Question 1

Which of the following correctly states the period for which the auditor is responsible for subsequent events?

Accepted Answer

A) The balance sheet date to the date the audit report is issued. 
B) The balance sheet date to the end of field work. 
C) The balance sheet date to the date of subsequent discovery of omitted procedures. 
D) All of the above. 
A) The balance sheet date to the date the audit report is issued. 
B) The balance sheet date to the end of field work. 
C) The balance sheet date to the date of subsequent discovery of omitted procedures. 
D) All of the above.

Question 2

Auditors are responsible for obtaining reasonable assurance that the financial statements are free from material misstatements,including material misstatements related to noncompliance with laws and regulations.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is false regarding the use of an audit checklist for disclosures?

Accepted Answer

A) It is a convenient documentation format. 
B) It reminds the auditor of matters that should be considered for disclosure. 
C) It can be organized to include relevant professional guidance. 
D) It covers all potential unusual circumstances. 
A) It is a convenient documentation format. 
B) It reminds the auditor of matters that should be considered for disclosure. 
C) It can be organized to include relevant professional guidance. 
D) It covers all potential unusual circumstances.

Question 4

The materiality of a misstatement is based on only the quantitative amount of the misstatement.

Accepted Answer

A) True 
 B)False

Question 5

Auditors are required to evaluate the likelihood of each client continuing as a going concern for a reasonable period into the foreseeable future.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following parties has the responsibility for designing and maintaining policies and procedures to identify,evaluate,and account for contingencies?

Accepted Answer

A) Management. 
B) The auditor. 
C) The audit committee. 
D) The client's attorney. 
A) Management. 
B) The auditor. 
C) The audit committee. 
D) The client's attorney.

Question 7

Which of the following is a tool that is best used by the audit team to determine if the client has included all disclosures?

Accepted Answer

A) Management representation letter. 
B) GAAS. 
C) Inquiry of the CFO. 
D) Checklists. 
A) Management representation letter. 
B) GAAS. 
C) Inquiry of the CFO. 
D) Checklists.

Question 8

Which of the following is one of the most important drivers of audit quality in cases where an auditor may feel some pressure to acquiesce to management's demands to not require that misstatements be corrected in order to preserve a harmonious working relationship?

Accepted Answer

A) Firm culture. 
B) Ethics training. 
C) Annual income of the CPA firm. 
D) PCAOB guidance. 
A) Firm culture. 
B) Ethics training. 
C) Annual income of the CPA firm. 
D) PCAOB guidance.

Question 9

An example of a Type I subsequent event would be a significant lawsuit that is initiated relating to an incident that occurred after the balance sheet date.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is not a main provision of the Foreign Corrupt Practices Act of 1977 (FCPA)?

Accepted Answer

A) No U.S.person or companies that have securities listed on U.S.markets may make a payment to a foreign official for the purpose of obtaining or retaining business. 
B) Companies that have securities listed on U.S.markets must make and keep financial records that accurately and fairly reflect the transactions of the company. 
C) Designing and maintaining internal accounting controls is the role of internal auditors when management conducts business in a foreign country. 
D) Certain payments made to an official to expedite the performance of the duties that the official would already be bound to perform are acceptable. 
A) No U.S.person or companies that have securities listed on U.S.markets may make a payment to a foreign official for the purpose of obtaining or retaining business. 
B) Companies that have securities listed on U.S.markets must make and keep financial records that accurately and fairly reflect the transactions of the company. 
C) Designing and maintaining internal accounting controls is the role of internal auditors when management conducts business in a foreign country. 
D) Certain payments made to an official to expedite the performance of the duties that the official would already be bound to perform are acceptable.

Question 11

Which one of the following is not a purpose of the management representation letter?

Accepted Answer

A) It clearly documents the audit procedures that were performed by the auditors. 
B) It further acknowledges management's responsibility for the financial statements. 
C) It confirms oral responses obtained by the auditor earlier in the audit and the continuing appropriateness of those responses. 
D) It reduces the possibility of misunderstanding concerning the matters that are the subject of the representations. 
A) It clearly documents the audit procedures that were performed by the auditors. 
B) It further acknowledges management's responsibility for the financial statements. 
C) It confirms oral responses obtained by the auditor earlier in the audit and the continuing appropriateness of those responses. 
D) It reduces the possibility of misunderstanding concerning the matters that are the subject of the representations.

Question 12

Where would the auditor make mention of issues noted during audit procedures that are not of audit significance?

Accepted Answer

A) Engagement letter. 
B) Management letter. 
C) Representation letter. 
D) Attorney letter. 
A) Engagement letter. 
B) Management letter. 
C) Representation letter. 
D) Attorney letter.

Question 13

Disclosures You are a staff auditor on the audit of Cosmo Technologies,Inc.The audit partner asks you to carefully read the new mortgage contract with the Hometown Bank and abstract all pertinent information that might be needed for a financial disclosure. Required: (1)List the information in a mortgage that is likely to be relevant to the auditor.(2)What are the pros and cons of using a disclosure checklist for this task?

Accepted Answer

(1) The information in a mortgage that i

Question 14

Auditing standards recognize that there are inherent limitations in an auditor's ability to detect material misstatements relating to the entity's compliance with laws and regulations.

Accepted Answer

A) True 
 B)False

Question 15

Which method focuses on the materiality of current year misstatements and the reversing effect of prior-year misstatements on the income statement?

Accepted Answer

A) Rollover method. 
B) Iron curtain method. 
C) Percentage approach. 
D) Judgmental method. 
A) Rollover method. 
B) Iron curtain method. 
C) Percentage approach. 
D) Judgmental method.

Question 16

Type II subsequent events Provide two examples of a Type II subsequent event and explain how these events would be treated in the financial statements.

Accepted Answer

The instructor must review the student's

Question 17

Which one of the following would be the most effective procedure for discovering material Type II subsequent events?

Accepted Answer

A) Updating the search for unrecorded liabilities. 
B) Resending all bank confirmations returned. 
C) Reading of the minutes of board of directors' meetings. 
D) Surprise cash count at random locations. 
A) Updating the search for unrecorded liabilities. 
B) Resending all bank confirmations returned. 
C) Reading of the minutes of board of directors' meetings. 
D) Surprise cash count at random locations.

Question 18

Review analytical procedures What is the purpose of using review analytical procedures in the final stages of the audit?

Accepted Answer

Review analytical procedures are require

Question 19

If the auditor continues to have substantial doubt about the client continuing as a going concern,the auditor should evaluate the adequacy of the client's related disclosures.

Accepted Answer

A) True 
 B)False

Question 20

Which one of the following is false regarding the adequacy of disclosures in a financial statement audit?

Accepted Answer

A) The auditor should consider matters for disclosure while gathering evidence during the course of the audit,not just at the end of the audit. 
B) One of the key disclosures is a summary of significant accounting policies used by the company. 
C) Disclosures should be limited to only checklist items. 
D) The auditor's report does not specifically cover the statements made by management in the "Management Discussion and Analysis" (MD&
A) section of the annual report. 
A) The auditor should consider matters for disclosure while gathering evidence during the course of the audit,not just at the end of the audit. 
B) One of the key disclosures is a summary of significant accounting policies used by the company. 
C) Disclosures should be limited to only checklist items. 
D) The auditor's report does not specifically cover the statements made by management in the "Management Discussion and Analysis" (MD&
A) section of the annual report.

Which of the following correctly states the period for which the auditor is responsible for subsequent events?

Auditors are responsible for obtaining reasonable assurance that the financial statements are free from material misstatements,including material misstatements related to noncompliance with laws and regulations.

Which of the following is false regarding the use of an audit checklist for disclosures?

The materiality of a misstatement is based on only the quantitative amount of the misstatement.

Auditors are required to evaluate the likelihood of each client continuing as a going concern for a reasonable period into the foreseeable future.

Which of the following parties has the responsibility for designing and maintaining policies and procedures to identify,evaluate,and account for contingencies?

Which of the following is a tool that is best used by the audit team to determine if the client has included all disclosures?

Which of the following is one of the most important drivers of audit quality in cases where an auditor may feel some pressure to acquiesce to management's demands to not require that misstatements be corrected in order to preserve a harmonious working relationship?

An example of a Type I subsequent event would be a significant lawsuit that is initiated relating to an incident that occurred after the balance sheet date.

Which of the following is not a main provision of the Foreign Corrupt Practices Act of 1977 (FCPA)?

Which one of the following is not a purpose of the management representation letter?

Where would the auditor make mention of issues noted during audit procedures that are not of audit significance?

Auditing standards recognize that there are inherent limitations in an auditor's ability to detect material misstatements relating to the entity's compliance with laws and regulations.

Which method focuses on the materiality of current year misstatements and the reversing effect of prior-year misstatements on the income statement?

Type II subsequent events Provide two examples of a Type II subsequent event and explain how these events would be treated in the financial statements.

Which one of the following would be the most effective procedure for discovering material Type II subsequent events?

Review analytical procedures What is the purpose of using review analytical procedures in the final stages of the audit?

If the auditor continues to have substantial doubt about the client continuing as a going concern,the auditor should evaluate the adequacy of the client's related disclosures.

Which one of the following is false regarding the adequacy of disclosures in a financial statement 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

Which of the following correctly states the period for which the auditor is responsible for subsequent events?

Auditors are responsible for obtaining reasonable assurance that the financial statements are free from material misstatements,including material misstatements related to noncompliance with laws and regulations.

Which of the following is false regarding the use of an audit checklist for disclosures?

The materiality of a misstatement is based on only the quantitative amount of the misstatement.

Auditors are required to evaluate the likelihood of each client continuing as a going concern for a reasonable period into the foreseeable future.

Which of the following parties has the responsibility for designing and maintaining policies and procedures to identify,evaluate,and account for contingencies?

Which of the following is a tool that is best used by the audit team to determine if the client has included all disclosures?

Which of the following is one of the most important drivers of audit quality in cases where an auditor may feel some pressure to acquiesce to management's demands to not require that misstatements be corrected in order to preserve a harmonious working relationship?

An example of a Type I subsequent event would be a significant lawsuit that is initiated relating to an incident that occurred after the balance sheet date.

Which of the following is not a main provision of the Foreign Corrupt Practices Act of 1977 (FCPA)?

Which one of the following is not a purpose of the management representation letter?

Where would the auditor make mention of issues noted during audit procedures that are not of audit significance?

Auditing standards recognize that there are inherent limitations in an auditor's ability to detect material misstatements relating to the entity's compliance with laws and regulations.

Which method focuses on the materiality of current year misstatements and the reversing effect of prior-year misstatements on the income statement?

Type II subsequent events Provide two examples of a Type II subsequent event and explain how these events would be treated in the financial statements.

Which one of the following would be the most effective procedure for discovering material Type II subsequent events?

Review analytical procedures What is the purpose of using review analytical procedures in the final stages of the audit?

If the auditor continues to have substantial doubt about the client continuing as a going concern,the auditor should evaluate the adequacy of the client's related disclosures.

Which one of the following is false regarding the adequacy of disclosures in a financial statement 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