Question 1

The auditor is responsible for communicating significant internal control deficiencies to the audit committee,or those charged with governance.This communication:

Accepted Answer

A)  may be oral or written. 
B)  must be oral. 
C)  must be written. 
D)  must be oral via direct communication. 
A)  may be oral or written. 
B)  must be oral. 
C)  must be written. 
D)  must be oral via direct communication.

Question 2

Which of the following is correct regarding supplementary information?

Accepted Answer

A)  The auditor must express an opinion on the supplementary information. 
B)  When reporting on supplementary information, the auditor uses a different materiality threshold from that used in forming an opinion on the basic financial statements. 
C)  If the auditor's report on the audited financial statements contains an adverse opinion, the auditor can still issue an unqualified opinion on the supplementary information. 
D)  The auditor can issue a separate report on the supplementary information; it does not need to be part of the report on the financial statements. 
A)  The auditor must express an opinion on the supplementary information. 
B)  When reporting on supplementary information, the auditor uses a different materiality threshold from that used in forming an opinion on the basic financial statements. 
C)  If the auditor's report on the audited financial statements contains an adverse opinion, the auditor can still issue an unqualified opinion on the supplementary information. 
D)  The auditor can issue a separate report on the supplementary information; it does not need to be part of the report on the financial statements.

Question 3

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

Accepted Answer

A)  Management's recommendations for internal control effectiveness improvements 
B)  Management's plans for improving product quality 
C)  Management's compliance with contractual arrangements that impact the financial statements 
D)  Management's goals for improving earnings per share 
A)  Management's recommendations for internal control effectiveness improvements 
B)  Management's plans for improving product quality 
C)  Management's compliance with contractual arrangements that impact the financial statements 
D)  Management's goals for improving earnings per share

Question 4

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?

Accepted Answer

The first step is to determine if a cont

Question 5

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 6

The auditor's responsibility with respect to events occurring between the balance sheet date and the end of the audit examination is best expressed by which of the following statements?

Accepted Answer

A)  The auditor is fully responsible for events occurring in the subsequent period and should extend all detailed procedures through the last day of fieldwork. 
B)  The auditor is responsible for determining that a proper cutoff has been made and performing a general review of events occurring in the subsequent period. 
C)  The auditor's responsibility is to determine that a proper cutoff has been made and that transactions recorded on or before the balance sheet date actually occurred. 
D)  The auditor has no responsibility for events occurring in the subsequent period unless these events affect transactions recorded on or before the balance sheet date. 
A)  The auditor is fully responsible for events occurring in the subsequent period and should extend all detailed procedures through the last day of fieldwork. 
B)  The auditor is responsible for determining that a proper cutoff has been made and performing a general review of events occurring in the subsequent period. 
C)  The auditor's responsibility is to determine that a proper cutoff has been made and that transactions recorded on or before the balance sheet date actually occurred. 
D)  The auditor has no responsibility for events occurring in the subsequent period unless these events affect transactions recorded on or before the balance sheet date.

Question 7

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:

Accepted Answer

A)  adjust the financial statements for the year under audit. 
B)  add a paragraph to the audit report. 
C)  advise the client to disclose the event in the notes to the financial statements. 
D)  advise the client to delay issuing the financial statements until the economic loss can be determined. 
A)  adjust the financial statements for the year under audit. 
B)  add a paragraph to the audit report. 
C)  advise the client to disclose the event in the notes to the financial statements. 
D)  advise the client to delay issuing the financial statements until the economic loss can be determined.

Question 8

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)  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)  Auditor does not have any requirement to communicate with anyone other than the company's senior management.

Question 9

Auditing standards require auditors to evaluate whether there is a substantial doubt about a client's ability to continue as a going concern.One of the most important audit procedures to perform to assess the going concern question is:

Accepted Answer

A)  analytical procedures. 
B)  confirmations from creditors. 
C)  statistical sampling procedures. 
D)  inquiries of client and its legal counsel. 
A)  analytical procedures. 
B)  confirmations from creditors. 
C)  statistical sampling procedures. 
D)  inquiries of client and its legal counsel.

Question 10

The auditor has completed her assessment of subsequent events.The proper accounting for subsequent events that have a direct effect on the financial statements is to:

Accepted Answer

A)  adjust the financial statements for the year under audit. 
B)  disclose in the notes to financial statement the amount of the adjustment. 
C)  duly note in the audit workpapers that next year's financial statements need to be adjusted. 
D)  make no adjustment of the financial statements for the year under audit. 
A)  adjust the financial statements for the year under audit. 
B)  disclose in the notes to financial statement the amount of the adjustment. 
C)  duly note in the audit workpapers that next year's financial statements need to be adjusted. 
D)  make no adjustment of the financial statements for the year under audit.

Question 11

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:

Accepted Answer

A)  beginning with the balance sheet date and ending with the date of the auditor's report. 
B)  beginning with the start of the fiscal year under audit and ending with the balance sheet date. 
C)  beginning with the start of the fiscal year under audit and ending with the date of the auditor's report. 
D)  beginning with the balance sheet date and ending with the date the registration statement becomes effective. 
A)  beginning with the balance sheet date and ending with the date of the auditor's report. 
B)  beginning with the start of the fiscal year under audit and ending with the balance sheet date. 
C)  beginning with the start of the fiscal year under audit and ending with the date of the auditor's report. 
D)  beginning with the balance sheet date and ending with the date the registration statement becomes effective.

Question 12

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 13

Refusal by a client to prepare and sign the representation letter would require the auditor to issue a:

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.

Question 14

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 15

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?

Accepted Answer

A)  Inquire of client regarding contingent liabilities. 
B)  Obtain a letter of representation written by client. 
C)  Subsequent period sales and purchases transactions are examined to determine whether the cutoff is accurate. 
D)  Review journals and ledgers of year 2 to determine the existence of any transactions related to year 1. 
A)  Inquire of client regarding contingent liabilities. 
B)  Obtain a letter of representation written by client. 
C)  Subsequent period sales and purchases transactions are examined to determine whether the cutoff is accurate. 
D)  Review journals and ledgers of year 2 to determine the existence of any transactions related to year 1.

Question 16

An auditor must obtain written client representations that might be signed by all but which of the following?

Accepted Answer

A)  Treasurer 
B)  Chief financial officer 
C)  Vice president of operations 
D)  Chief executive officer 
A)  Treasurer 
B)  Chief financial officer 
C)  Vice president of operations 
D)  Chief executive officer

Question 17

An independent review must be performed of all audits.

Accepted Answer

A) True 
 B)False

Question 18

When reviewing the summary of misstatements found in the audit:

Accepted Answer

A)  an adjusting journal entry must be made by the auditor for all material misstatements. 
B)  auditors must combine individually immaterial misstatements to evaluate whether the combined amount is material. 
C)  the auditor is not required to consider the impact on the current financial statements of misstatements in the prior year that were not corrected. 
D)  auditors only need to consider the misstatements that impact the income statement. 
A)  an adjusting journal entry must be made by the auditor for all material misstatements. 
B)  auditors must combine individually immaterial misstatements to evaluate whether the combined amount is material. 
C)  the auditor is not required to consider the impact on the current financial statements of misstatements in the prior year that were not corrected. 
D)  auditors only need to consider the misstatements that impact the income statement.

Question 19

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 20

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

Accepted Answer

1.Evaluate managemen

Exam 24: Audit Completion

The auditor is responsible for communicating significant internal control deficiencies to the audit committee,or those charged with governance.This communication:

Which of the following is correct regarding supplementary information?

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

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?

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

The auditor's responsibility with respect to events occurring between the balance sheet date and the end of the audit examination is best expressed by which of the following statements?

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

Auditing standards require auditors to evaluate whether there is a substantial doubt about a client's ability to continue as a going concern.One of the most important audit procedures to perform to assess the going concern question is:

The auditor has completed her assessment of subsequent events.The proper accounting for subsequent events that have a direct effect on the financial statements is to:

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:

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

Refusal by a client to prepare and sign the representation letter would require the auditor to issue a:

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

An auditor must obtain written client representations that might be signed by all but which of the following?

An independent review must be performed of all audits.

When reviewing the summary of misstatements found in the audit:

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

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

The Assurance Services Market

The Audit Standards Setting Process

Audit Reports

Legal Liability Considerations for Auditors

Ethics and the Audit Profession

Audit Responsibilities and Objectives

Nature and Type of Audit Evidence

Audit Planning

Considering Materiality and Audit Risk

Considering Internal Control

Considering the Risk of Fraud

Implications of Information Technology for the Audit Process

Developing the Overall Audit Plan and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls and Substantive Tests of Transactions

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 Inventory and Warehousing Cycle

Audit of the Payroll and Personnel 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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