CA Kuldip Tiwari Completion and Review

Which of following statements is false about “Written representations”?

• Written representations constitute sufficient appropriate audit evidence

• Written representations should be after date of financial statements but near reporting date of financial statements.

• Auditor's report cannot be dated before date of written representations.

• Qualifying language cannot be used in written representations.

Potential effects of inherent limitations on an auditor’s ability to detect material misstatements are _________ for conditions that may cause an entity to cease to continue as a going concern.

• Lower

• Greater

• Unchanged

• Undeterminable

An effective two-way communication established by auditor with those charged with governance is important for a number of reasons. Which of following is not one of such reasons?

• It helps in understanding matters related to the audit.

• It helps auditor in obtaining information from those charged with governance.

• It helps those charged with governance in fulfilling their responsibility to oversee the financial reporting process.

• It helps those charged with governance to accurately know about future prospects of the company.

What is proper meaning of term “Date the financial statements are issued” with respect to SA 560?

• It reflects the date that auditor's report and audited financial statements are signed by auditor.

• It reflects the date that auditor's report and audited financial statements are provided to the entity.

• It reflects the date that audit is completed and sufficient appropriate audit evidence is obtained.

• It reflects the date that auditor's report and audited financial statements are made available to third parties.

“Significant deficiencies” in internal control _________________?

• may exist even though auditor has not identified misstatements during the audit.

• cannot exist when auditor has identified any misstatement during the audit.

• are only dependent on actual occurrence of misstatements.

• are only dependent on likelihood that a misstatement could occur and the potential magnitude of misstatement.

SA 265 deals with: -

• auditors responsibility to communicate with those charged with governance in an audit of financial statements

• auditor’s responsibility to communicate to those charged with governance deficiencies in internal control identified by auditor in an audit of financial statements

• auditor’s responsibility to communicate to those charged with governance deficiencies in internal audit identified by auditor in an audit of financial statements

• auditors responsibility to communicate with those charged with governance significant matters raised by auditor in an audit of financial statements

An entity is not viewed as a going concern. What is its likely impact on recording of inventories in financial statements?

• Inventories may need to be written down.

• Inventories may need to be written up.

• Inventories would, in all likelihood, continue to be recorded at their historical costs.

• The going concern issue doesnt affect recording of inventories in any case.

Which of the following is not an example of an event or condition that may cast significant doubt on entity’s ability to continue as a going concern

• Loss of key management without replacement

• Adverse key financial ratios

• Inability to pay creditors on due date

• Current year profit turns to loss after providing depreciation

Following are examples of events or conditions that may cast significant doubt on an entity’s ability to continue as a going concern. Which of following is an example of operating event/conditions?

• Adverse key financial ratios

• Inability to pay creditors on due dates

• Indications of withdrawal of financial support by creditors

• Shortages of important supplies

Which of following statements is false?

• Written representations are an important source of audit evidence.

• If management does not provide the requested written representations, it may alert the auditor to the possibility that one or more significant issues may exist.

• A request for writtenrepresentations in many cases may prompt management to consider such matters more rigorously, thereby, enhancing the quality of the representations.

• The fact that management has provided reliable written representations affects the nature or extent of other audit evidence that the auditor obtains about specific assertions.