Question 1

Which of the following subsequent events would provide information about conditions that arose following the date of the financial statements?

Accepted Answer

A)  Settlement of long outstanding litigation. 
B)  Collection of a past due account receivable. 
C)  Loss of inventory as a result of a flood. 
D)  An additional tax assessment on prior income. 
A)  Settlement of long outstanding litigation. 
B)  Collection of a past due account receivable. 
C)  Loss of inventory as a result of a flood. 
D)  An additional tax assessment on prior income.

Question 2

A major objective of written representations is to

Accepted Answer

A)  Shift responsibility for financial statements from the management to auditors. 
B)  Provide a substitute source of audit evidence for substantive procedures that auditors would otherwise perform. 
C)  Provide management an opportunity to make assertions about the quantity and valuation of the physical inventory. 
D)  Impress on management its ultimate responsibility for the financial statements and disclosures. 
A)  Shift responsibility for financial statements from the management to auditors. 
B)  Provide a substitute source of audit evidence for substantive procedures that auditors would otherwise perform. 
C)  Provide management an opportunity to make assertions about the quantity and valuation of the physical inventory. 
D)  Impress on management its ultimate responsibility for the financial statements and disclosures.

Question 3

Following the audit report release date,auditors became aware of facts existing at the report date that would have affected the reports had auditors then been aware of such facts.What is the most appropriate initial course of action that auditors should take?

Accepted Answer

A)  Determine whether there are persons relying or likely to rely on the financial statements who would attach importance to the information. 
B)  Request that management disclose the newly discovered information by issuing revised financial statements. 
C)  Issue revised pro forma financial statements taking into consideration the newly discovered information. 
D)  Give public notice that auditors are no longer associated with financial statements. 
A)  Determine whether there are persons relying or likely to rely on the financial statements who would attach importance to the information. 
B)  Request that management disclose the newly discovered information by issuing revised financial statements. 
C)  Issue revised pro forma financial statements taking into consideration the newly discovered information. 
D)  Give public notice that auditors are no longer associated with financial statements.

Question 4

Subsequently discovered facts are matters identified by auditors after the date of the financial statements but prior to the date of the auditors' report.

Accepted Answer

A) True 
 B)False

Question 5

The scope of an audit is not restricted when an attorney letter limits the response to

Accepted Answer

A)  Matters to which the attorney has given substantive attention in the form of legal representation. 
B)  An evaluation of the likelihood of an unfavorable outcome of the matters disclosed by the entity. 
C)  The attorney's opinion of the entity's historical experience in recent similar litigation. 
D)  The probable outcome of asserted claims and pending or threatened litigation. 
A)  Matters to which the attorney has given substantive attention in the form of legal representation. 
B)  An evaluation of the likelihood of an unfavorable outcome of the matters disclosed by the entity. 
C)  The attorney's opinion of the entity's historical experience in recent similar litigation. 
D)  The probable outcome of asserted claims and pending or threatened litigation.

Question 6

Which of the following statements is not true with respect to written representations?

Accepted Answer

A)  The failure of management to furnish them is a significant scope limitation, resulting in either an adverse opinion or a disclaimer of opinion. 
B)  They should address management's responsibility for designing internal control to prevent and detect fraud. 
C)  Auditors use them to corroborate information received during the audit from the client and its employees. 
D)  They are dated the same date as the auditors' reports. 
A)  The failure of management to furnish them is a significant scope limitation, resulting in either an adverse opinion or a disclaimer of opinion. 
B)  They should address management's responsibility for designing internal control to prevent and detect fraud. 
C)  Auditors use them to corroborate information received during the audit from the client and its employees. 
D)  They are dated the same date as the auditors' reports.

Question 7

Indicate,using the letters C (client),A (auditors),and AT (attorney)which party is responsible for each of the following duties relating to letters of inquiry of attorneys.Each statement is associated with only one party.
____ 1.Respond directly to auditors' initial inquiries regarding litigation,claims,and assessments.
____ 2.Initiate request for attorney letter.
____ 3.Respond to attorney letter.
____ 4.Provide initial description and evaluation of litigation,claims,and assessments.
____ 5.Request attorney letter.
____ 6.Perform various procedures relating to litigation,claims,and assessments.
____ 7.Identify whether client's views expressed in the attorney letter are appropriate.
____ 8.Party the attorney informs if an unasserted claim must be disclosed.

Accepted Answer

1.C,2.A,3.

Question 8

If the client fails to provide written representations to the auditor,a qualified opinion or ___________________________________________ should be issued.

Accepted Answer

disclaimer

Question 9

Subsequently discovered facts may be identified either following the date of the auditors' report or the ________________________________.

Accepted Answer

audit repo

Question 10

Which of the following events occurring after the audit report release date most likely would cause auditors to make further inquiries about the previously issued financial statements?

Accepted Answer

A)  An uninsured natural disaster occurs that may affect the entity's ability to continue as a going concern. 
B)  A contingency that had been disclosed in the audited financial statements is resolved. 
C)  New information concerning undisclosed lease transactions during the period under audit is discovered. 
D)  A subsidiary that accounts for 25% of the entity's consolidated net income is sold. 
A)  An uninsured natural disaster occurs that may affect the entity's ability to continue as a going concern. 
B)  A contingency that had been disclosed in the audited financial statements is resolved. 
C)  New information concerning undisclosed lease transactions during the period under audit is discovered. 
D)  A subsidiary that accounts for 25% of the entity's consolidated net income is sold.

Question 11

Hall accepted an engagement to audit the year 1 financial statements of XYZ Company.XYZ completed the preparation of the year 1 financial statements on February 13,year 2,and its auditors began the fieldwork on February 17,year 2.Hall completed gathering sufficient appropriate evidence on March 24,year 2; Hall's report and XYZ's financial statements were released on March 28,year 2.The written representations normally would be dated

Accepted Answer

A)  February 13, year 2. 
B)  February 17, year 2. 
C)  March 24, year 2. 
D)  March 28, year 2. 
A)  February 13, year 2. 
B)  February 17, year 2. 
C)  March 24, year 2. 
D)  March 28, year 2.

Question 12

Why should auditors be particularly concerned with "miscellaneous" "other," and "clearing" accounts classified as revenues or expenses?

Accepted Answer

A)  These accounts are likely to relate to going-concern matters. 
B)  These accounts are often more difficult to audit using normal substantive procedures. 
C)  These accounts may represent attempts of earnings management. 
D)  These accounts are likely to require the assistance of a specialist. 
A)  These accounts are likely to relate to going-concern matters. 
B)  These accounts are often more difficult to audit using normal substantive procedures. 
C)  These accounts may represent attempts of earnings management. 
D)  These accounts are likely to require the assistance of a specialist.

Which of the following subsequent events would provide information about conditions that arose following the date of the financial statements?

A major objective of written representations is to

Following the audit report release date,auditors became aware of facts existing at the report date that would have affected the reports had auditors then been aware of such facts.What is the most appropriate initial course of action that auditors should take?

Subsequently discovered facts are matters identified by auditors after the date of the financial statements but prior to the date of the auditors' report.

The scope of an audit is not restricted when an attorney letter limits the response to

Which of the following statements is not true with respect to written representations?

If the client fails to provide written representations to the auditor,a qualified opinion or ___________________________________________ should be issued.

Subsequently discovered facts may be identified either following the date of the auditors' report or the ________________________________.

Which of the following events occurring after the audit report release date most likely would cause auditors to make further inquiries about the previously issued financial statements?

Why should auditors be particularly concerned with "miscellaneous" "other," and "clearing" accounts classified as revenues or expenses?

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

Which of the following subsequent events would provide information about conditions that arose following the date of the financial statements?

A major objective of written representations is to

Following the audit report release date,auditors became aware of facts existing at the report date that would have affected the reports had auditors then been aware of such facts.What is the most appropriate initial course of action that auditors should take?

Subsequently discovered facts are matters identified by auditors after the date of the financial statements but prior to the date of the auditors' report.

The scope of an audit is not restricted when an attorney letter limits the response to

Which of the following statements is not true with respect to written representations?

If the client fails to provide written representations to the auditor,a qualified opinion or ___________________________________________ should be issued.

Subsequently discovered facts may be identified either following the date of the auditors' report or the ________________________________.

Which of the following events occurring after the audit report release date most likely would cause auditors to make further inquiries about the previously issued financial statements?

Why should auditors be particularly concerned with "miscellaneous" "other," and "clearing" accounts classified as revenues or expenses?

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