Question 1

With respect to issuance of an audit report which is dual dated for a subsequent event occurring after the completion of field work but before issuance of the auditors' report,the auditors' responsibility for events occurring subsequent to the date of the audit report:

Accepted Answer

A)  Extended to include all events occurring until the date of the last subsequent event referred to.
B)  Limited to the specific event referred to.
C)  Limited to all events occurring through the date of issuance of the report.
D)  Extended to include all events occurring through the date of submission of the report to the client.E) B) and D)
F) A) and C)

Question 2

Which of the following is not a procedure that auditors typically perform to search for significant events during the period after year-end but prior to the audit report date?

Accepted Answer

A)  Review minutes of board of directors' meeting.
B)  Review the latest available interim financial statements.
C)  Inquire about any unusual adjustments made subsequent to the balance sheet date.
D)  Review changes in internal control during the period subsequent to the balance sheet date.E) C) and D)
F) B) and D)

Question 3

Auditors are concerned with the existence of loss contingencies that may affect the client's financial statements.One way that the auditors obtain evidence about existing loss contingencies is through the lawyer's letter.
a.Describe the information that the auditors wish to obtain about the litigation being handled by a lawyer.
b.Describe three other procedures that are used by auditors to discover existing loss contingencies.

Accepted Answer

a.The auditors wish to obtain the follow...

Question 4

Internal control over payroll is enhanced when the personnel department distributes payroll checks.

Accepted Answer

A) True 
 B)False

Question 5

The date the auditor grants the client permission to use the audit report in connection with the financial statements is the:

Accepted Answer

A)  Last day of significant field work.
B)  Report cutoff date.
C)  Report release date.
D)  Representation date.E) All of the above
F) A) and B)

Question 6

A client's previous two years of financial statements understated estimated warranty payable by $30,000 and $50,000 respectively,immaterial amounts.This year the auditors estimate that the accrual is understated by an additional $60,000.In this year's audit $100,000 represents a material amount.Assuming that the entire understatement is to be recorded,following SEC SAB 108 the decrease in this year's income due to these understatements is:

Accepted Answer

A)  $0
B)  $60,000
C)  $110,000
D)  $140,000E) C) and D)
F) B) and D)

Question 7

Auditors must be concerned with events that occur subsequent to the balance sheet date,because the events may need to be reflected in the financial statements.
a.Describe the two general types of subsequent events.
b.What is the auditors' responsibility with respect to detecting subsequent events?
c.List three audit procedures that are used by the auditors to search for subsequent events.

Accepted Answer

a.The two types of subsequent events are...

Question 8

If not adjusted,a situation in which the total likely misstatement in the financial statements exceeds a material amount is likely to lead to an audit report modification.

Accepted Answer

A) True 
 B)False

Question 9

The auditors' best course of action with respect to "other information (not including required supplemental information) " included in an annual report containing the auditors' report is to:

Accepted Answer

A)  Indicate in the auditors' report, that the "other financial information" is only compiled.
B)  Consider whether the "other financial information" is accurate by performing a limited review.
C)  Obtain written representations from managements as to the material accuracy of the "other financial information."
D)  Read and consider the manner of presentation of the "other financial information."E) B) and C)
F) All of the above

Exam 16: Auditing Operations and Completing the Audit

If not adjusted,a situation in which the total likely misstatement in the financial statements exceeds a material amount is likely to lead to an audit report modification.

Correct Answer
verified

Correct Answer
verified
a.The auditors wish to obtain the follow...
View Answer

Which of the following is not a procedure that auditors typically perform to search for significant events during the period after year-end but prior to the audit report date?

Correct Answer
verified

With respect to issuance of an audit report which is dual dated for a subsequent event occurring after the completion of field work but before issuance of the auditors' report,the auditors' responsibility for events occurring subsequent to the date of the audit report:

Correct Answer
verified

Internal control over payroll is enhanced when the personnel department distributes payroll checks.

Correct Answer
verified

The auditors' best course of action with respect to "other information (not including required supplemental information) " included in an annual report containing the auditors' report is to:

Correct Answer
verified

Correct Answer
verified
a.The two types of subsequent events are...
View Answer

The date the auditor grants the client permission to use the audit report in connection with the financial statements is the:

Correct Answer
verified

Correct Answer
verified

Exam 16: Auditing Operations and Completing the Audit

If not adjusted,a situation in which the total likely misstatement in the financial statements exceeds a material amount is likely to lead to an audit report modification.

Correct AnswerverifiedShow Answer

Correct Answerverifieda.The auditors wish to obtain the follow...View AnswerShow Answer

Which of the following is not a procedure that auditors typically perform to search for significant events during the period after year-end but prior to the audit report date?

Correct AnswerverifiedShow Answer

With respect to issuance of an audit report which is dual dated for a subsequent event occurring after the completion of field work but before issuance of the auditors' report,the auditors' responsibility for events occurring subsequent to the date of the audit report:

Correct AnswerverifiedShow Answer

Internal control over payroll is enhanced when the personnel department distributes payroll checks.

Correct AnswerverifiedShow Answer

The auditors' best course of action with respect to "other information (not including required supplemental information) " included in an annual report containing the auditors' report is to:

Correct AnswerverifiedShow Answer

Correct Answerverifieda.The two types of subsequent events are...View AnswerShow Answer

The date the auditor grants the client permission to use the audit report in connection with the financial statements is the:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
a.The auditors wish to obtain the follow...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a.The two types of subsequent events are...
View Answer

Correct Answer
verified

Correct Answer
verified