events that occurred after December 31. Which one of these subsequent events might result in adjustment of the December 31 financial statements?

Accepted Answer

A)  sale of a major subsidiary 
B)  adoption of accelerated depreciation methods 
C)  write-off of a substantial portion of inventory as obsolete 
D)  collection of 90% of the accounts receivable existing at December 31 
A)  sale of a major subsidiary 
B)  adoption of accelerated depreciation methods 
C)  write-off of a substantial portion of inventory as obsolete 
D)  collection of 90% of the accounts receivable existing at December 31

Question 17

Which of the following statements is most correct about an auditor's required communication with management and those charged with corporate governance?

Accepted Answer

A)  The auditor is required to inform those charged with governance about significant errors discovered and subsequently corrected by management. 
B)  Any significant matter reported to those charged with governance must also be communicated to management. 
C)  Communication is required before the audit report is issued. 
D)  The auditor does not have any requirement to communicate with anyone other than the company's senior management. 
A)  The auditor is required to inform those charged with governance about significant errors discovered and subsequently corrected by management. 
B)  Any significant matter reported to those charged with governance must also be communicated to management. 
C)  Communication is required before the audit report is issued. 
D)  The auditor does not have any requirement to communicate with anyone other than the company's senior management.

Question 18

The standard inquiry to the client's attorney should be prepared on

Accepted Answer

A)  plain paper (no letterhead) and be unsigned. 
B)  lawyer's stationery and signed by the lawyer. 
C)  auditor's stationery and signed by an audit partner. 
D)  client's letterhead and signed by a company official. 
A)  plain paper (no letterhead) and be unsigned. 
B)  lawyer's stationery and signed by the lawyer. 
C)  auditor's stationery and signed by an audit partner. 
D)  client's letterhead and signed by a company official.

Question 19

Which of the following is a contingent liability with which an auditor is particularly concerned?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 20

If an auditor concludes there are contingent liabilities, then he or she must evaluate the

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Exam 24: Completing the Audit

After performing all audit procedures in each area, the auditor must integrate the results into an overall conclusion about the financial statements.

To make a final evaluation as to whether sufficient appropriate evidence has been accumulated, the auditor will do all of the following except

Audit tests performed in earlier audit phases often provide sufficient appropriate evidence about contingent liabilities and subsequent events.

PCAOB auditing standards require the auditor to communicate key audit matters or critical audit matters in the standard unqualified audit report.

Which of the following is not a reason why the auditor requests that the client provide a letter of representation?

Which type of subsequent event requires consideration by management and evaluation by the auditor?

An independent review must be performed of all audits.

List the three reasons why an experienced member of the audit firm must thoroughly review audit documentation at the completion of the audit.

Auditors of accelerated filer public companies

An auditor has the responsibility to actively search for subsequent events that occur subsequent to the

Define the term contingent liability and discuss the criteria accountants and auditors use to classify these accounting events.

The probability threshold for dealing with uncertainty in loss contingencies uses the terms likely and unlikely.

Although the letter of representation is typed on the client's letterhead and signed by the client, it is common for the auditor to prepare the letter.

Current professional auditing standards require the performance of analytical procedures during the planning and completion phases of the audit.

A client has a calendar year-end. Listed below are four events that occurred after December 31. Which one of these subsequent events might result in adjustment of the December 31 financial statements?

Which of the following statements is most correct about an auditor's required communication with management and those charged with corporate governance?

The standard inquiry to the client's attorney should be prepared on

Which of the following is a contingent liability with which an auditor is particularly concerned?

If an auditor concludes there are contingent liabilities, then he or she must evaluate the

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 Materiality

Assessing the Risk of Material Misstatement

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, Substantive Tests of Transactions, and Accounts Payable

Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts

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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