Question 1

If auditors are appointed on January 3,2012,the date of the financial statements is December 31,2012,the date of the auditors' report is February 7,2013 and the audit report release date is March 3,2013,what is the appropriate date of the written representations?

Accepted Answer

A)  January 3, 2012. 
B)  December 31, 2012. 
C)  February 7, 2013. 
D)  March 3, 2013.

Question 2

A.Griffin audited the financial statements of Dodger Magnificat Corporation for the year ended December 31,2012.She completed gathering sufficient appropriate evidence on January 30 and later learned of a stock split voted by the board of directors on February 5.The financial statements were changed to reflect the split,and she now needs to dual date the report on the company's financial statements before sending it to the company.Which of the following is the proper form?

Accepted Answer

A)  December 31, 2012, except as to Note X, which is dated January 30, 2013. 
B)  January 30, 2013, except as to Note X, which is dated February 5, 2013. 
C)  December 31, 2012, except as to Note X, which is dated February 5, 2013. 
D)  February 5, 2013, except for the date of the auditors' report, for which the date is January 30, 2013.

Question 3

If an entity had litigation pending at the date of the financial statements and auditors learn of the outcome of this litigation following the date of their report (but prior to the audit report release date),this is known as a(n):

Accepted Answer

A)  Omitted procedure. 
B)  Prior-period adjustment. 
C)  Subsequent event. 
D)  Subsequently discovered fact.

Question 4

Auditors are not required to evaluate the accuracy of management's estimates but are required to evaluate the ___________________ of those estimates as well as the process used in developing those estimates.

Accepted Answer

The answer of Auditors are not required to evaluate the...

Question 5

Which of the following procedures is not used in auditors' examination of litigation,claims,and assessments?

Accepted Answer

A)  Obtaining a description and evaluation of litigation, claims, and assessments from management. 
B)  Examining documentary evidence regarding litigation, claims, and assessments. 
C)  Reading minutes of meetings of stockholders, directors, and appropriate committees. 
D)  Performing analytical procedures.

Question 6

Which of the following items would appear in written representations in the audit of a public entity but not a nonpublic entity?

Accepted Answer

A)  Statements related to management's responsibility for the entity's financial statements. 
B)  Statements related to management's responsibility for designing internal control to prevent and detect fraud. 
C)  An indication that all subsequent events have been disclosed to the auditors. 
D)  Management's opinion as to the effectiveness of its internal control over financial reporting.

Question 7

Auditors' communications with the individuals charged with governance of the client can be provided either during the audit or at the conclusion of the audit.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following forms of communication serves as a critical part of auditors' examination of litigation,claims,and assessments?

Accepted Answer

A)  Attorney letter. 
B)  Engagement letter. 
C)  Management letter. 
D)  Written representations.

Question 9

Interim testing normally occurs between what two dates?

Accepted Answer

A)  Beginning of the year under audit and audit report release date. 
B)  Date of the financial statements and audit report release date. 
C)  Beginning of the year under audit and date of the financial statements. 
D)  End of the year under audit and date of the auditors' report.

Question 10

If a subsequent event provides new information regarding a condition that existed at the date of the financial statements,auditors would ensure that the client's financial statements were _________________________________ to reflect the new information related to the matter.

Accepted Answer

The answer of If a subsequent event provides new information...

Question 11

_____________________________________ are obtained by auditors from the client to impress upon management their primary responsibility for the financial statements.

Accepted Answer

The answer of _____________________________________ are obtained by auditors from the...

Question 12

An entity's income statements were misstated due to the recording of journal entries that involved debits and credits to an unusual combination of expense and revenue accounts.Auditors most likely could have detected this irregularity by

Accepted Answer

A)  Tracing a sample of journal entries to the general ledger. 
B)  Evaluating the effectiveness of the internal control policies and procedures. 
C)  Investigating the reconciliations between controlling accounts and subsidiary records. 
D)  Performing analytical procedures designed to disclose differences from expectations.

Question 13

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 activities that appeared to be ineffective during the assessment of control risk.

Question 14

Auditors should communicate matters such as the quality of the client's accounting principles to _________________________________.

Accepted Answer

The answer of Auditors should communicate matters such as the...

Question 15

A charge following the date of the financial statements to a notes receivable account from the cash disbursements journal should alert auditors to the possibility that a

Accepted Answer

A)  Contingent asset has come into existence following the date of the financial statements. 
B)  Contingent liability has come into existence following the date of the financial statements. 
C)  Provision for contingencies is required. 
D)  Contingent liability has become a real liability and has been settled.

Question 16

It is ultimately the client's responsibility for adjusting the financial statements for matters identified during the audit.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is not a purpose of the review of audit documentation by a supervisor during fieldwork?

Accepted Answer

A)  To ensure that all appropriate steps in the audit plan is performed. 
B)  To ensure that referencing among audit documentation is clear. 
C)  To ensure that the explanations included in the audit documentation are understandable. 
D)  To ensure that the overall scope of the audit is appropriate.

Question 18

If substantial doubt exists about the entity's ability to continue as a going concern,auditors should ensure that appropriate disclosures are provided in the financial statements and modify their on the entity's financial statements.

Accepted Answer

The answer of If substantial doubt exists about the entity's...

Question 19

Management letters are not a means of

Accepted Answer

A)  Reporting recommendations to the client. 
B)  Assisting the client in improving its operations. 
C)  Satisfying professional requirements to communicate matters related to the client's internal control. 
D)  Developing rapport with the client.

Question 20

If the date of an entity's financial statements is December 31,the date of the auditor's report is February 20,and the audit report release date is February 22,which of the following is considered a subsequent event?

Accepted Answer

A)  A significant acquisition that was announced on February 1 and will be finalized on October 1. 
B)  A court settlement on March 3 related to a case that was pending on December 31. 
C)  Losses from the devaluation of a foreign currency that became finalized on February 21. 
D)  The entity's announcement of a major restructuring plan on December 30 that will be implemented during the upcoming year.

Exam 11: Completing the Audit