Question 1

The Sarbanes-Oxley Act includes additional communication requirements for auditors of public companies.

Accepted Answer

A) True 
 B)False

Question 2

As directed by the Sarbanes-Oxley Act,

Accepted Answer

A)  an attorney must report material violations of federal securities law to the public company's chief legal counsel or chief executive officer. 
B)  attorneys cannot breach confidentiality rules even if a client is committing a crime or a fraud. 
C)  if the audit committee fails to remedy any material violations of the federal securities law, the attorney must report the violation to the SEC. 
D)  All of the above are required by Sarbanes-Oxley. 
A)  an attorney must report material violations of federal securities law to the public company's chief legal counsel or chief executive officer. 
B)  attorneys cannot breach confidentiality rules even if a client is committing a crime or a fraud. 
C)  if the audit committee fails to remedy any material violations of the federal securities law, the attorney must report the violation to the SEC. 
D)  All of the above are required by Sarbanes-Oxley.

Question 3

Which of the following statements regarding the letter of representation is not correct?

Accepted Answer

A)  It is prepared on the client's letterhead. 
B)  It is addressed to the CPA firm. 
C)  It is signed by high-level corporate officials, usually the president and chief financial officer. 
D)  It is optional, not required, that the auditor obtain such a letter from management. 
A)  It is prepared on the client's letterhead. 
B)  It is addressed to the CPA firm. 
C)  It is signed by high-level corporate officials, usually the president and chief financial officer. 
D)  It is optional, not required, that the auditor obtain such a letter from management.

Question 4

Subsequent discoveries of facts requiring the reissuance of financial statements arise from events occurring after the date of the auditor's report.

Accepted Answer

A) True 
 B)False

Question 5

When the auditor's name is associated with a registration statement under the Securities Act of 1933, the auditor's responsibility for reviewing subsequent events is limited to the date of auditor's report, not to the date the registration becomes effective.

Accepted Answer

A) True 
 B)False

Question 6

Auditors approach obtaining evidence for presentation and disclosure objectives different with how they approach obtaining evidence for transaction-related and balance-related objectives.

Accepted Answer

A) True 
 B)False

Question 7

What is one of the main reasons an attorney may refuse to provide auditors with complete information about contingent liabilities?

Accepted Answer

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

Question 8

Match between columns
                        Premises: a potential legal claim against a client where the condition for a claim exists but no claim has been filed
a review of the financial statements and the entire set of audit files by an independent reviewer to whom the audit team must justify the evidence accumulated and the conclusions reached
agreements that the entity will hold to a fixed set of conditions
a potential future obligation to an outside party for an unknown amount resulting from activities that have already taken place
the use of one audit report date for normal subsequent events and a later date for one or more subsequent events such as the purchase or sale of merchandise at a stated price
transactions that occurred after the balance sheet date which affect the fair presentation or disclosure of the statements being audited
a written communication from the client to the auditor formalizing statements that the client has made about matters pertinent to the audit

Accepted Answer

The Answer of pending claim and unasserted claim and subsequent is...

Question 9

The audit firm issues an audit report for its client. The auditors have no obligation to make further inquiries with respect to the client's audited financial statements unless

Accepted Answer

A)  a development occurs that may affect the company's long-term viability as a company. 
B)  final resolution was made on disclosed contingency for which no liability needed to be accrued. 
C)  new information comes to the auditor's attention concerning an event that occurred prior to the date of the audit report that, if known, would have impacted the audit opinion. 
D)  a lawsuit, in which the risk of loss was considered remote, was resolved in the company's favor. 
A)  a development occurs that may affect the company's long-term viability as a company. 
B)  final resolution was made on disclosed contingency for which no liability needed to be accrued. 
C)  new information comes to the auditor's attention concerning an event that occurred prior to the date of the audit report that, if known, would have impacted the audit opinion. 
D)  a lawsuit, in which the risk of loss was considered remote, was resolved in the company's favor.

Question 10

Auditing standards require the auditor to communicate all management frauds and illegal acts to the audit committee

Accepted Answer

A)  only if the act is immaterial. 
B)  only if the act is material. 
C)  only if the act is highly material. 
D)  regardless of materiality. 
A)  only if the act is immaterial. 
B)  only if the act is material. 
C)  only if the act is highly material. 
D)  regardless of materiality.

Question 11

The date of the management representation letter received from the client should

Accepted Answer

A)  be the date of latest subsequent event disclosed in the notes to the financial statements. 
B)  be dated no earlier than the date of the audit report. 
C)  have the same date as the date of the balance sheet. 
D)  have the same date as the date of the engagement letter. 
A)  be the date of latest subsequent event disclosed in the notes to the financial statements. 
B)  be dated no earlier than the date of the audit report. 
C)  have the same date as the date of the balance sheet. 
D)  have the same date as the date of the engagement letter.

Question 12

If an attorney refuses to provide the auditor with information about material existing lawsuits or unasserted claims, current professional standards require that the auditor consider the refusal as a scope limitation.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following would be a subsequent discovery of facts which would not require a response by the auditor?

Accepted Answer

A)  discovery of the inclusion of material nonexistent sales 
B)  discovery of the failure to write off material obsolete inventory 
C)  discovery of the omission of a material footnote 
D)  discovery of management's intent to increase selling prices in the future 
A)  discovery of the inclusion of material nonexistent sales 
B)  discovery of the failure to write off material obsolete inventory 
C)  discovery of the omission of a material footnote 
D)  discovery of management's intent to increase selling prices in the future

Question 14

The audit procedures for the subsequent events review can be divided into two categories: (1) procedures normally 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 second category?

Accepted Answer

A)  Correspond with attorneys. 
B)  Test the collectability of accounts receivable by reviewing subsequent period cash receipts. 
C)  Subsequent period sales and purchase transactions are examined to determine whether the cutoff is accurate. 
D)  Compare the subsequent-period purchase price of inventory with the recorded cost as a test of lower of cost or market valuation. 
A)  Correspond with attorneys. 
B)  Test the collectability of accounts receivable by reviewing subsequent period cash receipts. 
C)  Subsequent period sales and purchase transactions are examined to determine whether the cutoff is accurate. 
D)  Compare the subsequent-period purchase price of inventory with the recorded cost as a test of lower of cost or market valuation.

Question 15

Refusal by a client to prepare and sign the representation letter would require the auditor to issue a(n)

Accepted Answer

A)  qualified opinion or a disclaimer of opinion. 
B)  adverse opinion or a disclaimer of opinion. 
C)  qualified or an adverse opinion. 
D)  unqualified opinion with an explanatory paragraph. 
A)  qualified opinion or a disclaimer of opinion. 
B)  adverse opinion or a disclaimer of opinion. 
C)  qualified or an adverse opinion. 
D)  unqualified opinion with an explanatory paragraph.

The Sarbanes-Oxley Act includes additional communication requirements for auditors of public companies.

As directed by the Sarbanes-Oxley Act,

Which of the following statements regarding the letter of representation is not correct?

Subsequent discoveries of facts requiring the reissuance of financial statements arise from events occurring after the date of the auditor's report.

When the auditor's name is associated with a registration statement under the Securities Act of 1933, the auditor's responsibility for reviewing subsequent events is limited to the date of auditor's report, not to the date the registration becomes effective.

Auditors approach obtaining evidence for presentation and disclosure objectives different with how they approach obtaining evidence for transaction-related and balance-related objectives.

What is one of the main reasons an attorney may refuse to provide auditors with complete information about contingent liabilities?

The audit firm issues an audit report for its client. The auditors have no obligation to make further inquiries with respect to the client's audited financial statements unless

Auditing standards require the auditor to communicate all management frauds and illegal acts to the audit committee

The date of the management representation letter received from the client should

If an attorney refuses to provide the auditor with information about material existing lawsuits or unasserted claims, current professional standards require that the auditor consider the refusal as a scope limitation.

Which of the following would be a subsequent discovery of facts which would not require a response by the auditor?

Refusal by a client to prepare and sign the representation letter would require the auditor to issue a(n)

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

Filters

Exam 24: Completing the Audit

The Sarbanes-Oxley Act includes additional communication requirements for auditors of public companies.

As directed by the Sarbanes-Oxley Act,

Which of the following statements regarding the letter of representation is not correct?

Subsequent discoveries of facts requiring the reissuance of financial statements arise from events occurring after the date of the auditor's report.

When the auditor's name is associated with a registration statement under the Securities Act of 1933, the auditor's responsibility for reviewing subsequent events is limited to the date of auditor's report, not to the date the registration becomes effective.

Auditors approach obtaining evidence for presentation and disclosure objectives different with how they approach obtaining evidence for transaction-related and balance-related objectives.

What is one of the main reasons an attorney may refuse to provide auditors with complete information about contingent liabilities?

The audit firm issues an audit report for its client. The auditors have no obligation to make further inquiries with respect to the client's audited financial statements unless

Auditing standards require the auditor to communicate all management frauds and illegal acts to the audit committee

The date of the management representation letter received from the client should

If an attorney refuses to provide the auditor with information about material existing lawsuits or unasserted claims, current professional standards require that the auditor consider the refusal as a scope limitation.

Which of the following would be a subsequent discovery of facts which would not require a response by the auditor?

Refusal by a client to prepare and sign the representation letter would require the auditor to issue a(n)

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

Filters