Question 1

A disclosure of a contingent liability in the footnotes is made rather than adjusting the financial statement accounts when

Accepted Answer

A)  The outcome of the event is judged to be reasonably possible and the loss can be reasonably estimated. 
B)  The loss can be reasonably estimated, but the outcome is unknown. 
C)  The outcome of the event is judged to be reasonably possible but the loss cannot be reasonably estimated. 
D)  The outcome is unknown and the loss is reasonably estimable but the client does not want to book the loss. 
A)  The outcome of the event is judged to be reasonably possible and the loss can be reasonably estimated. 
B)  The loss can be reasonably estimated, but the outcome is unknown. 
C)  The outcome of the event is judged to be reasonably possible but the loss cannot be reasonably estimated. 
D)  The outcome is unknown and the loss is reasonably estimable but the client does not want to book the loss.

Question 2

Key Co.plans to present comparative financial statements for the years ended December 31,2010 and 2011,respectively.Smith,CPA,audited Key's financial statements for both years and plans to report on the comparative financial statements on May 1,2012.Key's current management team was not present until January 1,2011.What period of time should be covered by Key's management representation letter?

Accepted Answer

A)  January 1, 2010 through December 31, 2011. 
B)  January 1, 2010 through May 1, 2012. 
C)  January 1, 2011 through December 31, 2011. 
D)  January 1, 2011 through May 1, 2012. 
A)  January 1, 2010 through December 31, 2011. 
B)  January 1, 2010 through May 1, 2012. 
C)  January 1, 2011 through December 31, 2011. 
D)  January 1, 2011 through May 1, 2012.

Question 3

From the list below,select the procedures that an auditor would use to test for contingent liabilities.
a.Inquire of SEC officials regarding reported violations by the client that create claims.
b.Read the client's contracts,loan agreements,leases,and other documents.
c.Read the client's minutes of meetings of shareholders,directors,and committees.
d.Request a representation letter from all the client's employees.
e.Read the legal briefs of all suits filed against the client's competitors.
f.Request the client's management to prepare a letter of inquiry to the client's attorney regarding pending litigation against the client.

Accepted Answer

Audit procedures 'b,

Question 4

Which of the following expressions is least likely to be included in a client's representation letter?

Accepted Answer

A)  No events have occurred subsequent to the balance sheet date that require adjustment to or disclosure in, the financial statements. 
B)  The company has complied with all aspects of contractual agreements that would have a material effect on the financial statements in the event of noncompliance. 
C)  Management acknowledges responsibility for illegal actions committed by its employees. 
D)  Management has made available all financial statements and related data. 
A)  No events have occurred subsequent to the balance sheet date that require adjustment to or disclosure in, the financial statements. 
B)  The company has complied with all aspects of contractual agreements that would have a material effect on the financial statements in the event of noncompliance. 
C)  Management acknowledges responsibility for illegal actions committed by its employees. 
D)  Management has made available all financial statements and related data.

A disclosure of a contingent liability in the footnotes is made rather than adjusting the financial statement accounts when

Which of the following expressions is least likely to be included in a client's representation letter?

An Introduction to Assurance and Financial Statement Auditing

The Financial Statement Auditing Environment

Audit Planning,Types of Audit Tests,and Materiality

Risk Assessment

Evidence and Documentation

Internal Control in a Financial Statement Audit

Auditing Internal Control Over Financial Reporting

Audit Sampling: An Overview and Application to Tests of Controls

Audit Sampling: An Application to Substantive Tests of Account Balances

Auditing the Revenue Process

Auditing the Purchasing Process

Auditing the Human Resource Management Process

Assurance,Attestation,and Internal Auditing Services

Auditing the Financinginvesting Process: Prepaid Expenses, Intangible Assets, and Property, Plant, and Equipment

Auditing the Financinginvesting Process: Long-Term Liabilities, Stockholders Equity, and Income Statement Accounts

Auditing the Financinginvesting Process: Cash and Investments

Reports on Audited Financial Statements

Professional Conduct,Independence,and Quality Control

Legal Liability

Assurance,Attestation,and Internal Auditing Services

Filters

Exam 17: Completing the Audit Engagement

A disclosure of a contingent liability in the footnotes is made rather than adjusting the financial statement accounts when

Which of the following expressions is least likely to be included in a client's representation letter?

An Introduction to Assurance and Financial Statement Auditing

The Financial Statement Auditing Environment

Audit Planning,Types of Audit Tests,and Materiality

Risk Assessment

Evidence and Documentation

Internal Control in a Financial Statement Audit

Auditing Internal Control Over Financial Reporting

Audit Sampling: An Overview and Application to Tests of Controls

Audit Sampling: An Application to Substantive Tests of Account Balances

Auditing the Revenue Process

Auditing the Purchasing Process

Auditing the Human Resource Management Process

Assurance,Attestation,and Internal Auditing Services

Auditing the Financinginvesting Process: Prepaid Expenses, Intangible Assets, and Property, Plant, and Equipment

Auditing the Financinginvesting Process: Long-Term Liabilities, Stockholders Equity, and Income Statement Accounts

Auditing the Financinginvesting Process: Cash and Investments

Reports on Audited Financial Statements

Professional Conduct,Independence,and Quality Control

Legal Liability

Assurance,Attestation,and Internal Auditing Services

Filters