Exam 18: Advanced Topics Concerning Complex Audit Judgments

Effect of Internal Audit's Work on the External Audit Which are the audit judgments made by the external auditor that should not be delegated to the internal auditor?

The FASB has set a hierarchy of inputs to consider in assessing fair value.Price taken from a recent trade on the NIKKEI of an index stock would fall under which level?

The significant judgments of "Discontinued assets" are subject to impairment testing that are most likely based on sale or disposal price.

Audits of Level 3 balances are the easiest as they involve an observable,active market.

The dual approach requires which of the following?

In order to achieve efficiency,a CPA firm can provide both internal and external audit services for the same client.

Goodwill arising from many acquisitions can be netted into one test at the company level.

In a standard audit program for goodwill impairment testing,if the original reporting unit no longer exists because operations have been fully integrated into operations of the parent company the auditor should do which of the following?

The audit approach for Level 2 requires the auditor to determine which of the following?

If the acquired company remains intact after the acquisition,it is defined as the:

Auditors request the client to book all known misstatements even if the recording cost is very high so that there are no carryovers from year to year.

The importance of sustainability reporting has become a topic of decreasing focus to organizations and societies around the globe in recent years.

Almost every asset and liability account requires significant judgments.Which of the following accounts is subject to allowance for noncollectibility?

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

Audit Standard No.5 by the PCAOB encourages the external auditor to utilize the work of internal auditors and other objective parties within the organization when performing the assessment of internal control over financial reporting.

A sensitivity analysis of changes in value based on industry and cash-flow assumptions is one of the aspects of the audit program for goodwill impairment testing.

Sustainability reporting is defined as mandatory corporate disclosures about sustainability initiatives,plans,and associated outcomes.

Which of the following is not true about materiality judgment?

Current FMV of assets and liabilities of non-goodwill assets is one of the factors affecting goodwill impairment valuations.

Although the SEC guidance is developed for public companies,the concepts regarding materiality are sound and could be followed by private companies and other organizations.