Question 1

Most audit firms use a schedule to accumulate the known and projected misstatements and the carryover effects of prior-year uncorrected misstatements.

Accepted Answer

A) True 
 B)False

Question 2

When requiring a letter of audit inquiry from the client's attorney,which of the following information will be requested?

Accepted Answer

A) A statement regarding conflicts of interest that the attorney may have with the client. 
B) The attorney's expert opinion of proper GAAP treatment related to client contingencies. 
C) An evaluation of the likelihood of unfavorable outcome of,and estimated losses from contingencies. 
D) Possible auditor defenses for third-party litigation related to ordinary negligence claims. 
A) A statement regarding conflicts of interest that the attorney may have with the client. 
B) The attorney's expert opinion of proper GAAP treatment related to client contingencies. 
C) An evaluation of the likelihood of unfavorable outcome of,and estimated losses from contingencies. 
D) Possible auditor defenses for third-party litigation related to ordinary negligence claims.

Question 3

The auditor generally reports things that management could do better in a management letter as a constructive part of the audit.

Accepted Answer

A) True 
 B)False

Question 4

Contingencies Define what a contingency is,describe the auditor's main concerns about them,and indicate how contingencies should be dealt with by management and the auditor.Besides litigation,claims,and assessments,what are some other types of contingencies?

Accepted Answer

Contingencies are potential gains or los

Question 5

On what information does the auditor base a going concern evaluation?

Accepted Answer

A) On separate procedures. 
B) On the management discussion and analysis (MD&
A) . 
C) On information obtained from normal audit procedures performed to test management's assertions. 
D) On the statement of cash flows for the current period. 
A) On separate procedures. 
B) On the management discussion and analysis (MD&
A) . 
C) On information obtained from normal audit procedures performed to test management's assertions. 
D) On the statement of cash flows for the current period.

Question 6

The audit committee is an independent subcommittee of the board of directors.

Accepted Answer

A) True 
 B)False

Question 7

Clients can waive audit adjustments,but only for misstatements that are immaterial.

Accepted Answer

A) True 
 B)False

Question 8

Assume a situation in which an attorney who provided significant litigation counsel to a client refuses to furnish information requested in an audit.Which of the following descriptions best describes this situation from the auditor's perspective?

Accepted Answer

A) A departure from GAAP. 
B) A scope limitation. 
C) A violation of the attorney-client privilege. 
D) A contingent liability. 
A) A departure from GAAP. 
B) A scope limitation. 
C) A violation of the attorney-client privilege. 
D) A contingent liability.

Question 9

Testing subsequent events List the audit procedures to be performed to determine if subsequent events have occurred and have been appropriately addressed.

Accepted Answer

The audit procedures performed when test

Question 10

If the auditor decides that steps should be taken to prevent further reliance on the financial statements and audit report due to subsequent events after issuance of the audit report,the auditor should not try to obtain client cooperation,but should immediately notify any regulatory agency having jurisdiction over the client,such as the SEC,that the audit report should no longer be associated with the client's financial statements.

Accepted Answer

A) True 
 B)False

Question 11

Management representation letters Describe the purpose of the management representation letter.

Accepted Answer

The purposes of the management represent

Question 12

Which of the following individuals should sign the management representation letter?

Accepted Answer

A) The members of the audit committee and board of directors. 
B) The chief executive officer and the chief financial officer. 
C) The chief financial officer and the treasurer. 
D) The controller and the auditor. 
A) The members of the audit committee and board of directors. 
B) The chief executive officer and the chief financial officer. 
C) The chief financial officer and the treasurer. 
D) The controller and the auditor.

Question 13

The iron curtain method for assessing materiality focuses on assuring that the year-end balance sheet is correct and considers the impact of prior-year uncorrected misstatements reversing in later years.

Accepted Answer

A) True 
 B)False

Question 14

The discovery of an intentional misstatement,even if immaterial,could impact the auditor's opinion on the effectiveness of which of the following?

Accepted Answer

A) The client's external controls. 
B) The client's interim financial statements. 
C) The client's internal controls over financial reporting. 
D) The client's segment reports. 
A) The client's external controls. 
B) The client's interim financial statements. 
C) The client's internal controls over financial reporting. 
D) The client's segment reports.

Question 15

Review analytical procedures help auditors assess the overall presentation of the financial statements.

Accepted Answer

A) True 
 B)False

Question 16

Which one of the following is not a key condition indicating doubt about a client's ability to continue as a going- concern?

Accepted Answer

A) Adverse key financial ratios. 
B) Employee strike that halts operations for several months. 
C) Company has not paid dividends to date. 
D) Default on bank debt. 
A) Adverse key financial ratios. 
B) Employee strike that halts operations for several months. 
C) Company has not paid dividends to date. 
D) Default on bank debt.

Question 17

A culture that encourages auditors to seek consultation with other members of the audit firm will be more likely to result in auditors who will acquiesce to inappropriate or aggressive client preferences.

Accepted Answer

A) True 
 B)False

Question 18

The total likely misstatements found during the audit are equal to the sum of known and projected misstatements.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is not a required communication with the audit committee?

Accepted Answer

A) Accounting policies. 
B) Accounting estimates. 
C) Economic trends. 
D) Difficulties encountered. 
A) Accounting policies. 
B) Accounting estimates. 
C) Economic trends. 
D) Difficulties encountered.

Question 20

Which of the following is not a typical analytical procedure for the completion of the audit?

Accepted Answer

A) Ratio analysis. 
B) Common-size analysis. 
C) Changes from the prior year. 
D) All of the above would typically be used. 
A) Ratio analysis. 
B) Common-size analysis. 
C) Changes from the prior year. 
D) All of the above would typically be used.

Most audit firms use a schedule to accumulate the known and projected misstatements and the carryover effects of prior-year uncorrected misstatements.

When requiring a letter of audit inquiry from the client's attorney,which of the following information will be requested?

The auditor generally reports things that management could do better in a management letter as a constructive part of the audit.

Contingencies Define what a contingency is,describe the auditor's main concerns about them,and indicate how contingencies should be dealt with by management and the auditor.Besides litigation,claims,and assessments,what are some other types of contingencies?

On what information does the auditor base a going concern evaluation?

The audit committee is an independent subcommittee of the board of directors.

Clients can waive audit adjustments,but only for misstatements that are immaterial.

Assume a situation in which an attorney who provided significant litigation counsel to a client refuses to furnish information requested in an audit.Which of the following descriptions best describes this situation from the auditor's perspective?

Testing subsequent events List the audit procedures to be performed to determine if subsequent events have occurred and have been appropriately addressed.

Management representation letters Describe the purpose of the management representation letter.

Which of the following individuals should sign the management representation letter?

The iron curtain method for assessing materiality focuses on assuring that the year-end balance sheet is correct and considers the impact of prior-year uncorrected misstatements reversing in later years.

The discovery of an intentional misstatement,even if immaterial,could impact the auditor's opinion on the effectiveness of which of the following?

Review analytical procedures help auditors assess the overall presentation of the financial statements.

Which one of the following is not a key condition indicating doubt about a client's ability to continue as a going- concern?

A culture that encourages auditors to seek consultation with other members of the audit firm will be more likely to result in auditors who will acquiesce to inappropriate or aggressive client preferences.

The total likely misstatements found during the audit are equal to the sum of known and projected misstatements.

Which of the following is not a required communication with the audit committee?

Which of the following is not a typical analytical procedure for the completion of the audit?

Quality Auditing: Why It Matters

The Auditors Responsibilities Regarding Fraud and Mechanisms to Address Fraud: Regulation and Corporate Governance

Internal Control Over Financial Reporting: Responsibilities of Management and the External Auditor

Professional Legal Liability

Professional Auditing Standards and the Audit Opinion Formulation Process

Audit Evidence

Planning the Audit: Identifying and Responding to the Risks of Material Misstatement

Specialized Audit Tools: Sampling and Generalized Audit Software

Auditing the Revenue Cycle

Auditing Cash and Marketable Securities

Auditing Inventory, Goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, Use, Impairment, and Disposal

Auditing Long-Term Liabilities and Stockholders Equity Transactions

Audit Reports

Filters

Exam 14: Completing a Quality Audit

Most audit firms use a schedule to accumulate the known and projected misstatements and the carryover effects of prior-year uncorrected misstatements.

When requiring a letter of audit inquiry from the client's attorney,which of the following information will be requested?

The auditor generally reports things that management could do better in a management letter as a constructive part of the audit.

Contingencies Define what a contingency is,describe the auditor's main concerns about them,and indicate how contingencies should be dealt with by management and the auditor.Besides litigation,claims,and assessments,what are some other types of contingencies?

On what information does the auditor base a going concern evaluation?

The audit committee is an independent subcommittee of the board of directors.

Clients can waive audit adjustments,but only for misstatements that are immaterial.

Assume a situation in which an attorney who provided significant litigation counsel to a client refuses to furnish information requested in an audit.Which of the following descriptions best describes this situation from the auditor's perspective?

Testing subsequent events List the audit procedures to be performed to determine if subsequent events have occurred and have been appropriately addressed.

Management representation letters Describe the purpose of the management representation letter.

Which of the following individuals should sign the management representation letter?

The iron curtain method for assessing materiality focuses on assuring that the year-end balance sheet is correct and considers the impact of prior-year uncorrected misstatements reversing in later years.

The discovery of an intentional misstatement,even if immaterial,could impact the auditor's opinion on the effectiveness of which of the following?

Review analytical procedures help auditors assess the overall presentation of the financial statements.

Which one of the following is not a key condition indicating doubt about a client's ability to continue as a going- concern?

A culture that encourages auditors to seek consultation with other members of the audit firm will be more likely to result in auditors who will acquiesce to inappropriate or aggressive client preferences.

The total likely misstatements found during the audit are equal to the sum of known and projected misstatements.

Which of the following is not a required communication with the audit committee?

Which of the following is not a typical analytical procedure for the completion of the audit?

Quality Auditing: Why It Matters

The Auditors Responsibilities Regarding Fraud and Mechanisms to Address Fraud: Regulation and Corporate Governance

Internal Control Over Financial Reporting: Responsibilities of Management and the External Auditor

Professional Legal Liability

Professional Auditing Standards and the Audit Opinion Formulation Process

Audit Evidence

Planning the Audit: Identifying and Responding to the Risks of Material Misstatement

Specialized Audit Tools: Sampling and Generalized Audit Software

Auditing the Revenue Cycle

Auditing Cash and Marketable Securities

Auditing Inventory, Goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, Use, Impairment, and Disposal

Auditing Long-Term Liabilities and Stockholders Equity Transactions

Audit Reports

Filters