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Aud Theo

The document contains multiple choice questions about auditing procedures and standards. It asks about identifying contingent liabilities, obtaining evidence regarding litigation, the purpose of management representation letters, dating the auditor's report for subsequent events, management's responsibility for financial statements, communicating audit adjustments to the audit committee.

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Elijah Caisip
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5 views

Aud Theo

The document contains multiple choice questions about auditing procedures and standards. It asks about identifying contingent liabilities, obtaining evidence regarding litigation, the purpose of management representation letters, dating the auditor's report for subsequent events, management's responsibility for financial statements, communicating audit adjustments to the audit committee.

Uploaded by

Elijah Caisip
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1. The audit step most likely to reveal the c.

an uncertainty sufficient to preclude an


existence of contingent liabilities is unqualified opinion.

a. a review of vouchers paid during the month d. a scope limitation sufficient to preclude
following the year-end. an unqualified opinion.

b. accounts payable confirmation. 6 Subsequent events for reporting purposes are


defined as events that occur subsequent to
c. an inquiry directed to legal counsel.
a. balance sheet date.
d. mortgage-note confirmation.
b. date of the auditor's report.
2. When obtaining evidence regarding litigation
against a client, the auditor would be least c. balance sheet date but before the date of
interested in determining the auditor's report.

a. an estimate of when the matter will be d. the auditor's report issue date
resolved.
7 Which of the following subsequent events
b. the period in which the underlying cause of the would normally not require disclosure in the
litigation occurred. financial statements

c. the probability of an unfavorable outcome. a. decrease sales volume resulting from a


general business recession.
d. an estimate of the potential loss.
b. serious damage to the client's plant from a
3. A principal purpose of a letter of representation
flood.
from management is to
c. issuance of a widely advertised capital stock
a. serve as an introduction to company personnel
issue with restrictive covenants.
and an authorization to examine the records.
d. settlement of a large liability for considerably
b. discharge the auditor from legal liability for the
less than the amount recorded.
audit.
8 With respect to issuance of an audit report that
c. confirm in writing management's approval of
is dual-dated for a subsequent event occurring
limitations on the scope of the audit
after the completion of field work but before
d. remind management of its primary issuance of the auditor's report, the auditor's
responsibility for financial statements. responsibility for events occurring subsequent to
the completion of field work is
4 The date of the management representation
letter should be coincide with the a. extended to include all events occurring until
the date of the last subsequent event referred to.
a. date of the audit report.
b. limited to the specific event referred to.
b. balance sheet date.
c. limited to all events occurring through the date
c. date of the latest subsequent event referred to of issuance of the report.
in the notes to the financial statements.
d. extended to include all events occurring
d. date of the engagement agreement. through the date of submission of the report to
5 Management's refusal to furnish a written the client.
representation on a matter that the auditor 9 A written representation from a client's
considers essential constitutes management that, among other matters,
a. prima facie evidence that the financial acknowledges responsibility for the fair
statements are not presented fairly. presentation of financial statements should
normally be signed by the
b. a violation of the Foreign Corrupt Practice Act.
a. chief executive officer and the chief
financial officer.
b. chief financial officer and the chairman of the
board of directors.

c. chairman of the audit committee.

d. chief executive officer and the client's lawyer.

10 An auditor is obligated to communicate a


proposed audit adjustment to a client's audit
committee only if the adjustment

a. has not been recorded before the end of the


auditor's field work.

b. has a significant effect on the client's


financial reporting process.

c. is a recurring matter that was proposed to


management the prior year.

d. results from the correction of a prior period's


departure from GAAP.

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