Question 1

The existence of "miscellaneous" revenue or expense accounts may signal the practice of earnings management.

Accepted Answer

A) True 
 B)False

Question 2

The chief executive officer,chief financial officer,or other executive-level client personnel should sign written representations.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is ordinarily performed last in the audit examination?

Accepted Answer

A)  Securing a signed engagement letter from the client. 
B)  Performing tests of controls. 
C)  Performing a review for subsequent events. 
D)  Obtaining signed written representations. 
A)  Securing a signed engagement letter from the client. 
B)  Performing tests of controls. 
C)  Performing a review for subsequent events. 
D)  Obtaining signed written representations.

Question 4

If the client refuses to provide written representations,auditors should issue either a qualified opinion or adverse opinion,depending on the importance of the omission.

Accepted Answer

A) True 
 B)False

Question 5

Written representations should be dated as of the date of the financial statements.

Accepted Answer

A) True 
 B)False

Question 6

Roll-forward procedures are normally conducted prior to the date of the financial statements.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is an audit procedure that auditors most likely would perform concerning litigation,claims,and assessments?

Accepted Answer

A)  Request the client's attorney to evaluate whether the client's pending litigation claims, and assessments indicate a going-concern problem. 
B)  Examine the legal documents in the client's attorney's possession concerning litigation, claims, and assessments to which the attorney has devoted substantive attention. 
C)  Discuss with management its policies and procedures adopted for evaluating and accounting for litigation, claims, and assessments. 
D)  Confirm directly with the client's attorney that all litigation, claims, and assessments have been recorded or disclosed in the financial statements. 
A)  Request the client's attorney to evaluate whether the client's pending litigation claims, and assessments indicate a going-concern problem. 
B)  Examine the legal documents in the client's attorney's possession concerning litigation, claims, and assessments to which the attorney has devoted substantive attention. 
C)  Discuss with management its policies and procedures adopted for evaluating and accounting for litigation, claims, and assessments. 
D)  Confirm directly with the client's attorney that all litigation, claims, and assessments have been recorded or disclosed in the financial statements.

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

Auditors are not responsible for evaluating the accuracy of management's estimates but the reasonableness of those estimates.

Accepted Answer

A) True 
 B)False

Question 10

An important method used by auditors to learn of material contingencies is

Accepted Answer

A)  Examining documents in the client's possession concerning contingencies. 
B)  Inquiring and discussing them with management. 
C)  Obtaining responses to an attorney letter. 
D)  Confirming accounts receivable with the client's customers. 
A)  Examining documents in the client's possession concerning contingencies. 
B)  Inquiring and discussing them with management. 
C)  Obtaining responses to an attorney letter. 
D)  Confirming accounts receivable with the client's customers.

Question 11

On March 15,2013,Kent,CPA,issued an unqualified opinion on a client's audited financial statements for the year ended December 31,2012.On May 4,2013,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 12

______________________________________ are matters that come to the auditors' attention following the date of the auditors' report.

Accepted Answer

Subsequent

Question 13

Which of the following events or activities may occur following the audit report release date?

Accepted Answer

A)  Interim testing. 
B)  Roll-forward work. 
C)  Subsequent events. 
D)  Subsequently discovered facts. 
A)  Interim testing. 
B)  Roll-forward work. 
C)  Subsequent events. 
D)  Subsequently discovered facts.

Question 14

Ambrose is auditing the financial statements of Mays (dated December 31,2012).The date of the auditors' report is February 17,2013 and the audit report release date is February 20,2013.For which of the following matters would Ambrose have the least responsibility:

Accepted Answer

A)  The obsolescence of inventory held on December 31, 2012 that was identified on January 20, 2013. 
B)  A customer's deteriorating financial condition that was identified on February 19, 2013. 
C)  A merger that was announced by Mays and known by Ambrose on February 12, 2013. 
D)  A major loss due to a catastrophe that occurred and was known by Ambrose on March 1, 2013. 
A)  The obsolescence of inventory held on December 31, 2012 that was identified on January 20, 2013. 
B)  A customer's deteriorating financial condition that was identified on February 19, 2013. 
C)  A merger that was announced by Mays and known by Ambrose on February 12, 2013. 
D)  A major loss due to a catastrophe that occurred and was known by Ambrose on March 1, 2013.

Question 15

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 16

Subsequent knowledge of which of the following would cause the entity to adjust its December 31 financial statements?

Accepted Answer

A)  Sale of an issue of new stock for $500,000 on January 30. 
B)  Settlement of a damage lawsuit for a customer's injury sustained February 15 for $10,000. 
C)  Settlement of litigation in February for $100,000 that had been estimated at $12,000 in the December 31 financial statements. 
D)  Storm damage of $1 million to the entity's buildings on March 1. 
A)  Sale of an issue of new stock for $500,000 on January 30. 
B)  Settlement of a damage lawsuit for a customer's injury sustained February 15 for $10,000. 
C)  Settlement of litigation in February for $100,000 that had been estimated at $12,000 in the December 31 financial statements. 
D)  Storm damage of $1 million to the entity's buildings on March 1.

Question 17

For which of the following objectives would auditors be least likely to use analytical procedures in the completion stages of the audit?

Accepted Answer

A)  Obtaining evidence about assertions related to account balances or classes of transactions. 
B)  Evaluating the adequacy of evidence gathered in response to unexpected account balances. 
C)  Identifying unusual or unexpected account balances or relationships among account balances that were not identified during the audit. 
D)  Evaluating the adequacy of evidence gathered in response to unexpected relationships among account balances. 
A)  Obtaining evidence about assertions related to account balances or classes of transactions. 
B)  Evaluating the adequacy of evidence gathered in response to unexpected account balances. 
C)  Identifying unusual or unexpected account balances or relationships among account balances that were not identified during the audit. 
D)  Evaluating the adequacy of evidence gathered in response to unexpected relationships among account balances.

Question 18

Subsequent events may provide additional information about a condition that existed at the date of the financial statements.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following substantive procedures should auditors ordinarily perform regarding subsequent events?

Accepted Answer

A)  Compare the latest available interim financial statements with the financial statements being audited. 
B)  Send second requests to the client's customers who failed to respond to initial accounts receivable confirmation requests. 
C)  Communicate material weaknesses in internal control to the client's audit committee. 
D)  Review the cutoff bank statements for several months after the date of the financial statements. 
A)  Compare the latest available interim financial statements with the financial statements being audited. 
B)  Send second requests to the client's customers who failed to respond to initial accounts receivable confirmation requests. 
C)  Communicate material weaknesses in internal control to the client's audit committee. 
D)  Review the cutoff bank statements for several months after the date of the financial statements.

Question 20

Which of the following is not required by generally accepted auditing standards?

Accepted Answer

A)  Written representations. 
B)  Attorney letter. 
C)  Management letter. 
D)  Engagement letter. 
A)  Written representations. 
B)  Attorney letter. 
C)  Management letter. 
D)  Engagement letter.

The existence of "miscellaneous" revenue or expense accounts may signal the practice of earnings management.

The chief executive officer,chief financial officer,or other executive-level client personnel should sign written representations.

Which of the following is ordinarily performed last in the audit examination?

If the client refuses to provide written representations,auditors should issue either a qualified opinion or adverse opinion,depending on the importance of the omission.

Written representations should be dated as of the date of the financial statements.

Roll-forward procedures are normally conducted prior to the date of the financial statements.

Which of the following is an audit procedure that auditors most likely would perform concerning litigation,claims,and assessments?

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

Auditors are not responsible for evaluating the accuracy of management's estimates but the reasonableness of those estimates.

An important method used by auditors to learn of material contingencies is

______________________________________ are matters that come to the auditors' attention following the date of the auditors' report.

Which of the following events or activities may occur following the audit report release date?

Ambrose is auditing the financial statements of Mays (dated December 31,2012).The date of the auditors' report is February 17,2013 and the audit report release date is February 20,2013.For which of the following matters would Ambrose have the least responsibility:

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?

Subsequent knowledge of which of the following would cause the entity to adjust its December 31 financial statements?

For which of the following objectives would auditors be least likely to use analytical procedures in the completion stages of the audit?

Subsequent events may provide additional information about a condition that existed at the date of the financial statements.

Which of the following substantive procedures should auditors ordinarily perform regarding subsequent events?

Which of the following is not required by generally accepted auditing standards?

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 Governmental and Fraud Audits

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing in a Computerized Environment

Filters

Exam 11: Completing the Audit

The existence of "miscellaneous" revenue or expense accounts may signal the practice of earnings management.

The chief executive officer,chief financial officer,or other executive-level client personnel should sign written representations.

Which of the following is ordinarily performed last in the audit examination?

If the client refuses to provide written representations,auditors should issue either a qualified opinion or adverse opinion,depending on the importance of the omission.

Written representations should be dated as of the date of the financial statements.

Roll-forward procedures are normally conducted prior to the date of the financial statements.

Which of the following is an audit procedure that auditors most likely would perform concerning litigation,claims,and assessments?

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

Auditors are not responsible for evaluating the accuracy of management's estimates but the reasonableness of those estimates.

An important method used by auditors to learn of material contingencies is

______________________________________ are matters that come to the auditors' attention following the date of the auditors' report.

Which of the following events or activities may occur following the audit report release date?

Ambrose is auditing the financial statements of Mays (dated December 31,2012).The date of the auditors' report is February 17,2013 and the audit report release date is February 20,2013.For which of the following matters would Ambrose have the least responsibility:

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?

Subsequent knowledge of which of the following would cause the entity to adjust its December 31 financial statements?

For which of the following objectives would auditors be least likely to use analytical procedures in the completion stages of the audit?

Subsequent events may provide additional information about a condition that existed at the date of the financial statements.

Which of the following substantive procedures should auditors ordinarily perform regarding subsequent events?

Which of the following is not required by generally accepted auditing standards?

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 Governmental and Fraud Audits

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing in a Computerized Environment

Filters