Question 1

What information should be included in the representation letter?

Accepted Answer

a. The representation letter should include discussion of:
b. Specific reference to management's responsibilities for the financial statements
c. A statement that management believes the financial statements to be free of material misstatement.
d. The completeness of financial records, documents, minutes of board meetings, and regulatory reports made available to the auditor
e. The absence of unrecorded errors or transactions related to the financial statements and management's belief that the effect of any uncorrected errors is immaterial
f. The completeness of information pertaining to related party transactions
g. The completeness of information pertaining to subsequent events and uncertainties
h. Information about any frauds or illegal acts that may have occurred
i. Management plans that might have an impact on the valuation or classification of transactions
j. Legal title of assets, liens against assets, and compliance with contractual obligations.
k. Information about issues that may require disclosure or accounting recognition including significant estimates, risk and uncertainties, regulatory noncompliance, unasserted claims, and contingent losses

Question 2

What are the various ways the auditor communicates the results of the audit to interested parties?

Accepted Answer

The auditor's primary form of external communication is the auditor's report, which is distributed along with the financial statements to external stakeholders through quarterly and annual reports. Also, publicly registered United States companies must issue three reports included in the 10-K filed with the SEC. One report contains an opinion on the financial statements and two other reports are issued on internal control over financial reporting; one being a report on management's assessment of controls and another being the auditor's independent assessment. Other communications are intended for internal parties, such as a report to the audit committee and a management letter.

Question 3

Describe circumstances that affect the risk of misstatement for a contingent loss.

Accepted Answer

The risk of misstatement of a contingent loss estimate is directly affected by the complexity of the estimate, the availability and reliability of data used for estimating, the nature of assumptions used, the degree of uncertainty surrounding future events, and the magnitude of the potential loss.

Question 4

Your audit of a major company is almost complete. However, management is debating adjustments that are immaterial, have offsetting effects, or involve subjective estimates. Describe your options and the negotiation process.

Accepted Answer

If management is unwilling to correct th

Question 5

What will the form of the auditor's formal report depend on in a traditional audit? In an integrated audit?

Accepted Answer

a. If a traditional audit of the financi

Question 6

What impact can the current environment and conditions have on the auditor's evaluation of the client's accounting policy choices?

Accepted Answer

Auditors must carefully note the current

Question 7

Under what circumstances will an unqualified report include an explanatory paragraph?

Accepted Answer

When the auditor wishes to emphasize so

Question 8

Who are the major groups that care about earnings quality and why do they care?

Accepted Answer

a. First, the company's shareholders mak

Question 9

What final procedures are performed by the auditor after all the necessary risk assessments and tests of management assertions have been completed?

Accepted Answer

After assessments and tests of managemen

Question 10

Why are attorney confirmations both the best evidence for contingent losses and the most problematic?

Accepted Answer

a. An attorney confirmation, or legal le

Question 11

What is the task and purpose of the concurring partner?

Accepted Answer

The purpose of the concurring partner is

Question 12

What is the importance of the review of audit documentation and conclusions? Describe the review process.

Accepted Answer

a. Review of the documentation of audit

Question 13

Your audit of a major company is almost complete. However, management is debating adjustments that are immaterial, have offsetting effects, or involve subjective estimates. Describe the negotiation factors that are likely to lead to a satisfactory outcome.

Accepted Answer

a. Commitment to principles or objective

Question 14

What circumstances would cause an auditor to issue an audit report as a dual date report?

Accepted Answer

Companies sometimes have a subsequent ev

Question 15

What are the seven parts to the standard unqualified audit report?

Accepted Answer

a. Title: The title of the report is "In

Question 16

Concerning the auditor's evaluation of a client's accounting choices, what circumstances must the auditor take into account with regard to the client's quality of earnings?

Accepted Answer

a. Correlation with underlying economic

Question 17

What is the purpose of the representation letter?

Accepted Answer

The auditor obtains a representation let

Question 18

What is the auditor's primary objective concerning contingent losses and what procedures does the auditor use to address contingent losses?

Accepted Answer

a. The auditor's primary objective in th

Question 19

What is the source of proposed adjustments and what does the auditor do about them?

Accepted Answer

i) As a result of audit testing, the aud

Question 20

What is the responsibility of management and of the auditor with regard to a client's accounting choices?

Accepted Answer

a. Financial statements are the responsi

What information should be included in the representation letter?

What are the various ways the auditor communicates the results of the audit to interested parties?

Describe circumstances that affect the risk of misstatement for a contingent loss.

Your audit of a major company is almost complete. However, management is debating adjustments that are immaterial, have offsetting effects, or involve subjective estimates. Describe your options and the negotiation process.

What will the form of the auditor's formal report depend on in a traditional audit? In an integrated audit?

What impact can the current environment and conditions have on the auditor's evaluation of the client's accounting policy choices?

Under what circumstances will an unqualified report include an explanatory paragraph?

Who are the major groups that care about earnings quality and why do they care?

What final procedures are performed by the auditor after all the necessary risk assessments and tests of management assertions have been completed?

Why are attorney confirmations both the best evidence for contingent losses and the most problematic?

What is the task and purpose of the concurring partner?

What is the importance of the review of audit documentation and conclusions? Describe the review process.

Your audit of a major company is almost complete. However, management is debating adjustments that are immaterial, have offsetting effects, or involve subjective estimates. Describe the negotiation factors that are likely to lead to a satisfactory outcome.

What circumstances would cause an auditor to issue an audit report as a dual date report?

What are the seven parts to the standard unqualified audit report?

Concerning the auditor's evaluation of a client's accounting choices, what circumstances must the auditor take into account with regard to the client's quality of earnings?

What is the purpose of the representation letter?

What is the auditor's primary objective concerning contingent losses and what procedures does the auditor use to address contingent losses?

What is the source of proposed adjustments and what does the auditor do about them?

What is the responsibility of management and of the auditor with regard to a client's accounting choices?

Assurance and Auditing

Managing Risk: The Role of Auditing and Assurance

The Building Blocks of Auditing

The Integrated Audit Process

Understanding the Clients Industry and Business: Strategic Analysis

Usiness Processes and Internal Risks

Risk Management and Internal Control

Evaluating Internal Control Over Financial Reporting

Inquiry and Analytical Evidence

Evidence About Management Assertions: Linking Residual Risks to Substantive Tests

Audit Testing for the Sales and Customer Service Process

Audit Testing for the Supply Chain and Production Process

Auditing Resource Management Processes

Completing the Integrated Audit I: Business Measurement Analysis

Interpreting Sample-Based Audit Evidence

The Ethical Auditor: Factors Affecting Auditor Decision Making

Audit and Assurance Services

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Exam 15: Completing the Integrated Audit II: Audit Reporting

What information should be included in the representation letter?

What are the various ways the auditor communicates the results of the audit to interested parties?

Describe circumstances that affect the risk of misstatement for a contingent loss.

Your audit of a major company is almost complete. However, management is debating adjustments that are immaterial, have offsetting effects, or involve subjective estimates. Describe your options and the negotiation process.

What will the form of the auditor's formal report depend on in a traditional audit? In an integrated audit?

What impact can the current environment and conditions have on the auditor's evaluation of the client's accounting policy choices?

Under what circumstances will an unqualified report include an explanatory paragraph?

Who are the major groups that care about earnings quality and why do they care?

What final procedures are performed by the auditor after all the necessary risk assessments and tests of management assertions have been completed?

Why are attorney confirmations both the best evidence for contingent losses and the most problematic?

What is the task and purpose of the concurring partner?

What is the importance of the review of audit documentation and conclusions? Describe the review process.

Your audit of a major company is almost complete. However, management is debating adjustments that are immaterial, have offsetting effects, or involve subjective estimates. Describe the negotiation factors that are likely to lead to a satisfactory outcome.

What circumstances would cause an auditor to issue an audit report as a dual date report?

What are the seven parts to the standard unqualified audit report?

Concerning the auditor's evaluation of a client's accounting choices, what circumstances must the auditor take into account with regard to the client's quality of earnings?

What is the purpose of the representation letter?

What is the auditor's primary objective concerning contingent losses and what procedures does the auditor use to address contingent losses?

What is the source of proposed adjustments and what does the auditor do about them?

What is the responsibility of management and of the auditor with regard to a client's accounting choices?

Assurance and Auditing

Managing Risk: The Role of Auditing and Assurance

The Building Blocks of Auditing

The Integrated Audit Process

Understanding the Clients Industry and Business: Strategic Analysis

Usiness Processes and Internal Risks

Risk Management and Internal Control

Evaluating Internal Control Over Financial Reporting

Inquiry and Analytical Evidence

Evidence About Management Assertions: Linking Residual Risks to Substantive Tests

Audit Testing for the Sales and Customer Service Process

Audit Testing for the Supply Chain and Production Process

Auditing Resource Management Processes

Completing the Integrated Audit I: Business Measurement Analysis

Interpreting Sample-Based Audit Evidence

The Ethical Auditor: Factors Affecting Auditor Decision Making

Audit and Assurance Services

Filters