Question 1

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

Accepted Answer

A) True 
 B)False  True

Question 2

Auditors typically do not keep track of the differences between management estimates and the most reasonable estimates supported by audit evidence.

Accepted Answer

A) True 
 B)False  False

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 1 and February 15. B

Question 4

Likely misstatements are those that probably exist,based on audit evidence examined.

Accepted Answer

A) True 
 B)False

Question 5

Further possible misstatements are those that could exist over and above the total of known and likely misstatements because of the fundamental limitations of auditing.

Accepted Answer

A) True 
 B)False

Question 6

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 7

Briefly explain the auditor's responsibility for the subsequent discovery of facts that occurred between the date of the financial statements and the date of the auditor's report.

Accepted Answer

The answer of Briefly explain the auditor's responsibility for the...

Question 8

List the most important matters arising from the audit of financial statements that should be communicated to the audit committee.

Accepted Answer

The answer of List the most important matters arising from...

Question 9

Before adjusting entries proposed by the auditors are included in financial statements,they must be approved by the ________.

Accepted Answer

A)  client's management
B)  audit manager
C)  engagement partner
D)  cold review partner

Question 10

Summarize the communications that auditors are required to make throughout the audit process.Indicate when these various communications need to take place.

Accepted Answer

The answer of Summarize the communications that auditors are required...

Question 11

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 12

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

Accepted Answer

A) True 
 B)False

Question 13

Further possible 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 14

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 15

Known 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 16

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 17

You are auditing Green Corporation for the calendar year 2012.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 in September 2004.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 2,2013.The financial statements were issued on March 14,2013.The trial was in progress at that date.On March 20,2013,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

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 20

What are the three categories of uncorrected misstatements?

Accepted Answer

The answer of What are the three categories of uncorrected...

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

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

Auditors typically do not keep track of the differences between management estimates and the most reasonable estimates supported by audit evidence.

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?

Likely misstatements are those that probably exist,based on audit evidence examined.

Further possible misstatements are those that could exist over and above the total of known and likely misstatements because of the fundamental limitations of auditing.

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

Briefly explain the auditor's responsibility for the subsequent discovery of facts that occurred between the date of the financial statements and the date of the auditor's report.

List the most important matters arising from the audit of financial statements that should be communicated to the audit committee.

Before adjusting entries proposed by the auditors are included in financial statements,they must be approved by the ________.

Summarize the communications that auditors are required to make throughout the audit process.Indicate when these various communications need to take place.

The most common reporting framework in Canada is the ________.

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

Further possible misstatements ________.

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

Known misstatements ________.

Likely misstatements ________.

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

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

What are the three categories of uncorrected misstatements?