Question 1

For audit purposes, subsequent events are defined as events that occur after the ________.

Accepted Answer

A)  balance sheet date 
B)  date of the audit report 
C)  balance sheet date but prior to the date of the audit report 
D)  date of the audit report and concern contingencies that are not reflected in the financial statements 
A)  balance sheet date 
B)  date of the audit report 
C)  balance sheet date but prior to the date of the audit report 
D)  date of the audit report and concern contingencies that are not reflected in the financial statements

Question 2

Which of the following items would appear in a management letter of representation?

Accepted Answer

A)  That a physical inventory was taken, and properly valued. 
B)  That the control systems are operating effectively. 
C)  That management has adequate insurance to ensure its ongoing operations. 
D)  That all financial records and related data were made available to the auditors. 
A)  That a physical inventory was taken, and properly valued. 
B)  That the control systems are operating effectively. 
C)  That management has adequate insurance to ensure its ongoing operations. 
D)  That all financial records and related data were made available to the auditors.

Question 3

Which of the following representations would be made by the client in writing?

Accepted Answer

A)  Losses from sales commitments. 
B)  Unasserted claims and assessments. 
C)  That all transactions have been recorded. 
D)  Noncompliance with contractual agreements. 
A)  Losses from sales commitments. 
B)  Unasserted claims and assessments. 
C)  That all transactions have been recorded. 
D)  Noncompliance with contractual agreements.

Question 4

Auditors have a responsibility to perform audit procedures ________.

Accepted Answer

A)  after the report date 
B)  until the report date 
C)  after the report issuance date 
D)  after the report date for events between the report date and a later dual dated event 
A)  after the report date 
B)  until the report date 
C)  after the report issuance date 
D)  after the report date for events between the report date and a later dual dated event

Question 5

Analytical procedures are used during the overall evaluation of the financial statements.

Accepted Answer

A) True 
 B)False

Question 6

At the review stage of an audit, the application of analytical procedures is ________.

Accepted Answer

A)  recommended by auditing standards 
B)  not mentioned by auditing standards 
C)  not useful, since detailed substantive tests have already been performed 
D)  required by auditing standards 
A)  recommended by auditing standards 
B)  not mentioned by auditing standards 
C)  not useful, since detailed substantive tests have already been performed 
D)  required by auditing standards

Question 7

A written letter of representation from a client can provide a good defence for not performing audit procedures.

Accepted Answer

A) True 
 B)False

Question 8

Analytical procedures used in the overall review stage of an audit generally include ________.

Accepted Answer

A)  considering unusual or unexpected account balances that were not previously identified 
B)  performing tests of transactions to corroborate management's financial statement assertions 
C)  gathering evidence concerning account balances that have not changed from the prior year 
D)  retesting control procedures that appeared to be ineffective during the assessment of control risk 
A)  considering unusual or unexpected account balances that were not previously identified 
B)  performing tests of transactions to corroborate management's financial statement assertions 
C)  gathering evidence concerning account balances that have not changed from the prior year 
D)  retesting control procedures that appeared to be ineffective during the assessment of control risk

Question 9

An entity's income statements were misstated due to the recording of a journal entry that involved debits and credits to an unusual combination of expense and revenue accounts. The auditor most likely to detect this irregularity by ________.

Accepted Answer

A)  tracing a sample of journal entries to the general ledger 
B)  evaluating the effectiveness of the internal control system policies and procedures 
C)  investigating the reconciliation of control accounts with the subsidiary records 
D)  performing analytical procedures designed to disclose differences between the balances in the accounts and budgeted amounts 
A)  tracing a sample of journal entries to the general ledger 
B)  evaluating the effectiveness of the internal control system policies and procedures 
C)  investigating the reconciliation of control accounts with the subsidiary records 
D)  performing analytical procedures designed to disclose differences between the balances in the accounts and budgeted amounts

Question 10

Management letters are a means of ________.

Accepted Answer

A)  reporting recommendations to the client 
B)  making the client aware of the firm's consulting services 
C)  communicating matters related to control risk 
D)  identifying frauds and material misstatements 
A)  reporting recommendations to the client 
B)  making the client aware of the firm's consulting services 
C)  communicating matters related to control risk 
D)  identifying frauds and material misstatements

Question 11

The primary purpose of the second partner review is to help in forming the audit opinion.

Accepted Answer

A) True 
 B)False

Question 12

Auditors must complete phases of an audit after the balance sheet date. This subsequent period extends from the balance sheet date to the date of the ________.

Accepted Answer

A)  audit report 
B)  final review of the audit working papers 
C)  public issuance of the financial statements 
D)  delivery of the audit report to the client 
A)  audit report 
B)  final review of the audit working papers 
C)  public issuance of the financial statements 
D)  delivery of the audit report to the client

Question 13

What are the three key features that must be included in the management representation letter?

Accepted Answer

i. That management has fulfilled its res

Question 14

Which of the following can illustrate a subsequent event that requires disclosure but not adjustment?

Accepted Answer

A)  Settlement of long outstanding litigation. 
B)  Collection of a customer debt that had been written off. 
C)  Loss of inventory as a result of a flood occurring after year-end. 
D)  An additional tax assessment on prior income. 
A)  Settlement of long outstanding litigation. 
B)  Collection of a customer debt that had been written off. 
C)  Loss of inventory as a result of a flood occurring after year-end. 
D)  An additional tax assessment on prior income.

Question 15

The primary source of information that the auditor can use in corroborating information about litigation, claims, and assessments is the ________.

Accepted Answer

A)  client's lawyer 
B)  court records 
C)  client's management 
D)  independent auditor 
A)  client's lawyer 
B)  court records 
C)  client's management 
D)  independent auditor

Question 16

The refusal by a client's lawyer to provide a representation about the legality of an act committed by the client is generally ________.

Accepted Answer

A)  sufficient reason to issue an adverse opinion 
B)  considered to be a scope limitation 
C)  insufficient reason to modify the auditor's report due to the lawyer's obligation of confidentiality 
D)  proper grounds to withdraw from the engagement 
A)  sufficient reason to issue an adverse opinion 
B)  considered to be a scope limitation 
C)  insufficient reason to modify the auditor's report due to the lawyer's obligation of confidentiality 
D)  proper grounds to withdraw from the engagement

Question 17

According to the CPA Canada Handbook, auditors should watch for unusual transactions in the course of their audit. List four examples of these transactions.

Accepted Answer

i. Transactions that are made with unusu

Question 18

A working paper reference index reflects ________.

Accepted Answer

A)  all balance sheet accounts 
B)  all income statement accounts 
C)  all trial balance accounts 
D)  all capital assets 
A)  all balance sheet accounts 
B)  all income statement accounts 
C)  all trial balance accounts 
D)  all capital assets

Question 19

Toward the end of an audit, it is not necessary that external auditors consider the revenue and expense accounts that were not audited in connection with balance sheet accounts.

Accepted Answer

A) True 
 B)False

Question 20

A subsequent event involving the issue of bonds payable or share capital requires ________.

Accepted Answer

A)  financial statement disclosure only 
B)  restatement of prior years' financial statements 
C)  adjustment to financial statement numbers 
D)  no disclosure or financial statement adjustment 
A)  financial statement disclosure only 
B)  restatement of prior years' financial statements 
C)  adjustment to financial statement numbers 
D)  no disclosure or financial statement adjustment

Exam 15: Completing the Audit Work

For audit purposes, subsequent events are defined as events that occur after the ________.

Which of the following items would appear in a management letter of representation?

Which of the following representations would be made by the client in writing?

Auditors have a responsibility to perform audit procedures ________.

Analytical procedures are used during the overall evaluation of the financial statements.

At the review stage of an audit, the application of analytical procedures is ________.

A written letter of representation from a client can provide a good defence for not performing audit procedures.

Analytical procedures used in the overall review stage of an audit generally include ________.

An entity's income statements were misstated due to the recording of a journal entry that involved debits and credits to an unusual combination of expense and revenue accounts. The auditor most likely to detect this irregularity by ________.

Management letters are a means of ________.

The primary purpose of the second partner review is to help in forming the audit opinion.

Auditors must complete phases of an audit after the balance sheet date. This subsequent period extends from the balance sheet date to the date of the ________.

What are the three key features that must be included in the management representation letter?

Which of the following can illustrate a subsequent event that requires disclosure but not adjustment?

The primary source of information that the auditor can use in corroborating information about litigation, claims, and assessments is the ________.

The refusal by a client's lawyer to provide a representation about the legality of an act committed by the client is generally ________.

According to the CPA Canada Handbook, auditors should watch for unusual transactions in the course of their audit. List four examples of these transactions.

A working paper reference index reflects ________.

Toward the end of an audit, it is not necessary that external auditors consider the revenue and expense accounts that were not audited in connection with balance sheet accounts.

A subsequent event involving the issue of bonds payable or share capital requires ________.

Introduction to Auditing

Auditors Professional Roles and Responsibilities

Auditors Ethical and Legal Responsibilities

Reports on Audited Financial Statements

Preliminary Audit Planning: Understanding the Auditees Business

Assessing Risks in an Audit Engagement

Internal Control Over Financial Reporting

Audit Evidence and Assurance

Control Assessment and Testing

Audit Sampling

The Revenues, Receivables, and Receipts Process and Cash Account Balance

The Purchases, Payables, and Payments Process

Payroll and Production Processes

The Finance and Investment Process

Applying Professional Judgment to Form the Audit Opinion and Issue Theaudit Report

Other Public Accounting Services and Reportsreviews and Compilations

Professional Rules of Conduct Details and Auditor Responsibilities

Part I the Audit of Accounting Estimates: Basic Material Relating to Accountingestimates

Legal Liability Cases

Other Professional Accounting Services and Reports, Including Fraud

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