Question 1

To whom should written representations be addressed?

Accepted Answer

A)  Auditors 
B)  Board of directors 
C)  Client 
D)  Stockholders 
A)  Auditors 
B)  Board of directors 
C)  Client 
D)  Stockholders

Question 2

Management letters are not a means of

Accepted Answer

A)  reporting recommendations to the client. 
B)  assisting the client in improving its operations. 
C)  satisfying professional requirements to communicate matters related to the client's internal control. 
D)  developing rapport with the client. 
A)  reporting recommendations to the client. 
B)  assisting the client in improving its operations. 
C)  satisfying professional requirements to communicate matters related to the client's internal control. 
D)  developing rapport with the client.

Question 3

The Orange Corporation was audited for the year ended December 31.The audit was completed on January 25; prior to the release of the report,auditors learned of a two-for-one stock split on February 1.If dual dating is used,what are the proper dates for the auditors' reports?

Accepted Answer

A)  December 31 and January 25 
B)  January 25 and February 1 
C)  January 25 and February 15 
D)  February I and February 15 
A)  December 31 and January 25 
B)  January 25 and February 1 
C)  January 25 and February 15 
D)  February I and February 15

Question 4

On March 15,2015,Kent,CPA,issued an unqualified opinion on a client's audited financial statements for the year ended December 31,2014.On May 4,2015,Kent's internal inspection program disclosed that engagement personnel failed to observe the client's physical inventory.Omission of this procedure impairs Kent's present ability to support the unqualified opinion.If the stockholders are currently relying on the opinion,Kent should first

Accepted Answer

A)  advise management to disclose to the stockholders that Kent's unqualified opinion should not be relied on. 
B)  undertake to apply alternative procedures that would provide a satisfactory basis for the opinion. 
C)  reissue the auditors' reports and add an explanatory paragraph describing the departure from generally accepted auditing standards. 
D)  compensate for the omitted procedure by performing tests of controls to reduce audit risk to a sufficiently low level. 
A)  advise management to disclose to the stockholders that Kent's unqualified opinion should not be relied on. 
B)  undertake to apply alternative procedures that would provide a satisfactory basis for the opinion. 
C)  reissue the auditors' reports and add an explanatory paragraph describing the departure from generally accepted auditing standards. 
D)  compensate for the omitted procedure by performing tests of controls to reduce audit risk to a sufficiently low level.

Question 5

The primary objective of analytical procedures used near the end of an audit is to

Accepted Answer

A)  obtain evidence from details tested to corroborate management assertions. 
B)  obtain evidence on the validity of the assessment of control risk. 
C)  assist auditors in evaluating the overall financial statement presentation. 
D)  identify areas that represent specific risks relevant to the audit. 
A)  obtain evidence from details tested to corroborate management assertions. 
B)  obtain evidence on the validity of the assessment of control risk. 
C)  assist auditors in evaluating the overall financial statement presentation. 
D)  identify areas that represent specific risks relevant to the audit.

Question 6

Indicate the type of communication(s)that correspond to each of the following statements.Use the letters A (attorney letter),M (management letter),and WR (written representations).Each statement may be related to more than one type of communication.
____ 1.Discusses management's responsibility for the fairness of the financial statements.
____ 2.Is obtained on the date of the auditors' report.
____ 3.Provides auditors with significant evidence regarding litigation,claims,and assessments.
____ 4.Discusses the absence of fraud activity by the client and its personnel.
____ 5.Is not required by generally accepted auditing standards.
____ 6.Is intended to be returned to auditors as a form of evidence.
____ 7.Is typically prepared following the audit report release date.
____ 8.Is signed by an executive of the client.

Accepted Answer

1.WR; 2.WR

Question 7

Interim testing normally occurs between the ____ and the ____.

Accepted Answer

A)  beginning of the year under audit; audit report release date 
B)  date of the financial statements; audit report release date 
C)  beginning of the year under audit; date of the financial statements 
D)  end of the year under audit; date of the auditors' report 
A)  beginning of the year under audit; audit report release date 
B)  date of the financial statements; audit report release date 
C)  beginning of the year under audit; date of the financial statements 
D)  end of the year under audit; date of the auditors' report

Question 8

An engagement quality review by a second partner of the audit documentation and financial statements is performed to ensure that the:

Accepted Answer

A)  "to-do lists" are reviewed and cleared. 
B)  audit plan procedures are "signed off." 
C)  tick-mark notations are cleared. 
D)  audit work meets the quality standards of the firm. 
A)  "to-do lists" are reviewed and cleared. 
B)  audit plan procedures are "signed off." 
C)  tick-mark notations are cleared. 
D)  audit work meets the quality standards of the firm.

Question 9

Which of the following items would appear in written representations in the audit of a public entity but not a nonpublic entity?

Accepted Answer

A)  Statements related to management's responsibility for the entity's financial statements 
B)  Statements related to management's responsibility for designing internal control to prevent and detect fraud 
C)  An indication that all subsequent events have been disclosed to the auditors 
D)  Management's opinion as to the effectiveness of its internal control over financial reporting 
A)  Statements related to management's responsibility for the entity's financial statements 
B)  Statements related to management's responsibility for designing internal control to prevent and detect fraud 
C)  An indication that all subsequent events have been disclosed to the auditors 
D)  Management's opinion as to the effectiveness of its internal control over financial reporting

Question 10

Which of the following is the most effective method of identifying potential earnings management attempts?

Accepted Answer

A)  Analytical procedures 
B)  Detailed substantive procedures 
C)  Inquiry of client management and key financial personnel 
D)  Scanning accounts for unusual items 
A)  Analytical procedures 
B)  Detailed substantive procedures 
C)  Inquiry of client management and key financial personnel 
D)  Scanning accounts for unusual items

Question 11

Auditors try to identify predictable relationships when using analytical procedures.Relationships involving transactions from which of the following accounts most likely would yield the highest level of evidence?

Accepted Answer

A)  Accounts receivable 
B)  Interest expense 
C)  Accounts payable 
D)  Travel and entertainment expense 
A)  Accounts receivable 
B)  Interest expense 
C)  Accounts payable 
D)  Travel and entertainment expense

Question 12

A partner of the accounting firm who has not been involved in the audit performs an engagement quality review of documentation.This review usually focuses on

Accepted Answer

A)  the fair presentation of the financial statements in conformity with GAAP. 
B)  irregularities involving the client's management and its employees. 
C)  the materiality of the adjusting entries proposed by the audit staff. 
D)  the communication of internal control deficiencies to the client's audit committee (or those charged with governance). 
A)  the fair presentation of the financial statements in conformity with GAAP. 
B)  irregularities involving the client's management and its employees. 
C)  the materiality of the adjusting entries proposed by the audit staff. 
D)  the communication of internal control deficiencies to the client's audit committee (or those charged with governance).

Question 13

Which of the following best describes the auditors' responsibility with respect to management's estimates?

Accepted Answer

A)  Verifying the mathematical accuracy of management estimates 
B)  Assessing the likelihood that actual results will be consistent with management's estimates 
C)  Evaluating the reasonableness of management's estimates 
D)  Identifying how the failure of the entity to achieve management's estimates will influence users' decisions 
A)  Verifying the mathematical accuracy of management estimates 
B)  Assessing the likelihood that actual results will be consistent with management's estimates 
C)  Evaluating the reasonableness of management's estimates 
D)  Identifying how the failure of the entity to achieve management's estimates will influence users' decisions

Question 14

Define what is meant by the term "subsequent event".In addition,identify the two types of subsequent events and indicate how auditors should modify the engagement for the discovery of subsequent events.

Accepted Answer

A subsequent event is an event that occu

Question 15

What course of action should auditors take if,after evaluating management's plan to mitigate the effect of factors that suggest going-concern uncertainties,they believe that substantial doubt about going concern does not exist?

Accepted Answer

A)  Modify their report on the financial statements to describe management's plan to mitigate going-concern uncertainties, the procedures performed by the auditors, and indicate that substantial doubt about going concern does not exist. 
B)  Prepare a separate report that describes management's plan to mitigate going-concern uncertainties, the procedures performed by the auditors, and indicate that substantial doubt about going concern does not exist. 
C)  Require financial statement disclosure of management's plan to mitigate going-concern uncertainties with no modification to the auditors' report on the financial statements or no separate report on going concern. 
D)  Conclude that substantial doubt about going concern does not exist and not require financial statement disclosure or modification of the auditors' report. 
A)  Modify their report on the financial statements to describe management's plan to mitigate going-concern uncertainties, the procedures performed by the auditors, and indicate that substantial doubt about going concern does not exist. 
B)  Prepare a separate report that describes management's plan to mitigate going-concern uncertainties, the procedures performed by the auditors, and indicate that substantial doubt about going concern does not exist. 
C)  Require financial statement disclosure of management's plan to mitigate going-concern uncertainties with no modification to the auditors' report on the financial statements or no separate report on going concern. 
D)  Conclude that substantial doubt about going concern does not exist and not require financial statement disclosure or modification of the auditors' report.

Question 16

Small and Tall,CPAs completed the December 31,2014 audit of Big Company on February 10,2015.After the audit report release date,an outstanding lawsuit against Big Company was settled for materially more than recorded in the December 31,2014 financial statements.The amount recorded in the financial statements represented the best estimate of management and the company's attorneys at the time the audit was completed.Based on this new information,Small and Tall,CPAs should

Accepted Answer

A)  determine whether persons are currently relying on the auditors' reports. 
B)  advise the client to make appropriate changes in the financial statements and reissue them. 
C)  notify each member of the board of directors of Big Company. 
D)  take no action since the event took place after the audit report release date. 
A)  determine whether persons are currently relying on the auditors' reports. 
B)  advise the client to make appropriate changes in the financial statements and reissue them. 
C)  notify each member of the board of directors of Big Company. 
D)  take no action since the event took place after the audit report release date.

Question 17

Which of the following is not a purpose of the review of audit documentation by a supervisor during fieldwork?

Accepted Answer

A)  To ensure that all appropriate steps in the audit plan were performed 
B)  To ensure that referencing among audit documentation is clear 
C)  To ensure that the explanations included in the audit documentation are understandable 
D)  To ensure that the overall scope of the audit was appropriate 
A)  To ensure that all appropriate steps in the audit plan were performed 
B)  To ensure that referencing among audit documentation is clear 
C)  To ensure that the explanations included in the audit documentation are understandable 
D)  To ensure that the overall scope of the audit was appropriate

Question 18

Explain briefly auditors' responsibility for subsequently discovered facts existing at the date of the auditors' reports.

Accepted Answer

If auditors become aware of facts that e

Question 19

Which of the following would not ordinarily be considered when using analytical procedures to verify the overall reasonableness of revenue and expense accounts?

Accepted Answer

A)  Current-year recorded (unaudited) balances 
B)  Expected balances using a statistical analysis or relationships among accounts 
C)  Internal budgets and reports 
D)  Prior-year balances 
A)  Current-year recorded (unaudited) balances 
B)  Expected balances using a statistical analysis or relationships among accounts 
C)  Internal budgets and reports 
D)  Prior-year balances

Question 20

Which of the following substantive procedures would not ordinarily be used by auditors in evaluating the potential existence of subsequent events?

Accepted Answer

A)  Reviewing the latest interim financial statements 
B)  Performing cut-off testing near year end 
C)  Inquiring of officers and other client executives 
D)  Obtaining written representations 
A)  Reviewing the latest interim financial statements 
B)  Performing cut-off testing near year end 
C)  Inquiring of officers and other client executives 
D)  Obtaining written representations

To whom should written representations be addressed?

Management letters are not a means of

The Orange Corporation was audited for the year ended December 31.The audit was completed on January 25; prior to the release of the report,auditors learned of a two-for-one stock split on February 1.If dual dating is used,what are the proper dates for the auditors' reports?

The primary objective of analytical procedures used near the end of an audit is to

Interim testing normally occurs between the and the .

An engagement quality review by a second partner of the audit documentation and financial statements is performed to ensure that the:

Which of the following items would appear in written representations in the audit of a public entity but not a nonpublic entity?

Which of the following is the most effective method of identifying potential earnings management attempts?

Auditors try to identify predictable relationships when using analytical procedures.Relationships involving transactions from which of the following accounts most likely would yield the highest level of evidence?

A partner of the accounting firm who has not been involved in the audit performs an engagement quality review of documentation.This review usually focuses on

Which of the following best describes the auditors' responsibility with respect to management's estimates?

Define what is meant by the term "subsequent event".In addition,identify the two types of subsequent events and indicate how auditors should modify the engagement for the discovery of subsequent events.

What course of action should auditors take if,after evaluating management's plan to mitigate the effect of factors that suggest going-concern uncertainties,they believe that substantial doubt about going concern does not exist?

Which of the following is not a purpose of the review of audit documentation by a supervisor during fieldwork?

Explain briefly auditors' responsibility for subsequently discovered facts existing at the date of the auditors' reports.

Which of the following would not ordinarily be considered when using analytical procedures to verify the overall reasonableness of revenue and expense accounts?

Which of the following substantive procedures would not ordinarily be used by auditors in evaluating the potential existence of subsequent events?

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash

Revenue and Collection Cycle

Acquisition and Expenditure Cycle

Production Cycle

Finance and Investment Cycle

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Audits governmental Audits and Fraud Examinations

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing and Information Technology

Filters

Exam 11: Completing the Audit

To whom should written representations be addressed?

Management letters are not a means of

The Orange Corporation was audited for the year ended December 31.The audit was completed on January 25; prior to the release of the report,auditors learned of a two-for-one stock split on February 1.If dual dating is used,what are the proper dates for the auditors' reports?

The primary objective of analytical procedures used near the end of an audit is to

Interim testing normally occurs between the ____ and the ____.

An engagement quality review by a second partner of the audit documentation and financial statements is performed to ensure that the:

Which of the following items would appear in written representations in the audit of a public entity but not a nonpublic entity?

Which of the following is the most effective method of identifying potential earnings management attempts?

Auditors try to identify predictable relationships when using analytical procedures.Relationships involving transactions from which of the following accounts most likely would yield the highest level of evidence?

A partner of the accounting firm who has not been involved in the audit performs an engagement quality review of documentation.This review usually focuses on

Which of the following best describes the auditors' responsibility with respect to management's estimates?

Define what is meant by the term "subsequent event".In addition,identify the two types of subsequent events and indicate how auditors should modify the engagement for the discovery of subsequent events.

What course of action should auditors take if,after evaluating management's plan to mitigate the effect of factors that suggest going-concern uncertainties,they believe that substantial doubt about going concern does not exist?

Which of the following is not a purpose of the review of audit documentation by a supervisor during fieldwork?

Explain briefly auditors' responsibility for subsequently discovered facts existing at the date of the auditors' reports.

Which of the following would not ordinarily be considered when using analytical procedures to verify the overall reasonableness of revenue and expense accounts?

Which of the following substantive procedures would not ordinarily be used by auditors in evaluating the potential existence of subsequent events?

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash

Revenue and Collection Cycle

Acquisition and Expenditure Cycle

Production Cycle

Finance and Investment Cycle

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Audits governmental Audits and Fraud Examinations

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing and Information Technology

Filters

Interim testing normally occurs between the and the .