Question 1

The primary objective of performing analytical procedures in the final review stage of an audit is to ________.

Accepted Answer

A) obtain evidence from details tested to corroborate management assertions 
B) obtain evidence on the validity of the assessment of control risk 
C) assist the auditor in evaluating the overall financial statement presentation 
D) identify areas that represent specific risks relevant to the audit 
A) obtain evidence from details tested to corroborate management assertions 
B) obtain evidence on the validity of the assessment of control risk 
C) assist the auditor in evaluating the overall financial statement presentation 
D) identify areas that represent specific risks relevant to the audit C

Question 2

Regarding subsequent events,when would pro forma financial statement be the best disclosure?

Accepted Answer

This type of disclosure is best when the subsequent event requiring financial statement disclosure only is so significant that the presentation of financial statements "as if" the event had occurred on the date of the balance sheet would be of great assistance to financial statement users.This type of disclosure would be given in a note to the financial statements.

Question 3

According to the CICA Handbook,auditors should watch for unusual transactions in the course of their audit.List four examples of these transactions.

Accepted Answer

i.Transactions that are made with unusual or unfamiliar enterprises.
ii.Transactions that are unusual in nature and size.
iii.Transactions that are different in substance than they are in form.
iv.Transactions that lack an apparent business reason.

Question 4

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 procedures that appeared to be ineffective during the assessment of control risk 
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 procedures that appeared to be ineffective during the assessment of control risk

Question 5

The refusal by a client's lawyer to provide a representation about the legality of an act committed by the client is generally ________.

Accepted Answer

A) sufficient reason to issue an adverse opinion 
B) considered to be a scope limitation 
C) insufficient reason to modify the auditor's report due to the lawyer's obligation of confidentiality 
D) proper grounds to withdraw from the engagement 
A) sufficient reason to issue an adverse opinion 
B) considered to be a scope limitation 
C) insufficient reason to modify the auditor's report due to the lawyer's obligation of confidentiality 
D) proper grounds to withdraw from the engagement

Question 6

Procedures for the audit of warranty expense are generally coordinated with which of the following audit programs?

Accepted Answer

A) Inventory and liabilities. 
B) Inventory,sales,and repairs and maintenance. 
C) Investments and intangibles. 
D) Sales,inventory,and interest expense. 
A) Inventory and liabilities. 
B) Inventory,sales,and repairs and maintenance. 
C) Investments and intangibles. 
D) Sales,inventory,and interest expense.

Question 7

All revenue accounts designated "miscellaneous" or "other" are generally immaterial in amount and,therefore,not audited.

Accepted Answer

A) True 
 B)False

Question 8

An auditor analyzes repairs and maintenance accounts primarily to obtain evidence in support of the audit assertion that all expenditures for ________.

Accepted Answer

A) repairs and maintenance have been recorded in the proper period 
B) property and equipment have been recorded in the proper period 
C) repairs and maintenance have not been charged to capital accounts 
D) property and equipment have not been charged to expense 
A) repairs and maintenance have been recorded in the proper period 
B) property and equipment have been recorded in the proper period 
C) repairs and maintenance have not been charged to capital accounts 
D) property and equipment have not been charged to expense

Question 9

Auditors draft the letter of representation that will be prepared on company letterhead and signed by the officers of the company.

Accepted Answer

A) True 
 B)False

Question 10

What are the two types of subsequent events?

Accepted Answer

The two types are (1)subsequen

Question 11

Management letters are a means of ________.

Accepted Answer

A) reporting recommendations to the client 
B) making the client aware of the firm's consulting services 
C) communicating matters related to control risk 
D) identifying frauds and material misstatements 
A) reporting recommendations to the client 
B) making the client aware of the firm's consulting services 
C) communicating matters related to control risk 
D) identifying frauds and material misstatements

Question 12

What are the three key features that must be included in the management representation letter?

Accepted Answer

i.That management has fulfilled its resp

Question 13

For audit purposes,subsequent events are defined as events that occur after the ________.

Accepted Answer

A) balance sheet date 
B) date of the audit report 
C) balance sheet date but prior to the date of the audit report 
D) date of the audit report and concern contingencies that are not reflected in the financial statements 
A) balance sheet date 
B) date of the audit report 
C) balance sheet date but prior to the date of the audit report 
D) date of the audit report and concern contingencies that are not reflected in the financial statements

Question 14

What procedures should an auditor perform if he or she auditing the financial statements of a company and finds out that the company has several clearing accounts?

Accepted Answer

Clearing and other miscellaneous account

Question 15

The client signs the enquiry letter about claims and possible claims that is sent to the company's law firm for confirmation.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following items would appear in a management letter of representation?

Accepted Answer

A) That a physical inventory was taken,and properly valued. 
B) That the control systems are operating effectively. 
C) That management has adequate insurance to ensure its ongoing operations. 
D) That all financial records and related data were made available to the auditors. 
A) That a physical inventory was taken,and properly valued. 
B) That the control systems are operating effectively. 
C) That management has adequate insurance to ensure its ongoing operations. 
D) That all financial records and related data were made available to the auditors.

Question 17

A subsequent event involving the issue of bonds payable or share capital requires ________.

Accepted Answer

A) financial statement disclosure only 
B) restatement of prior years' financial statements 
C) adjustment to financial statement numbers 
D) no disclosure or financial statement adjustment 
A) financial statement disclosure only 
B) restatement of prior years' financial statements 
C) adjustment to financial statement numbers 
D) no disclosure or financial statement adjustment

Question 18

Which of the following representations would be made by the client in writing?

Accepted Answer

A) Losses from sales commitments. 
B) Unasserted claims and assessments. 
C) That all transactions have been recorded. 
D) Noncompliance with contractual agreements. 
A) Losses from sales commitments. 
B) Unasserted claims and assessments. 
C) That all transactions have been recorded. 
D) Noncompliance with contractual agreements.

Question 19

A loss on uncollectible trade accounts receivable resulting from the bankruptcy of a major customer requires financial statement disclosure only.

Accepted Answer

A) True 
 B)False

Question 20

What are the auditors' responsibilities regarding subsequent events?

Accepted Answer

Auditors have an active,procedural respo

hapter 15 Completing the Audit Work

The primary objective of performing analytical procedures in the final review stage of an audit is to ________.

Regarding subsequent events,when would pro forma financial statement be the best disclosure?

According to the CICA Handbook,auditors should watch for unusual transactions in the course of their audit.List four examples of these transactions.

Analytical procedures used in the overall review stage of an audit generally include ________.

The refusal by a client's lawyer to provide a representation about the legality of an act committed by the client is generally ________.

Procedures for the audit of warranty expense are generally coordinated with which of the following audit programs?

All revenue accounts designated "miscellaneous" or "other" are generally immaterial in amount and,therefore,not audited.

An auditor analyzes repairs and maintenance accounts primarily to obtain evidence in support of the audit assertion that all expenditures for ________.

Auditors draft the letter of representation that will be prepared on company letterhead and signed by the officers of the company.

What are the two types of subsequent events?

Management letters are a means of ________.

What are the three key features that must be included in the management representation letter?

For audit purposes,subsequent events are defined as events that occur after the ________.

What procedures should an auditor perform if he or she auditing the financial statements of a company and finds out that the company has several clearing accounts?

The client signs the enquiry letter about claims and possible claims that is sent to the company's law firm for confirmation.

Which of the following items would appear in a management letter of representation?

A subsequent event involving the issue of bonds payable or share capital requires ________.

Which of the following representations would be made by the client in writing?

A loss on uncollectible trade accounts receivable resulting from the bankruptcy of a major customer requires financial statement disclosure only.

What are the auditors' responsibilities regarding subsequent events?

Introduction to Auditing

Auditors Professional Roles and Responsibilities

Auditors Ethical and Legal Responsibilities

Reports on Audited Financial Statements

Preliminary Audit Planning: Understanding the Auditees Business

Assessing Risks in an Audit Engagement

Internal Control Over Financial Reporting

Audit Evidence and Assurance

Control Assessment and Testing

Audit Sampling

The Revenues, Receivables, and Receipts Process and Cash Account Balance

The Purchases, Payables, and Payments Process

Payroll and Production Processes

The Finance and Investment Process

Applying Professional Judgment to Form the Audit Opinion and Issue the Audit Report

Other Public Accounting Services and Reportsreviews and Compilations

Professional Rules of Conduct Details and Auditor Responsibilities

The Audit of Accounting Estimates: Basic Material Relating to Accounting Estimates

Legal Liability Cases

Other Professional Accounting Services and Reports, Including Fraud Auditing

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