Question 1

Subsequent events procedures are normally performed through to and including the date of
the auditor's report.

Accepted Answer

This statement is true. Subsequent events procedures are performed up until the date of the auditor's report to ensure that any events that occurred after the financial statements were issued are appropriately disclosed or accounted for.

Question 2

Generally, the further into the future an event is likely to take place, the greater the
uncertainty surrounding the event.

Accepted Answer

This is because there are more variables and factors that can potentially impact the event as time passes, leading to greater uncertainty.

Question 3

The going concern assumption means the viability of a business to

Accepted Answer

The going concern assumption refers to the assumption that a business will remain in operation for the foreseeable future. This assumption is based on the idea that the company has sufficient resources and managerial competence to continue to operate and meet its obligations. Therefore, option A is the correct answer as it reflects the meaning of the going concern assumption.

Question 4

When misstatements or deviations from controls are found in planned procedures, consideration should always be given to:

Accepted Answer

When misstatements or deviations from controls are found, both the need to modify or perform further audit procedures and the reason behind the misstatement or deviation should be considered. This ensures that the auditors have a complete understanding of the situation and can take appropriate actions to address the issue. Therefore, both option a and b are correct.

Question 5

The client's compliance with contractual requirements of operating agreements is an example
of a qualitative factor that may cause misstatements of quantitatively immaterial amounts to be
considered material.

Accepted Answer

Even if a misstatement is quantitatively immaterial, if it relates to compliance with contractual requirements, it may be considered material due to the potential legal or reputational consequences for the client. This is an example of a qualitative factor that can affect materiality judgments.

Question 6

An error is an intentional misstatement in the client's financial statements.

Accepted Answer

An error is an unintentional misstatement in the client's financial statements, whereas fraud or misrepresentation is an intentional misstatement.

Question 7

Matters of governance that the auditor may wish to discuss with those charged with
governance include any practical difficulties encountered in performing the audit.

Accepted Answer

The statement is true that the auditor may wish to discuss practical difficulties encountered during the audit with those charged with governance.

Question 8

As soon as practicable, the auditor should communicate weaknesses in internal controls to
management or those charged with governance.

Accepted Answer

According to auditing standards, the auditor should communicate significant deficiencies and material weaknesses in internal control to management and those charged with governance as soon as practicable after they are identified during the audit. This helps management and the governing body to take corrective action and improve the effectiveness of the organization's internal controls.

Question 9

The auditor's responsibility for the financial statements includes selecting and applying
appropriate accounting policies.

Accepted Answer

The management of an entity is responsible for selecting and applying appropriate accounting policies; the auditor's responsibility is to audit the financial statements and express an opinion on whether they are prepared, in all material respects, in accordance with an applicable financial reporting framework.

Question 10

The uninsured loss of inventory as a result of fire subsequent to year-end is an example of a
type 2 subsequent event.

Accepted Answer

The uninsured loss of inventory is a subsequent event that provides additional evidence about the condition that existed at the balance sheet date. It is classified as a type 2 subsequent event because it provides evidence about conditions that did not exist at the balance sheet date but arose after the period-end.

Question 11

Ron Nucci is trying to gather sufficient appropriate evidence. Which of these are factors to consider in evaluating the sufficiency and appropriateness of audit evidence?

Accepted Answer

The sufficiency and appropriateness of audit evidence depends on the quality of information obtained during the audit. Factors such as audit risk and control risk are important in determining the nature and extent of audit procedures, but do not directly impact the sufficiency and appropriateness of audit evidence.

Question 12

An auditor's consideration of the going concern assumption does not include considering

Accepted Answer

The auditor's final assessment of audit risk is not directly related to the going concern assumption. A, B, and C are all factors that auditors should consider when evaluating whether the going concern assumption is appropriate for the entity under audit.

Question 13

A type 1 subsequent event provides evidence with respect to conditions that developed
subsequent to year-end.

Accepted Answer

A type 1 subsequent event provides evidence about conditions that existed at the balance sheet date, not conditions that developed after the year-end.

Question 14

Mostafa Torabi, the partner on the Torabi, Jimenez LLP audit called a meeting of his senior staff during the engagement wrap-up. Which of the following areas would be the least likely to be covered during the wrap up?

Accepted Answer

The least likely area to be covered during the engagement wrap-up would be the preparation of budgets for the following year's audit, as this would typically be done after the current engagement has been completed and any necessary adjustments have been made based on the current year's results. A, B, and C are all areas that would typically be addressed during the wrap-up process.

Question 15

A public auditor in practice can only perform audits and review and is prohibited from
completing non-assurance engagements such as compilations of financial information and tax
engagements.

Accepted Answer

This statement is false. A public auditor in practice is not prohibited from completing non-assurance engagements such as compilations of financial information and tax engagements. However, it is important to maintain independence and objectivity while performing such engagements.

Question 16

A limitation on the scope of the auditor's work could result from an inability to perform
procedures or an imposition by the entity.

Accepted Answer

The scope of the auditor's work can be limited due to various factors, such as restrictions imposed by the entity, inability to access certain information or perform certain procedures, among others.

Question 17

An unqualified audit report with an emphasis of matter should be issued if a subsequent
event has occurred that has resulted in a new audit report being prepared on a revised financial
statement.

Accepted Answer

An unqualified audit report with an emphasis of matter should be issued if a subsequent event has occurred that has resulted in a new audit report being prepared on a revised financial statement.

Question 18

Which of the following are areas normally covered during the wrap-up of an audit engagement?

Accepted Answer

All of the above areas are normally covered during the wrap-up of an audit engagement. Performing subsequent events procedures ensures that any material events occurring after the balance sheet date are appropriately reflected in the financial statements. Considering the amount used for materiality ensures that the audit team has applied a consistent and appropriate threshold for assessing whether misstatements in the financial statements are material. Finally, reconsidering the assessments of internal control at the entity level and the risk of fraud ensures that the audit team remains aware of any changes or emerging risks that may impact the accuracy and completeness of the financial statements.

Question 19

Sufficiency relates to the quality of audit evidence gathered.

Accepted Answer

The answer of Sufficiency relates to the quality of audit...

Question 20

The final phase of an audit is to assess all of the audit evidence obtained and determine
whether it is sufficient and appropriate.

Accepted Answer

This statement is true. The final phase of an audit involves the auditor evaluating all of the evidence gathered during the audit to determine if it is sufficient and appropriate to support the audit opinion.

Quiz 13: Completing and Reporting on the Audit

Subsequent events procedures are normally performed through to and including the date of the auditor's report.

Generally, the further into the future an event is likely to take place, the greater the uncertainty surrounding the event.

The going concern assumption means the viability of a business to

When misstatements or deviations from controls are found in planned procedures, consideration should always be given to:

The client's compliance with contractual requirements of operating agreements is an example of a qualitative factor that may cause misstatements of quantitatively immaterial amounts to be considered material.

An error is an intentional misstatement in the client's financial statements.

Matters of governance that the auditor may wish to discuss with those charged with governance include any practical difficulties encountered in performing the audit.

As soon as practicable, the auditor should communicate weaknesses in internal controls to management or those charged with governance.

The auditor's responsibility for the financial statements includes selecting and applying appropriate accounting policies.

The uninsured loss of inventory as a result of fire subsequent to year-end is an example of a type 2 subsequent event.

Ron Nucci is trying to gather sufficient appropriate evidence. Which of these are factors to consider in evaluating the sufficiency and appropriateness of audit evidence?

An auditor's consideration of the going concern assumption does not include considering

A type 1 subsequent event provides evidence with respect to conditions that developed subsequent to year-end.

Mostafa Torabi, the partner on the Torabi, Jimenez LLP audit called a meeting of his senior staff during the engagement wrap-up. Which of the following areas would be the least likely to be covered during the wrap up?

A public auditor in practice can only perform audits and review and is prohibited from completing non-assurance engagements such as compilations of financial information and tax engagements.

A limitation on the scope of the auditor's work could result from an inability to perform procedures or an imposition by the entity.

An unqualified audit report with an emphasis of matter should be issued if a subsequent event has occurred that has resulted in a new audit report being prepared on a revised financial statement.

Which of the following are areas normally covered during the wrap-up of an audit engagement?

Sufficiency relates to the quality of audit evidence gathered.

The final phase of an audit is to assess all of the audit evidence obtained and determine whether it is sufficient and appropriate.