Question 1

Contingencies
Discuss what a contingency is,the auditor's main concerns about them and how they are supposed to be dealt with by management and the auditor.Besides litigation,claims and assessments,what are some other types of contingencies?

Accepted Answer

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Discuss what a contingency is,the auditor's main...

Question 2

Management letters to clients
What is a management letter and how does it differ from a management representation letter?

Accepted Answer

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What is a management...

Question 3

If substantial doubt remains about going concern for a client at the end of the audit,then the auditor would do which of the following?

Accepted Answer

If substantial doubt remains about going concern for a client at the end of the audit, then the auditor would issue an unqualified audit report with an explanatory paragraph to disclose the uncertainty about the client's ability to continue as a going concern. This would be done to ensure that the financial statement users are aware of the uncertainty and can make informed decisions about the client's financial position. A qualified report or adverse report would be issued if the auditor concludes that the client cannot continue as a going concern.

Question 4

Which of the following is not a required communication with the audit committee?

Accepted Answer

While economic trends may be relevant to discuss with the audit committee, they are not a required communication under auditing standards. Accounting policies, accounting estimates, and difficulties encountered are all required communications.

Question 5

Type II subsequent events
Present two examples of a Type II subsequent event and explain how they would be treated in the financial statements.

Accepted Answer

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Present two examples of...

Question 6

Which of the following is not a required communication with the audit committee?

Accepted Answer

While analytical review is an important tool for auditors to assess the reasonableness of financial statements, it is not a required communication with the audit committee. The other options listed (auditor's responsibility under GAAP, audit adjustments, and uncorrected misstatements) are all required communication with the audit committee according to auditing standards.

Question 7

Analytical procedures
What is the purpose of using analytical review procedures in the final review stages of the audit?

Accepted Answer

The answer of Analytical procedures
What is the purpose of using...

Question 8

In the letter of audit inquiry concerning a description and evaluation of litigation,claims and assessment provided by management to the auditor,the client's lawyer is not requested to provide information on

Accepted Answer

The client's lawyer is not requested to provide information on compliance of the disclosures with GAAP. The responsibility for compliance with GAAP lies with management. The purpose of the letter of audit inquiry is to obtain information from the client's lawyer about litigation, claims, and assessments, including the completeness of management's list, the likelihood and range of possible losses, and any limitations on the lawyer's response.

Question 9

Management representation letters
Describe the purpose of the management representation letter.

Accepted Answer

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Describe the purpose of the...

Question 10

Management responsibilities
Explain how management explicitly asserts their confidence and responsibility over the financial statements of the company.

Accepted Answer

The answer of Management responsibilities
Explain how management explicitly asserts their...

Question 11

Which of the following is not a potential indicator of going concern problems for a client?

Accepted Answer

A plan to sell nonessential assets can actually be a positive sign for a client, as it shows that they are actively taking steps to improve their financial situation. On the other hand, negative trends (A), loss of key personnel (B), and default on a loan (D) are all potential indicators of going concern problems for a client.

Question 12

Contingent liabilities
The auditor will discuss contingencies with the appropriate executives and management of the company.Identify at least five sources of evidence to corroborate management's representations regarding contingencies.

Accepted Answer

The answer of Contingent liabilities
The auditor will discuss contingencies with...

Question 13

In evaluating accounting estimates the auditor would not concentrate on key factors and assumptions that are

Accepted Answer

The auditor would not focus on factors and assumptions that are within budgetary expectations because they are less likely to be misstated or biased compared to subjective, inconsistent, or sensitive factors.

Question 14

Testing subsequent events
List the audit procedures to be performed to determine if subsequent events have occurred.

Accepted Answer

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List the audit procedures to...

Question 15

Subsequent events
What are the two types of subsequent events identified in the accounting literature and what is required when each occurs? Provide an example of each type of subsequent event.

Accepted Answer

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What are the two types of...

Question 16

At the end of the audit the auditor is suppose to accumulate and evaluate the need for adjustment of

Accepted Answer

At the end of the audit, the auditor is required to evaluate and accumulate the need for adjustment of known uncorrected errors, unknown projected errors, and carryover of prior year errors. Therefore, option D "all of the above" is the best choice.

Question 17

Type I subsequent events
Present two examples of a Type I subsequent event and explain how they would be treated in the financial statements.

Accepted Answer

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Present two examples of...

Question 18

Litigation,claims,and assessments
Discuss the information management is supposed to provide on litigation,claims and assessments,the purpose of the letter of audit inquiry,who writes it,who it is addressed to,and the important inquiries that are made of the client's lawyer in it.

Accepted Answer

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Discuss the information management is supposed...

Quiz 15: Ensuring Audit Quality in Completing the Audit

Contingencies Discuss what a contingency is,the auditor's main concerns about them and how they are supposed to be dealt with by management and the auditor.Besides litigation,claims and assessments,what are some other types of contingencies?

Management letters to clients What is a management letter and how does it differ from a management representation letter?

If substantial doubt remains about going concern for a client at the end of the audit,then the auditor would do which of the following?

Which of the following is not a required communication with the audit committee?

Type II subsequent events Present two examples of a Type II subsequent event and explain how they would be treated in the financial statements.

Which of the following is not a required communication with the audit committee?

Analytical procedures What is the purpose of using analytical review procedures in the final review stages of the audit?

In the letter of audit inquiry concerning a description and evaluation of litigation,claims and assessment provided by management to the auditor,the client's lawyer is not requested to provide information on

Management representation letters Describe the purpose of the management representation letter.

Management responsibilities Explain how management explicitly asserts their confidence and responsibility over the financial statements of the company.

Which of the following is not a potential indicator of going concern problems for a client?

Contingent liabilities The auditor will discuss contingencies with the appropriate executives and management of the company.Identify at least five sources of evidence to corroborate management's representations regarding contingencies.

In evaluating accounting estimates the auditor would not concentrate on key factors and assumptions that are

Testing subsequent events List the audit procedures to be performed to determine if subsequent events have occurred.

Subsequent events What are the two types of subsequent events identified in the accounting literature and what is required when each occurs? Provide an example of each type of subsequent event.

At the end of the audit the auditor is suppose to accumulate and evaluate the need for adjustment of

Type I subsequent events Present two examples of a Type I subsequent event and explain how they would be treated in the financial statements.

Litigation,claims,and assessments Discuss the information management is supposed to provide on litigation,claims and assessments,the purpose of the letter of audit inquiry,who writes it,who it is addressed to,and the important inquiries that are made of the client's lawyer in it.