Exam 24: Completing the Audit

When an auditor reviews the financial statements to determine if assets are properly classified between current and noncurrent, he or she is satisfying the audit objective of occurrence and rights and obligations.

Accounting standards generally require the financial statements to be prepared on the assumption an entity will continue its operations for a reasonable amount of time.

Which of the following audit procedures would most likely assist an auditor in identifying conditions and events that may indicate there could be substantial doubt about an entity's ability to continue as a going concern?

Auditors often integrate procedures for presentation and disclosure objectives with

If the auditor is unable to determine the effect of a subsequent event on the effectiveness of internal control at year-end, the auditor must give an adverse opinion on internal control over financial reporting.

The auditor's responsibility for "reviewing the subsequent events" of a public company that is about to issue new securities is normally limited to the period of time

A management representation letter is

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

Because a management representation letter is a written statement from a nonindependent source, it cannot be regarded as reliable evidence.

Auditors are required to obtain a letter of representation that describes management's planned solutions to all internal control weaknesses identified during an audit.

Results from the final analytical procedures may indicate that additional audit evidence is necessary.

If an attorney refuses to provide the auditor with information about material existing lawsuits or unasserted claims,

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

Three conditions are required for a contingent liability to exist. Which of the following is not one of those conditions?

After the balance sheet date, but prior to the issuance of the audit report, the client suffers an uninsured loss of their inventory as a result of a fire. The amount of the loss is material. The auditor should

Which of the following would the auditor expect to find in the client's management representation letter?

Whenever subsequent events are used to evaluate the amounts included in the statements, care must be taken to distinguish between conditions that existed at the balance sheet date and those that come into being after the balance sheet date. The subsequent information should not be incorporated directly into the statements if the conditions causing the change in valuation

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

Often, procedures for the presentation objectives are integrated with the auditor's tests for transaction-related and balance-related audit objectives.

An environmental clean-up lawsuit is pending against your client. What information about the lawsuit would you as the auditor need in order to determine the proper accounting treatment?