Question 1

The auditor actively seeks audit evidence up to the date of the audit report.After that date,the auditor does not seek new evidence.

Accepted Answer

This statement is true. The auditor is responsible for gathering sufficient evidence up to the date of the audit report to support their opinion on the financial statements. Any events or transactions that occur after this date are not reflected in the financial statements and therefore do not require new audit evidence. However, if the auditor becomes aware of a material misstatement in the financial statements after the audit report has been issued, they may need to take action to correct the error.

Question 2

Auditors are responsible to search for both types of subsequent events between ________.
A)the financial statement year-end date and the audited financial statement issue date
B)the audit report date and the audited financial statement issue date
C)the financial statement year-end date and the audit report date
D)the interim audit date and the audit report date

Accepted Answer

Auditors are responsible to search for subsequent events between the financial statement year-end date and the audit report date. This is because subsequent events that occur after the financial statement year-end date but before the audit report date may require adjustments to the financial statements or disclosure in the footnotes. The auditors do not need to search for subsequent events after the audit report has been issued, so options A and B are incorrect. Option D refers to interim audit date, which is not relevant here.

Question 3

Dual dating refers to instances of dating the audit report as of the date that financial statements are approved by the auditee's responsible parties (e.g. ,the company's board of directors)and attaching an additional later date to disclosure of a significant subsequent event that requires financial statements to be amended.

Accepted Answer

Dual dating is a common practice in auditing, where the audit report is dated as of the date the financial statements are approved and an additional later date is included for disclosure of any significant subsequent events.

Question 4

An Other Matter is like an Emphasis of Matter paragraph except that it relates to information that is not required to be disclosed in the financial statements.

Accepted Answer

An Other Matter paragraph is used to highlight information that is not required to be disclosed in the financial statements. This may include additional information related to the company's operations, significant events or transactions, or other matters that may be of interest to the reader of the financial statements.

Question 5

What is "dual dating" in the audit report?

Accepted Answer

The answer of What is "dual dating" in the audit...

Question 6

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

Accepted Answer

Dual dating is a method used to document a transaction when the actual date of the event is unknown or uncertain. It involves using two different dates on a document, typically the actual date of the event and a later date when the document was prepared or signed. This is done to limit the responsibility for the subsequent events that occur after the earlier date.

Question 7

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 8

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

Accepted Answer

Likely misstatements are identified based on audit evidence examined which indicate that there is a high probability of a material misstatement in the financial statements.

Question 9

When a report is double-dated,the auditor has no responsibility for other events that have occurred after the end of fieldwork.

Accepted Answer

The answer of When a report is double-dated,the auditor has...

Question 10

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

Accepted Answer

This is a common practice for auditors to report any material weaknesses in internal controls to the audit committee in a formal letter.

Question 11

Subsequent to the issuance of the audit 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 ________.
A)determine whether there are persons relying or likely to rely on the financial statements who would attach importance to the information
B)request that management disclose the newly discovered information by issuing revised financial statements
C)issue revised pro forma financial statements taking into consideration the newly discovered information
D)give public notice that the auditor is no longer associated with the financial statements

Accepted Answer

The answer of Subsequent to the issuance of the audit...

Question 12

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

This statement is true. Auditing has inherent limitations and there may be misstatements that the auditor is unable to detect or identify through the audit process.

Question 13

What are the three categories of uncorrected misstatements?

Accepted Answer

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

Question 14

The auditor must decide if any uncorrected misstatements are material individually but not in aggregate.

Accepted Answer

The auditor must decide if uncorrected misstatements are material, both individually and in aggregate, to determine if they affect the financial statements' overall fairness.

Question 15

Before adjusting entries proposed by the auditors are included in financial statements,they must be approved by the ________.
A)client's management
B)audit manager
C)engagement partner
D)cold review partner

Accepted Answer

Before adjusting entries are included in financial statements, they must be approved by the client's management. This ensures that management is aware of and in agreement with any changes made to the financial statements based on the auditors' recommendations. The other options listed (audit manager, engagement partner, and cold review partner) may be involved in the audit process, but ultimate approval of the adjustments rests with the client's management.

Question 16

If information is included the audit report relating to a discrepancy between a company's MD & A and comparative information from other periods,it would appear in a(n)________ paragraph.
A)Scope
B)Other Matter
C)Opinion
D)Emphasis of Matter

Accepted Answer

The answer of If information is included the audit report...

Question 17

If an audit report contains information relating to a company's MD&A,it would be found in a(n)________ paragraph.
A)Opinion
B)Scope
C)Other Matter
D)Emphasis of Matter

Accepted Answer

The "Other Matter" paragraph is used to disclose information that is relevant to the financial statements but is not an integral part of the auditor's opinion or the scope of the audit. Information related to a company's MD&A would fall under this category.

Question 18

What are the various causes of misstatements? Are they intentional?

Accepted Answer

The answer of What are the various causes of misstatements?...

Question 19

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

Accepted Answer

Auditors are required to evaluate the reasonableness of management estimates and compare them to the most reasonable estimates supported by audit evidence. This is a key part of their evaluation of financial statements.

Question 20

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

Accepted Answer

Emphasis of Matter paragraphs in the auditor's report draw attention to information presented or disclosed in the financial statements that is of such importance that it is fundamental to users' understanding of the financial statements.

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