Question 1

Discuss the factors that are relevant when management is assessing the going concern assumption.

Accepted Answer

The answer of Discuss the factors that are relevant when...

Question 2

The final phase of an audit includes which of the following:

Accepted Answer

A) confirming the terms of the audit engagement with the auditor. 
B) performing substantive tests of account balances. 
C) gaining an understanding of the client's internal control system. 
D) determining whether the audit evidence obtained is sufficient and appropriate to reduce the risk of material misstatements in the financial report to an acceptably low level.

Question 3

The uninsured loss of inventory as a result of fire subsequent to year-end is an example of a type 2 subsequent event.

Accepted Answer

A) True 
 B)False

Question 4

Generally,the further into the future an event is likely to take place,the greater the uncertainty surrounding the event.

Accepted Answer

A) True 
 B)False

Question 5

The auditor's responsibility for the financial report includes selecting and applying appropriate accounting policies.

Accepted Answer

A) True 
 B)False

Question 6

The client's compliance with contractual requirements of operating agreements is an example of a qualitative factor that may cause misstatements of quantitatively immaterial amounts to be considered material.

Accepted Answer

A) True 
 B)False

Question 7

Explain why the global financial crisis has resulted in the number of potential and actual legal liability insurance claims and explain how auditors can deal with the risk of litigation in tough economic times.

Accepted Answer

The answer of Explain why the global financial crisis has...

Question 8

Which of the following statements is regarding a type 1 subsequent event?

Accepted Answer

A) they may be of such significance as to require disclosure in the financial report. 
B) they are events that do not result in changes to amounts in the financial report. 
C) they occur before the end of the client's financial year. 
D) the financial report is adjusted for any material changes in estimates from these types of events.

Question 9

What are examples of matters of governance interest that the auditor may wish to discuss with those charged with governance?

Accepted Answer

The answer of What are examples of matters of governance...

Question 10

Under section 311 of the Corporations Act auditors are required to report any actual or suspected contraventions of the Act to:

Accepted Answer

A) the Financial Reporting Council. 
B) the Auditing and Assurance Standards Board. 
C) the Australian Securities and Investments Commission. 
D) the Australian Securities Exchange.

Question 11

Identify quantitative and qualitative considerations that are taken into account when the auditor evaluates whether misstatements either cause financial reports to be materially misstated or requires additional disclosure.

Accepted Answer

The answer of Identify quantitative and qualitative considerations that are...

Question 12

Which of the following factors is not relevant when management is assessing the going concern assumption?

Accepted Answer

A) The nature and condition of the entity's business 
B) Whether the auditor specialises in the client's industry 
C) The time into the future that an event is likely to take place 
D) The size and complexity of the entity

Question 13

Under section 311 of the Corporations Act,auditors are required to report to ASIC any actual or suspected contraventions of the Act within 28 days of an event.

Accepted Answer

A) True 
 B)False

Question 14

The auditor's report will not require a modified opinion where:

Accepted Answer

A) a significant uncertainty exists. 
B) there is a disagreement with those charged with governance. 
C) a limitation of scope of the engagement exists. 
D) the financial report is true and fair.

Question 15

Procedures used by an auditor when conducting a subsequent events review include:

Accepted Answer

A) reading minutes of the meetings of the board of directors. 
B) assessing continued compliance with borrowing limits and loan covenants. 
C) enquiring of those charged with governance as to whether any subsequent events have occurred that may affect the financial report. 
D) All of the above

Question 16

Which of the following are areas normally covered during the wrap-up of an audit engagement?

Accepted Answer

A) Reconsider the assessments of internal control at the entity level and the risk of fraud 
B) Perform subsequent events procedures 
C) Consider the amount used for materiality 
D) All of the above

Question 17

A subsequent event occurs:

Accepted Answer

A) after the audit completes the tests of controls 
B) before the end of the financial year 
C) between the client's financial year-end and the date of the auditor's report 
D) after the auditor signs the audit engagement letter

Question 18

Matters of governance interest that the auditor may wish to discuss with those charged with governance include:

Accepted Answer

A) expected modifications to the audit report. 
B) any practical difficulties encountered in performing the audit. 
C) the potential effect on the financial report of any material risks and exposures. 
D) All of the above

Question 19

A limitation on the scope of the auditor's work could result from an inability to perform procedures or an imposition by the entity.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following would not be included in an audit report?

Accepted Answer

A) The audit fee charged to the client 
B) The auditor's address 
C) An introductory paragraph 
D) The auditor's responsibility for the financial report

Exam 12: Completing and Reporting on the Audit

Discuss the factors that are relevant when management is assessing the going concern assumption.

The final phase of an audit includes which of the following:

The uninsured loss of inventory as a result of fire subsequent to year-end is an example of a type 2 subsequent event.

Generally,the further into the future an event is likely to take place,the greater the uncertainty surrounding the event.

The auditor's responsibility for the financial report includes selecting and applying appropriate accounting policies.

The client's compliance with contractual requirements of operating agreements is an example of a qualitative factor that may cause misstatements of quantitatively immaterial amounts to be considered material.

Explain why the global financial crisis has resulted in the number of potential and actual legal liability insurance claims and explain how auditors can deal with the risk of litigation in tough economic times.

Which of the following statements is regarding a type 1 subsequent event?

What are examples of matters of governance interest that the auditor may wish to discuss with those charged with governance?

Under section 311 of the Corporations Act auditors are required to report any actual or suspected contraventions of the Act to:

Identify quantitative and qualitative considerations that are taken into account when the auditor evaluates whether misstatements either cause financial reports to be materially misstated or requires additional disclosure.

Which of the following factors is not relevant when management is assessing the going concern assumption?

Under section 311 of the Corporations Act,auditors are required to report to ASIC any actual or suspected contraventions of the Act within 28 days of an event.

The auditor's report will not require a modified opinion where:

Procedures used by an auditor when conducting a subsequent events review include:

Which of the following are areas normally covered during the wrap-up of an audit engagement?

A subsequent event occurs:

Matters of governance interest that the auditor may wish to discuss with those charged with governance include:

A limitation on the scope of the auditor's work could result from an inability to perform procedures or an imposition by the entity.

Which of the following would not be included in an audit report?