Question 1

Which one of the following is the best example of a Type II subsequent event?

Accepted Answer

A) Election of new board members. 
B) Change in auditors. 
C) Inability to collect from a significant customer. 
D) Acquisition of a subsidiary. 
A) Election of new board members. 
B) Change in auditors. 
C) Inability to collect from a significant customer. 
D) Acquisition of a subsidiary.

Question 2

For the client to be considered a going concern,the auditor must satisfy himself or herself that the entity will continue in existence for a reasonable period of time,usually one year from the last day of the fiscal year.

Accepted Answer

A) True 
 B)False

Question 3

The management representation letter should be signed by the

Accepted Answer

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

Question 4

Guarantees by the client of the liabilities of others are included as contingencies that are assessed by auditors during their concluding procedures.

Accepted Answer

A) True 
 B)False

Question 5

If a client's major customer goes bankrupt in the period subsequent to cutoff and the allowance for doubtful accounts does not cover the loss,the client should adjust the allowance prior to the completion of the audit.

Accepted Answer

A) True 
 B)False

Question 6

When making a client continuance decision the auditor should view an individual client as

Accepted Answer

A) an individual stock in an investment portfolio from a risk and return perspective. 
B) a stand alone investment with a fixed level of risk and return. 
C) since risk is unknown it is not a factor in the decision and the auditor should seek the highest fee possible. 
D) an auditor must charge a standard fee based on the size of the client to maintain independence. 
A) an individual stock in an investment portfolio from a risk and return perspective. 
B) a stand alone investment with a fixed level of risk and return. 
C) since risk is unknown it is not a factor in the decision and the auditor should seek the highest fee possible. 
D) an auditor must charge a standard fee based on the size of the client to maintain independence.

Question 7

When a subsequent event provides evidence about conditions that existed at the balance sheet date,the auditor should do which of the following?

Accepted Answer

A) assign a specialist. 
B) ensure that the financial statements are adjusted to reflect the information,including any necessary footnote disclosures. 
C) shop for an opinion that fits the desired type of event. 
D) provide management with a new engagement letter to document the terms of the revised arrangement. 
A) assign a specialist. 
B) ensure that the financial statements are adjusted to reflect the information,including any necessary footnote disclosures. 
C) shop for an opinion that fits the desired type of event. 
D) provide management with a new engagement letter to document the terms of the revised arrangement.

Question 8

The Financial Reporting Council Audit Quality Framework states that there are three primary drivers of audit quality.

Accepted Answer

A) True 
 B)False

Question 9

An example of a Type II Subsequent Event includes the settlement two months after year-end of a liability for an amount well in excess of the amount that was accrued at year-end.

Accepted Answer

A) True 
 B)False

Question 10

The primary drivers of the Financial Reporting Council's Audit Quality Framework include which of the following?

Accepted Answer

A) client culture. 
B) The skills and personal qualities of Chief Financial Officer and client accounting. 
C) Factors outside of the control of the auditors that affect audit quality. 
D) all of the above. 
A) client culture. 
B) The skills and personal qualities of Chief Financial Officer and client accounting. 
C) Factors outside of the control of the auditors that affect audit quality. 
D) all of the above.

Question 11

In evaluating accounting estimates the auditor would not concentrate on key factors and assumptions that are

Accepted Answer

A) within budgetary expectations. 
B) subjective and susceptible to misstatement and bias. 
C) inconsistent with current economic trends. 
D) sensitive to variations. 
A) within budgetary expectations. 
B) subjective and susceptible to misstatement and bias. 
C) inconsistent with current economic trends. 
D) sensitive to variations.

Question 12

If the audit team encounters difficulties in performing an audit,such matters must be communicated to which party?

Accepted Answer

A) the SEC 
B) the audit committee 
C) management 
D) the PCAOB 
A) the SEC 
B) the audit committee 
C) management 
D) the PCAOB

Question 13

The failure of management to provide a management representation letter is considered a scope limitation on the audit.

Accepted Answer

A) True 
 B)False

Question 14

A quality audit guarantees that the audited financial statements are not materially misstated.

Accepted Answer

A) True 
 B)False

Question 15

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 16

A quality audit

Accepted Answer

A) is performed in accordance with generally accepted accounting principles (GAAP). 
B) provides reasonable assurance that the audited financial statements are presented in accordance with generally accepted auditing standards (GAAS) 
C) provides absolute assurance that the audited financial statements not materially misstated. 
D) none of the above. 
A) is performed in accordance with generally accepted accounting principles (GAAP). 
B) provides reasonable assurance that the audited financial statements are presented in accordance with generally accepted auditing standards (GAAS) 
C) provides absolute assurance that the audited financial statements not materially misstated. 
D) none of the above.

Question 17

An example of a Type II Subsequent Event includes an earthquake that happens after balance sheet date and destroys a major warehouse of the client.

Accepted Answer

A) True 
 B)False

Question 18

Management letters to clients
What is a management letter and how does it differ from a management representation letter?

Accepted Answer

The management letter is a letter from t

Question 19

A quality audit is one that

Accepted Answer

A) guarantees that the audited financial statements are not materially misstated. 
B) provides reasonable assurance that the audited financial statements are free from all errors and every possible disclosure is made. 
C) provides reasonable assurance that the audited financial statements not materially misstated. 
D) none of the above. 
A) guarantees that the audited financial statements are not materially misstated. 
B) provides reasonable assurance that the audited financial statements are free from all errors and every possible disclosure is made. 
C) provides reasonable assurance that the audited financial statements not materially misstated. 
D) none of the above.

Question 20

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

Accepted Answer

The instructor must review the student's

Which one of the following is the best example of a Type II subsequent event?

For the client to be considered a going concern,the auditor must satisfy himself or herself that the entity will continue in existence for a reasonable period of time,usually one year from the last day of the fiscal year.

The management representation letter should be signed by the

Guarantees by the client of the liabilities of others are included as contingencies that are assessed by auditors during their concluding procedures.

If a client's major customer goes bankrupt in the period subsequent to cutoff and the allowance for doubtful accounts does not cover the loss,the client should adjust the allowance prior to the completion of the audit.

When making a client continuance decision the auditor should view an individual client as

When a subsequent event provides evidence about conditions that existed at the balance sheet date,the auditor should do which of the following?

The Financial Reporting Council Audit Quality Framework states that there are three primary drivers of audit quality.

An example of a Type II Subsequent Event includes the settlement two months after year-end of a liability for an amount well in excess of the amount that was accrued at year-end.

The primary drivers of the Financial Reporting Council's Audit Quality Framework include which of the following?

In evaluating accounting estimates the auditor would not concentrate on key factors and assumptions that are

If the audit team encounters difficulties in performing an audit,such matters must be communicated to which party?

The failure of management to provide a management representation letter is considered a scope limitation on the audit.

A quality audit guarantees that the audited financial statements are not materially misstated.

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

A quality audit

An example of a Type II Subsequent Event includes an earthquake that happens after balance sheet date and destroys a major warehouse of the client.

Management letters to clients What is a management letter and how does it differ from a management representation letter?

A quality audit is one that

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

Auditing: Integral to the Economy

Corporate Governance and Audits

Judgmental and Ethical Decision-Making Frameworks and Associated Professional Standards

Audit Risk,business Risk,and Audit Planning

Internal Control Over Financial Reporting

Performing an Integrated Audit

A Framework for Audit Evidence

Tools Used in Gathering Audit Evidence

Auditing for Fraud

Auditing Revenue and Related Accounts

Audit of Acquisition and Payment Cycle and Inventory

Audit of Cash and Other Liquid Assets

Audit of Long-Lived Assets and Related Expense Accounts

Audit of Longer-Term Liabilities, equity, acquisitions, and Related-Entity Transactions, long-Term Liabilities, and Equity

Auditors Reports

Professional Liability

Advanced Topics Concerning Complex Audit Judgments

Filters

Exam 15: Ensuring Audit Quality in Completing the Audit

Which one of the following is the best example of a Type II subsequent event?

For the client to be considered a going concern,the auditor must satisfy himself or herself that the entity will continue in existence for a reasonable period of time,usually one year from the last day of the fiscal year.

The management representation letter should be signed by the

Guarantees by the client of the liabilities of others are included as contingencies that are assessed by auditors during their concluding procedures.

If a client's major customer goes bankrupt in the period subsequent to cutoff and the allowance for doubtful accounts does not cover the loss,the client should adjust the allowance prior to the completion of the audit.

When making a client continuance decision the auditor should view an individual client as

When a subsequent event provides evidence about conditions that existed at the balance sheet date,the auditor should do which of the following?

The Financial Reporting Council Audit Quality Framework states that there are three primary drivers of audit quality.

An example of a Type II Subsequent Event includes the settlement two months after year-end of a liability for an amount well in excess of the amount that was accrued at year-end.

The primary drivers of the Financial Reporting Council's Audit Quality Framework include which of the following?

In evaluating accounting estimates the auditor would not concentrate on key factors and assumptions that are

If the audit team encounters difficulties in performing an audit,such matters must be communicated to which party?

The failure of management to provide a management representation letter is considered a scope limitation on the audit.

A quality audit guarantees that the audited financial statements are not materially misstated.

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

A quality audit

An example of a Type II Subsequent Event includes an earthquake that happens after balance sheet date and destroys a major warehouse of the client.

Management letters to clients What is a management letter and how does it differ from a management representation letter?

A quality audit is one that

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

Auditing: Integral to the Economy

Corporate Governance and Audits

Judgmental and Ethical Decision-Making Frameworks and Associated Professional Standards

Audit Risk,business Risk,and Audit Planning

Internal Control Over Financial Reporting

Performing an Integrated Audit

A Framework for Audit Evidence

Tools Used in Gathering Audit Evidence

Auditing for Fraud

Auditing Revenue and Related Accounts

Audit of Acquisition and Payment Cycle and Inventory

Audit of Cash and Other Liquid Assets

Audit of Long-Lived Assets and Related Expense Accounts

Audit of Longer-Term Liabilities, equity, acquisitions, and Related-Entity Transactions, long-Term Liabilities, and Equity

Auditors Reports

Professional Liability

Advanced Topics Concerning Complex Audit Judgments

Filters