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Terms in this set (56)Which of the following best describes the role of analytical procedures in the review stages of the audit engagement? To provide an overall review of the financial information and assessment of the adequacy of evidence gathered during the audit engagement. A major objective of written representations is to____ Impress on management its ultimate responsibility for the financial statements and disclosures. Which of these substantive procedures is used to obtain evidence about contingencies? - Obtaining a letter from the client's attorney. Which of these substantive procedures is not used to obtain evidence about contingencies? Scanning expense accounts for credit entries. Subsequent knowledge of which of the following would cause the entity to adjust its December 31 financial statements? Settlement of litigation in February for $100,000 that had been estimated at $12,000 in the December 31 financial statements A. Griffin audited the financial statements of Dodger Magnificat Corporation for the year ended December 31, 2012. She completed gathering sufficient appropriate evidence on January 30 and later learned of a stock split voted by the board of directors on February 5. The financial statements were changed to reflect the split, and she now needs to dual date the report on the entity's financial statements. Which of the following is the proper form? January 30, 2013, except as to Note Χ, which is dated February 5, 2013. Auditors have a responsibility related to management's disclosure of new information related to subsequent events until____ The audit report release date. The auditing standards regarding subsequently discovered facts refers to knowledge obtained after____ The date of the auditors' report. Which of the following is required by generally accepted auditing standards? - Written representations. Which of the following is not required by generally accepted auditing standards? - Management letter. Which of these persons generally does participate in writing the management letter? - Public accounting firm's consulting and tax experts. Which of these persons generally does not participate in writing the management letter? - Client's outside attorneys. Which of the following is ordinarily performed last in the audit examination? Obtaining signed written representations. Which of the following normally occurs earliest in the audit examination? Review of audit documentation. Ambrose is auditing the financial statements of Mays (dated December 31, 2012). The date of the auditors' report is February 17, 2013, and the audit report release date is February 20, 2013. For which of the following matters would Ambrose have the least responsibility? A major loss due to a catastrophe that occurred and was known by Ambrose on March 1, 2013.
Which of the following statements is most likely to be included in an attorney letter? "Please furnish to our auditors such explanation, if any, that you consider necessary to supplement the foregoing information." After the audit report release date, the auditors determine that an important auditing procedure was omitted. Which of the following initial courses of action is most appropriate? Determine whether the omitted procedure is important in supporting the auditors' opinion on the entity's financial statements. Hall accepted an engagement to audit the year 1 financial statements of XYZ Company. XYZ completed the preparation of the year 1 financial statements on February 13, year 2, and its auditors began the fieldwork on February 17, year 2. Hall completed gathering sufficient appropriate evidence on March 24, year 2; Hall's report and XYZ's financial statements were released on March 28, year 2. The written representations normally would be dated March 24, year 2. A charge following the date of the financial statements to a notes receivable account from the cash disbursements journal should alert auditors to the possibility that a Contingent liability has become a real liability and has been settled. Which of the following substantive procedures should auditors ordinarily perform regarding subsequent events? Compare the latest available interim financial statements with the financial statements being audited. Which of the following substantive procedures would auditors most likely perform to obtain evidence about the occurrence of subsequent events? Investigate changes in shareholders' equity occurring after the date of the financial statements. The primary reason auditors request responses to attorney letters is to provide auditors___ Corroboration of the information furnished by management about litigation, claims, and assessments.
The scope of an audit is restricted when an attorney letter limits the response to - An evaluation of the likelihood of an unfavorable outcome of the matters disclosed by the entity. The scope of an audit is not restricted when an attorney letter limits the response to - Matters to which the attorney has given substantive attention in the form of legal representation. Management acknowledgement of its responsibility for the fairness of the financial statements in accordance with U.S. GAAP Included in written representations in all audits A list of pending or threatened litigation, claims, or assessments currently outstanding against the client. Not included in written representations A description of recommendations that allow the client to improve the efficiency and effectiveness of its operations. Not included in written representations Availability of all financial records and related data. Included in written representations in all audits Information related to the presentation and disclosure of items within the financial statements. Included in written representations in all audits Disclosure of all significant deficiencies and material weaknesses in internal control. Included in written representations in all audits Auditors' judgment about the quality of the client's accounting principles. Not included in written representations. Management's conclusion about the effectiveness of its internal control over financial reporting. Included in written representations in audits of public entities A statement that the financial statements are prepared according to U.S. generally accepted accounting principles. Not included in written representations Which of the following best describes the role of analytical procedures near the end of the audit engagement? a. To identify possible deficiencies in the client's internal control over
financial reporting d. to provide an overall review of the financial information and assessment of the adequacy of evidence gathered during the audit engagement Which of the following statements is not true with respect to written representations? a. The failure of management to furnish them is a significant scope limitation, resulting in either an adverse opinion or a disclaimer of opinion. a. The failure of management to furnish them is a significant scope limitation, resulting in either an adverse opinion or a disclaimer of opinion. What is an auditor's primary method to corroborate information on litigation, claims, and assessments? Reviewing the response from the client's lawyer to a letter of audit inquiry. Which of the following statements is not true regarding the auditor's responsibility for subsequent events? a. The auditor has an active responsibility to make continuing inquiries between the date of the financial statements and the date of the auditor's report. b. The auditor has an active responsibility to make continuing inquiries between the date of the auditor's report and the date on which the report is submitted. On February 25, a CPA issued an auditor's report expressing an unqualified opinion on financial statements for the year ended January 31. On March 2, the CPA learned that on February 11, the entity incurred a material loss on an uncollectible trade receivable as a result of the deteriorating financial condition of the entity's principal customer that led to the customer's bankruptcy. Management then refused to adjust the financial statements for this subsequent event. The CPA determined that the information is reliable and that there are creditors currently relying on the financial statements. The CPA's next course of action most likely would be to: Notify each member of the entity's board of directors about management's refusal to adjust the financial statements. Which of the following procedures would an auditor most likely perform to obtain evidence about the occurrence of subsequent events? a. Comparing the financial statements being reported on with those of the prior period. b. Inquiring as to whether any unusual adjustments were made after year-end. Which of the following events occurring after the issuance of an auditor's report most likely would cause the auditor to make further inquiries about the previously issued financial statements? a. An uninsured natural disaster occurs that may affect the entity's ability to
continue as a going concern. d. New information is discovered concerning undisclosed lease transactions of the audited period. Which of the following procedures would an auditor most likely perform in obtaining evidence about subsequent events? a. Recompute depreciation charges for plant assets sold after year-end. d. Investigate changes in long-term debt occurring after year-end. An auditor is considering whether the omission of a substantive procedure considered necessary at the time of an audit may impair the auditor's present ability to support the previously expressed opinion. The auditor need not apply the omitted procedure if the: Results of other procedures that were applied tend to compensate for the procedure omitted. Subsequent to the issuance of an auditor's report, the auditor became aware of facts existing at the report date that would have affected the report had the auditor then been aware of such facts. After determining that the information is reliable, the auditor should next: Determine whether there are persons relying or likely to rely on the financial statements who would attach importance to the information. Which of the following events occurring after the issuance of an auditor's report most likely would cause the auditor to make further inquiries about the previously issued financial statements? a. The final resolution of a lawsuit explained in a separate paragraph of the auditor's report. b. The discovery of information regarding a contingency that existed before the financial statements were issued. Wilson, CPA, obtained sufficient appropriate audit evidence to render an opinion on Abco's December 31, Year 1, financial statements on March 6, Year 2. A subsequent event requiring adjustment to the Year 1 financial statements occurred on April 10, Year 2, and came to Wilson's attention on April 24, Year 2. If the adjustment is made without disclosure of the event, Wilson's report ordinarily should be dated: March 6, Year 2. An auditor concludes that a substantive auditing procedure considered necessary during the prior period's audit was omitted. Which of the following factors would most likely cause the auditor promptly to apply the omitted procedure? a. The auditor's opinion on the prior period's financial statements was unqualified. d. The omission of the procedure impairs the auditor's present ability to support the previously expressed opinion. After issuing a report, an auditor has no obligation to make continuing inquiries or perform other procedures concerning the audited financial statements, unless: a. Information, which existed at the report date and may affect the report, comes to the auditor's attention. As of August 13, a CPA had obtained sufficient appropriate audit evidence with respect to fieldwork on an engagement to audit financial statements for the year ended June 30. On August 27, an event came to the CPA's attention that should be disclosed in the notes to the financial statements. The event was properly disclosed by the entity, but the CPA decided not to dual date the auditor's report and dated the report August 27. Under these circumstances, the CPA was taking responsibility for: d. All subsequent events that occurred through August 27. On February 9, Brown, CPA, expressed an unqualified opinion on the financial statements of Web Co. On October 9, during a peer review of Brown's practice, the reviewer informed Brown that engagement personnel failed to perform a search for subsequent events for the Web engagement. Brown should first: c. Assess the importance of the omitted procedures to Brown's present ability to support the opinion. Which of the following procedures would an auditor most likely perform prior to the balance sheet date? a. Send inquiry letter to client's legal counsel. d. Review detail and test significant travel and entertainment expenses. Which of the following items would most likely require an adjustment to the financial statements for the year ended December 31, Year 1? a. Settlement of litigation in Year 2 over an event that occurred in Year 2. d. Loss on an uncollectible trade receivable recorded in Year 1 from a customer that declared bankruptcy in Year 2. An auditor issued an audit report that was dual dated for a subsequent event occurring after the original date of the auditor's report but before issuance of the related financial statements. The auditor's responsibility for events occurring subsequent to the original report date was: Limited to the specific event referenced. An auditor is considering whether the omission of the confirmation of investments impairs the auditor's ability to support a previously expressed unmodified opinion. The auditor need not perform this omitted procedure if: The results of alternative procedures that were performed compensate for the omission. Which of the following circumstances most likely would require an auditor to apply an omitted procedure after the audit report issuance date? a. Generally accepted accounting principles are
violated. c. The auditor's report is unsupported as a result of the omitted procedure. Which of the following events occurring after the issuance of the auditor's report most likely would cause the auditor to make further inquiries about the previously issued financial statements? a. Litigation that had been disclosed in the financial statements is resolved. c. New information regarding significant unrecorded transactions from the year under audit is discovered. After an audit report is issued, an auditor discovers that an important audit procedure was not performed. Which of the following procedures is acceptable in this situation? a. No further action is necessary if the audit report can still be supported. a. No further action is necessary if the audit report can still be supported. Sets with similar termsAudit Chapter 1141 terms RDM89 Ch 1121 terms john_may40 Chapter 11 Quiz (Right Answers)85 terms Humberto_Coronado Chapter 1121 terms mike_donofrio Sets found in the same folderCh. 825 terms ahurr1 Chapter 14 Audit37 terms RenitaThapa Audit 3 questions116 terms cazza_spazza Audit MC Final44 terms WhisperoftheHeart Other sets by this creatorREG Flashcards260 terms johnwilliamshall FAR Flashcards207 terms johnwilliamshall BEC Flashcards182 terms johnwilliamshall AUD Flashcards104 terms johnwilliamshall Other Quizlet setsAuditing Test 3 Chapter 11 + 1236 terms cbellinooo Audit Chapter 1111 terms Emily_Thompson215 CH 11 book quiz21 terms pgreene11 403 final33 terms themaddog2020 Related questionsQUESTION How many farms are there in the US? 15 answers QUESTION In this story, two families are feuding, the Pandavas and the Kauravas. Why did this feud begin? 9 answers QUESTION Service quality greatly depends on the quality of the buyer and seller interactions during the service encounter; this is known as 3 answers
QUESTION What enzymes in intestinal mucosal cells are involved in carbohydrate digestion? 15 answers Which of the following procedures would an auditor most likely perform to obtain evidence about the occurrences of subsequent events?Choice “B” is correct. In obtaining evidence about subsequent events, the auditor would most likely inquire of management whether there have been significant changes in working capital since year-end. Such changes could be indicative of a going concern problem, which would require financial statement disclosure.
Which of the following procedures will an auditor most likely perform when evaluating audit evidence at the completion of the audit?Which of the following procedures will an auditor most likely perform when evaluating audit evidence at the completion of the audit? Consider whether the results of audit procedures affect the assessment of the identified risks of material misstatement due to fraud.
Which of the following procedures would an auditor most likely perform?Which of the following procedures would an auditor most likely perform in planning a financial statement audit? Comparing the financial statements with anticipated results.
What procedures will the auditor use to obtain audit evidence?Audit procedures to obtain audit evidence can include inspection, observation, confirmation, recalculation, reperformance, and analytical procedures, often in some combination, in addition to inquiry.
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