Question 1

Auditors are responsible for designing and maintaining policies and procedures to identify,evaluate,and account for contingencies.

Accepted Answer

A) True 
 B)False

Question 2

When evaluating identified misstatements,the auditor only needs to consider misstatements in the current year,and not misstatements from the prior year.

Accepted Answer

A) True 
 B)False

Question 3

At the end of an audit,adjustments for misstatements that are "waived" will remain uncorrected.

Accepted Answer

A) True 
 B)False

Question 4

A misstatement that is intentional is not assessed any differently by the auditor than a misstatement that is unintentional.

Accepted Answer

A) True 
 B)False

Question 5

Auditors routinely review the MD&A to provide reasonable assurance that it does not contain information that is factually inaccurate or inconsistent with the audited portion of the financial statements and accompanying notes.

Accepted Answer

A) True 
 B)False

Question 6

The engagement quality review is a risk-based review.

Accepted Answer

A) True 
 B)False

Question 7

Dual-dating opinions Describe the concept and the purpose of dual-dating an audit report.

Accepted Answer

Dual-dating the audit report reduces the

Question 8

Contingent liabilities The auditor will discuss contingencies with the appropriate executives and management of the company.Identify at least five sources of evidence to corroborate management's representations regarding contingencies.

Accepted Answer

Corroborating evidence of contingent lia

Question 9

Assessing disclosures does not require reasonable assurance of which of the following?

Accepted Answer

A) The disclosures are understandable to users. 
B) Disclosed events and transactions have occurred and pertain to the entity. 
C) All material and immaterial disclosures have been reported. 
D) The information is disclosed accurately and at appropriate amounts. 
A) The disclosures are understandable to users. 
B) Disclosed events and transactions have occurred and pertain to the entity. 
C) All material and immaterial disclosures have been reported. 
D) The information is disclosed accurately and at appropriate amounts.

Question 10

All major accounting disagreements with management,even if eventually resolved,should be discussed with the audit committee.

Accepted Answer

A) True 
 B)False

Question 11

When a subsequent event provides evidence about conditions that did not exist at the balance sheet date,what is the best course of action for the auditor to follow?

Accepted Answer

A) Ensure that any necessary footnote disclosures be included with the statements. 
B) Ensure that the financial statements are adjusted to reflect the information,including any necessary footnote disclosures. 
C) Give an inappropriate opinion. 
D) Provide management with a new engagement letter to document the terms of the revised arrangement. 
A) Ensure that any necessary footnote disclosures be included with the statements. 
B) Ensure that the financial statements are adjusted to reflect the information,including any necessary footnote disclosures. 
C) Give an inappropriate opinion. 
D) Provide management with a new engagement letter to document the terms of the revised arrangement.

Question 12

If the auditor concludes that there may be a going-concern problem,which of the following should the auditor do?

Accepted Answer

A) Withdraw from the engagement. 
B) Issue a qualified or adverse opinion. 
C) Identify and assess management's plan to overcome the problem. 
D) Communicate this fact with management that is one level above the controller. 
A) Withdraw from the engagement. 
B) Issue a qualified or adverse opinion. 
C) Identify and assess management's plan to overcome the problem. 
D) Communicate this fact with management that is one level above the controller.

Question 13

The auditor's report specifically covers the statements and disclosures made by management in the "Management Discussion and Analysis" (MD&A)section of the annual report.

Accepted Answer

A) True 
 B)False

Question 14

Analytical procedures conducted at the end of an audit are performed to examine trends and changes.What is typically another purpose of analytical procedures at the end of the audit?

Accepted Answer

A) To document planning in accordance with GAAS. 
B) To provide the client with a value-added service in conjunction with audit activities. 
C) To ask "hard questions" about the company's results and its relationship to external factors. 
D) To increase the number of items reported in the management letter. 
A) To document planning in accordance with GAAS. 
B) To provide the client with a value-added service in conjunction with audit activities. 
C) To ask "hard questions" about the company's results and its relationship to external factors. 
D) To increase the number of items reported in the management letter.

Question 15

Type I subsequent events indicate conditions that did not exist at the balance sheet date,but that may require disclosure.

Accepted Answer

A) True 
 B)False

Question 16

It is important that the auditor have a constructive and detailed dialogue with the audit committee on important aspects of the audit.

Accepted Answer

A) True 
 B)False

Question 17

If the auditor concludes that there may be a going-concern problem,which of the following is not typically evaluated to determine the reasonableness of management's plans to overcome this problem?

Accepted Answer

A) Management's assumption about increasing prices or market share in relationship to current industry developments. 
B) Management's assumptions about cost savings related to a reduction in the work force should be recomputed and evaluated to determine any hidden costs. 
C) Management's past track record related to delaying unnecessary expenditures. 
D) Management's assumptions about selling off assets and their relationship to current market prices. 
A) Management's assumption about increasing prices or market share in relationship to current industry developments. 
B) Management's assumptions about cost savings related to a reduction in the work force should be recomputed and evaluated to determine any hidden costs. 
C) Management's past track record related to delaying unnecessary expenditures. 
D) Management's assumptions about selling off assets and their relationship to current market prices.

Question 18

The discovery of an intentional misstatement,even if immaterial,could impact the auditor's opinion on the effectiveness of the client's internal control over financial reporting.

Accepted Answer

A) True 
 B)False

Question 19

When management is unable to provide an explanation for a previously unrecognized risk identified through the review analytical procedures,the auditor must issue an adverse opinion.

Accepted Answer

A) True 
 B)False

Question 20

The auditor should have a sound basis,supported by objective evidence,regarding accounting estimates and should not fall victim to an "all estimates are subjective" argument in order to waive which of the following?

Accepted Answer

A) Contingent liability. 
B) Material misstatements. 
C) Unrecorded liability. 
D) Material adjustments. 
A) Contingent liability. 
B) Material misstatements. 
C) Unrecorded liability. 
D) Material adjustments.

Auditors are responsible for designing and maintaining policies and procedures to identify,evaluate,and account for contingencies.

When evaluating identified misstatements,the auditor only needs to consider misstatements in the current year,and not misstatements from the prior year.

At the end of an audit,adjustments for misstatements that are "waived" will remain uncorrected.

A misstatement that is intentional is not assessed any differently by the auditor than a misstatement that is unintentional.

Auditors routinely review the MD&A to provide reasonable assurance that it does not contain information that is factually inaccurate or inconsistent with the audited portion of the financial statements and accompanying notes.

The engagement quality review is a risk-based review.

Dual-dating opinions Describe the concept and the purpose of dual-dating an audit report.

Contingent liabilities The auditor will discuss contingencies with the appropriate executives and management of the company.Identify at least five sources of evidence to corroborate management's representations regarding contingencies.

Assessing disclosures does not require reasonable assurance of which of the following?

All major accounting disagreements with management,even if eventually resolved,should be discussed with the audit committee.

When a subsequent event provides evidence about conditions that did not exist at the balance sheet date,what is the best course of action for the auditor to follow?

If the auditor concludes that there may be a going-concern problem,which of the following should the auditor do?

The auditor's report specifically covers the statements and disclosures made by management in the "Management Discussion and Analysis" (MD&A)section of the annual report.

Analytical procedures conducted at the end of an audit are performed to examine trends and changes.What is typically another purpose of analytical procedures at the end of the audit?

Type I subsequent events indicate conditions that did not exist at the balance sheet date,but that may require disclosure.

It is important that the auditor have a constructive and detailed dialogue with the audit committee on important aspects of the audit.

If the auditor concludes that there may be a going-concern problem,which of the following is not typically evaluated to determine the reasonableness of management's plans to overcome this problem?

The discovery of an intentional misstatement,even if immaterial,could impact the auditor's opinion on the effectiveness of the client's internal control over financial reporting.

When management is unable to provide an explanation for a previously unrecognized risk identified through the review analytical procedures,the auditor must issue an adverse opinion.

The auditor should have a sound basis,supported by objective evidence,regarding accounting estimates and should not fall victim to an "all estimates are subjective" argument in order to waive which of the following?

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

Auditors are responsible for designing and maintaining policies and procedures to identify,evaluate,and account for contingencies.

When evaluating identified misstatements,the auditor only needs to consider misstatements in the current year,and not misstatements from the prior year.

At the end of an audit,adjustments for misstatements that are "waived" will remain uncorrected.

A misstatement that is intentional is not assessed any differently by the auditor than a misstatement that is unintentional.

Auditors routinely review the MD&A to provide reasonable assurance that it does not contain information that is factually inaccurate or inconsistent with the audited portion of the financial statements and accompanying notes.

The engagement quality review is a risk-based review.

Dual-dating opinions Describe the concept and the purpose of dual-dating an audit report.

Contingent liabilities The auditor will discuss contingencies with the appropriate executives and management of the company.Identify at least five sources of evidence to corroborate management's representations regarding contingencies.

Assessing disclosures does not require reasonable assurance of which of the following?

All major accounting disagreements with management,even if eventually resolved,should be discussed with the audit committee.

When a subsequent event provides evidence about conditions that did not exist at the balance sheet date,what is the best course of action for the auditor to follow?

If the auditor concludes that there may be a going-concern problem,which of the following should the auditor do?

The auditor's report specifically covers the statements and disclosures made by management in the "Management Discussion and Analysis" (MD&A)section of the annual report.

Analytical procedures conducted at the end of an audit are performed to examine trends and changes.What is typically another purpose of analytical procedures at the end of the audit?

Type I subsequent events indicate conditions that did not exist at the balance sheet date,but that may require disclosure.

It is important that the auditor have a constructive and detailed dialogue with the audit committee on important aspects of the audit.

If the auditor concludes that there may be a going-concern problem,which of the following is not typically evaluated to determine the reasonableness of management's plans to overcome this problem?

The discovery of an intentional misstatement,even if immaterial,could impact the auditor's opinion on the effectiveness of the client's internal control over financial reporting.

When management is unable to provide an explanation for a previously unrecognized risk identified through the review analytical procedures,the auditor must issue an adverse opinion.

The auditor should have a sound basis,supported by objective evidence,regarding accounting estimates and should not fall victim to an "all estimates are subjective" argument in order to waive which of the following?

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