Question 1

An auditor evaluates fair presentation in the financial statements from the auditee's perspective.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements regarding auditor communication with audit committees is FALSE?

Accepted Answer

A) Both the auditor and management should be present in meetings with the audit committee to discuss these reports,which may be written or oral. 
B) The auditor and management should,in advance,review the information to be covered with the audit committee. 
C) On all matters,management should report to the audit committee first,and the auditor then comments. 
D) When the auditor communicates in writing,the report should indicate that it is intended solely for use by the audit committee.

Question 3

The Orange Corporation was audited for the year-ended December 31,the fieldwork was completed on January 25,and the audit report was delivered on February 15.The auditor learned about a two-for-one stock split on February 1.How should the report be dated?

Accepted Answer

A) December 31 and January 25. 
B) January 25 and February 1. 
C) January 25 and February 15. 
D) February 1and February 15.

Question 4

________ paragraphs relate to information that is not required to be disclosed in the financial statements.

Accepted Answer

A) Scope 
B) Other Matter 
C) Opinion 
D) Emphasis of Matter

Question 5

The auditor actively seeks audit evidence up to the date of the audit report.After that date,the auditor does not seek new evidence.

Accepted Answer

A) True 
 B)False

Question 6

Likely misstatements ________.

Accepted Answer

A) are those actually identified during the audit,so there is no uncertainty about their existence 
B) are those that probably exist,based on audit evidence examined 
C) are those that could exist over and above the total of known and likely misstatements because of the fundamental limitations of auditing 
D) are those for which the amount of possible misstatement cannot be precisely quantified

Question 7

What are the various causes of misstatements? Are they intentional?

Accepted Answer

The answer of What are the various causes of misstatements?...

Question 8

Dual dating is used to cut off the subsequent event procedural responsibility at the earlier date.

Accepted Answer

A) True 
 B)False

Question 9

What is an Emphasis of Matter (EOM)paragraph?

Accepted Answer

The answer of What is an Emphasis of Matter (EOM)paragraph?...

Question 10

Emphasis of Matter paragraphs refer only to information presented or disclosed in the financial statements.

Accepted Answer

A) True 
 B)False

Question 11

If an audit report contains information relating to a company's MD&A,it would be found in a(n)________ paragraph.

Accepted Answer

A) Opinion 
B) Scope 
C) Other Matter 
D) Emphasis of Matter

Question 12

An Other Matter paragraph can be used to alert the user to a material misstatement in the financial statements.

Accepted Answer

A) True 
 B)False

Question 13

Auditors consider materiality at each of the following stages of an audit EXCEPT ________.

Accepted Answer

A) at the planning stage 
B) at the interim audit to assess internal controls 
C) while performing the year-end audit 
D) at the final evaluation stage when forming the audit opinion

Question 14

Auditors have a responsibility to perform audit procedures ________.

Accepted Answer

A) after the report date 
B) until the report date 
C) after the report issuance date 
D) after the report date for events between the report date and a later dual dated event

Question 15

Which of the following statements about forming an audit opinion is FALSE?

Accepted Answer

A) Auditors need to form an opinion on whether the financial statements are presented fairly in all material respects and in accordance with GAAP. 
B) The auditor must make a number of professional judgments as set out in CAS 700. 
C) The auditor must decide whether the audit team has obtained sufficient appropriate audit evidence providing reasonable assurance that the financial statements as a whole are free from material misstatement due to fraud or error. 
D) The auditor must decide if any uncorrected misstatements are material individually but not in aggregate.

Question 16

Explain how the wording of a standard audit report varies between statements prepared using a fair presentation framework and statements prepared using a compliance framework.

Accepted Answer

The answer of Explain how the wording of a standard...

Question 17

You are auditing Green Corporation for the calendar year 20X2.Among other items related to the audit,Green is being sued for personal injury resulting from the malfunction of one of its products.Sue Ewe filed the lawsuit 8 years earlier in September 20W4.The officers of the company and its outside legal counsel estimate that the loss from the suit will be approximately $250,000.This amount has been accrued and properly disclosed in the footnotes of the financial statements.You have no reason to believe that the estimate is wrong.You completed your audit and dated your report March 2,20X3.The financial statements were issued on March 14,20X3.The trial was in progress at that date.On March 20,20X3,you read in a national business periodical that the jury in the trial awarded Sue Ewe $1.5 million.
Required:
Discuss the nature of these events and what responsibility the auditor has,if any,regarding the news of March 20.

Accepted Answer

The answer of You are auditing Green Corporation for the...

Question 18

The auditor typically writes a letter to the audit committee concerning material weaknesses in internal controls.

Accepted Answer

A) True 
 B)False

Question 19

The most common reporting framework in Canada is the ________.

Accepted Answer

A) fair presentation framework 
B) special purpose framework 
C) compliance framework 
D) general purpose framework

Question 20

In the audit of Longwind Ltd.'s January 31 financial statements,subsequent to the approval of the financial statements by the board of directors on March 11,2016 and prior to the issuance of the audit report,the auditor became aware of a lawsuit that should have been disclosed but was not.The auditor was able to conduct separate work related to the material lawsuit and note 17 related to this item was added.The additional work and change to the statement was completed April 2,2016.How should the audit report be dated?

Accepted Answer

A) March 11. 
B) March 11,except for Note 17,April 2. 
C) April 2. 
D) An audit report cannot be issued until additional fieldwork is completed on fully revised and reissued financial statements.

Exam 16: Applying Professional Judgment to Form the Audit Opinion and Issue the Audit Report

An auditor evaluates fair presentation in the financial statements from the auditee's perspective.

Which of the following statements regarding auditor communication with audit committees is FALSE?

The Orange Corporation was audited for the year-ended December 31,the fieldwork was completed on January 25,and the audit report was delivered on February 15.The auditor learned about a two-for-one stock split on February 1.How should the report be dated?

________ paragraphs relate to information that is not required to be disclosed in the financial statements.

The auditor actively seeks audit evidence up to the date of the audit report.After that date,the auditor does not seek new evidence.

Likely misstatements ________.

What are the various causes of misstatements? Are they intentional?

Dual dating is used to cut off the subsequent event procedural responsibility at the earlier date.

What is an Emphasis of Matter (EOM)paragraph?

Emphasis of Matter paragraphs refer only to information presented or disclosed in the financial statements.

If an audit report contains information relating to a company's MD&A,it would be found in a(n) ________ paragraph.

An Other Matter paragraph can be used to alert the user to a material misstatement in the financial statements.

Auditors consider materiality at each of the following stages of an audit EXCEPT ________.

Auditors have a responsibility to perform audit procedures ________.

Which of the following statements about forming an audit opinion is FALSE?

Explain how the wording of a standard audit report varies between statements prepared using a fair presentation framework and statements prepared using a compliance framework.

The auditor typically writes a letter to the audit committee concerning material weaknesses in internal controls.

The most common reporting framework in Canada is the ________.