Question 1

Current professional auditing standards mandate the use of analytical procedures during the testing phase of the audit.

Accepted Answer

A) True 
 B)False

Question 2

Auditors,as part of completing the audit,will request the client to send a standard inquiry to the client's attorney letter to those attorneys the company has been consulting with during the year under audit regarding legal matters of concern to the company.The primary reason the auditor requests this information is to

Accepted Answer

A) determine the range of probable loss for asserted claims. 
B) obtain a professional opinion about the expected outcome of existing lawsuits and the likely amount of the liability,including court costs. 
C) obtain an outside opinion of the probability of losses in determining accruals for contingencies. 
D) obtain an outside opinion of the probability of losses in determining the proper footnote disclosure.

Question 3

List four specific matters that should be included in a client representation letter.

Accepted Answer

The answer of List four specific matters that should be...

Question 4

If the auditor determines that a subsequent event that affects the current period financial statements occurred after fieldwork was completed but before the audit report was issued,what date(s)may the auditor use on the report?

Accepted Answer

A)   
B)   
C)   
D)

Question 5

Audit procedures related to contingent liabilities are initially focused on

Accepted Answer

A) accuracy. 
B) completeness. 
C) existence. 
D) occurrence.

Question 6

Whenever subsequent events are used to evaluate the amounts included in the statements,care must be taken to distinguish between conditions that existed at the balance sheet date and those that come into being after the balance sheet date.The subsequent information should not be incorporated directly into the statements if the conditions causing the change in valuation

Accepted Answer

A) took place before the balance sheet date. 
B) did not take place until after the balance sheet date. 
C) occurred both before and after the balance sheet date. 
D) are reimbursable through insurance policies.

Question 7

The auditor's responsibility with respect to events occurring between the balance sheet date and the end of the audit examination is best expressed by which of the following statements?

Accepted Answer

A) The auditor is fully responsible for events occurring in the subsequent period and should extend all detailed procedures through the last day of fieldwork. 
B) The auditor is responsible for determining that a proper cutoff has been made and performing a general review of events occurring in the subsequent period. 
C) The auditor's responsibility is to determine that a proper cutoff has been made and that transactions recorded on or before the balance sheet date actually occurred. 
D) The auditor has no responsibility for events occurring in the subsequent period unless these events affect transactions recorded on or before the balance sheet date.

Question 8

When should auditors generally assess a client's ability to continue as a going concern?

Accepted Answer

A) upon completion of the audit 
B) during the planning stages of the audit 
C) throughout the entire audit process 
D) during testing and completion phases of the audit

Question 9

Auditors are required to communicate either orally or in writing with the audit committee about internal control weaknesses.

Accepted Answer

A) True 
 B)False

Question 10

Auditors of public companies must obtain certain representations from management regarding internal control over financial reporting.

Accepted Answer

A) True 
 B)False

Question 11

Subsequent events affecting the realization of assets ordinarily will require an adjustment of the financial statements under examination because such events typically represent

Accepted Answer

A) the culmination of conditions that existed at the balance sheet date. 
B) additional new information related to events that were in existence on the balance sheet date. 
C) final estimates of losses relating to casualties occurring in the subsequent events period. 
D) preliminary estimate of losses relating to new events that occurred subsequent to the balance sheet date.

Question 12

An auditor must obtain written client representations that might be signed by all but which of the following?

Accepted Answer

A) treasurer 
B) chief financial officer 
C) vice president of operations 
D) chief executive officer

Question 13

Current professional auditing standards require the performance of analytical procedures during the planning and completion phases of the audit.

Accepted Answer

A) True 
 B)False

Question 14

The audit procedures for the subsequent events review can be divided into two categories: (1)procedures integrated as a part of the verification of year-end account balances,and (2)those performed specifically for the purpose of discovering subsequent events.Which of the following procedures is in the first category?

Accepted Answer

A) Inquire of client regarding contingent liabilities. 
B) Obtain a letter of representation written by client. 
C) Subsequent period sales and purchases transactions are examined to determine whether the cutoff is accurate. 
D) Review journals and ledgers of year 2 to determine the existence of any transactions related to year 1.

Question 15

When dealing with contingencies,

Accepted Answer

A) all contingencies must be disclosed or footnoted. 
B) the auditor must exercise considerable professional judgment when evaluating whether the client has applied the appropriate treatment. 
C) it is easy for the auditor to uncover contingencies without management's cooperation. 
D) the review for contingent liabilities is only performed at the beginning and the end of the audit.

Question 16

A client has a calendar year-end.Listed below are four events that occurred after ? December 31.Which one of these subsequent events might result in adjustment of the ?
December 31 financial statements?

Accepted Answer

A) sale of a major subsidiary 
B) adoption of accelerated depreciation methods 
C) write-off of a substantial portion of inventory as obsolete 
D) collection of 90% of the accounts receivable existing at December 31

Question 17

Which of the following statements regarding the letter of representation is not correct?

Accepted Answer

A) It is prepared on the client's letterhead. 
B) It is addressed to the CPA firm. 
C) It is signed by high-level corporate officials,usually the president and chief financial officer. 
D) It is optional,not required,that the auditor obtain such a letter from management.

Question 18

An auditor has the responsibility to actively search for subsequent events that occur subsequent to the

Accepted Answer

A) balance sheet date. 
B) date of the auditor's report. 
C) balance sheet date,but prior to the audit report. 
D) date of the management representation letter.

Question 19

If,during the completion phase of the audit,the auditor determines that he or she has not obtained sufficient evidence to draw a conclusion about the fairness of the client's financial statements,there are two choices: accumulate additional evidence or issue either a qualified or an adverse opinion.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following material events occurring subsequent to the balance sheet date would require an adjustment to the financial statements before they could be issued?

Accepted Answer

A) loss of a plant as a result of a flood 
B) sale of long-term debt or capital stock 
C) settlement of litigation in excess of the recorded liability 
D) major purchase of a business that is expected to double the sales volume

Exam 24: Completing the Audit

Current professional auditing standards mandate the use of analytical procedures during the testing phase of the audit.

List four specific matters that should be included in a client representation letter.

If the auditor determines that a subsequent event that affects the current period financial statements occurred after fieldwork was completed but before the audit report was issued,what date(s) may the auditor use on the report?

Audit procedures related to contingent liabilities are initially focused on

The auditor's responsibility with respect to events occurring between the balance sheet date and the end of the audit examination is best expressed by which of the following statements?

When should auditors generally assess a client's ability to continue as a going concern?

Auditors are required to communicate either orally or in writing with the audit committee about internal control weaknesses.

Auditors of public companies must obtain certain representations from management regarding internal control over financial reporting.

Subsequent events affecting the realization of assets ordinarily will require an adjustment of the financial statements under examination because such events typically represent

An auditor must obtain written client representations that might be signed by all but which of the following?

Current professional auditing standards require the performance of analytical procedures during the planning and completion phases of the audit.

When dealing with contingencies,

A client has a calendar year-end.Listed below are four events that occurred after ? December 31.Which one of these subsequent events might result in adjustment of the ? December 31 financial statements?

Which of the following statements regarding the letter of representation is not correct?

An auditor has the responsibility to actively search for subsequent events that occur subsequent to the

If,during the completion phase of the audit,the auditor determines that he or she has not obtained sufficient evidence to draw a conclusion about the fairness of the client's financial statements,there are two choices: accumulate additional evidence or issue either a qualified or an adverse opinion.

Which of the following material events occurring subsequent to the balance sheet date would require an adjustment to the financial statements before they could be issued?