
Completing the Audit
Authored by Lowelle Pacot
Business
Professional Development
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15 questions
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1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
The responsibility for the identification and disclosure of related parties and transactions with such parties rests with the
Auditor
Entity’s management
FRSC
SEC
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
After determining that a related party transaction has, in fact, occurred, an auditor should
Obtain an understanding of the business purpose of the transaction.
Substantiate that the transaction was consummated on terms equivalent to an arm’s-length transaction.
Add a separate paragraph to the auditor’s report to explain the transaction.
Perform analytical procedures to verify whether similar transactions occurred, but were not recorded.
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Which of the following audit procedures is most likely to assist an auditor in identifying related party transactions?
Inspecting communications with law firms for evidence of unreported contingent liabilities.
Reviewing accounting records for nonrecurring transactions recognized near the balance sheet date.
Retesting ineffective controls previously reported to the audit committee.
Sending second requests for unanswered positive confirmations of accounts receivable.
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Which of the following would not necessarily be a related party transaction?
A purchase from another corporation that is controlled by the corporation’s chief shareholder.
A loan from the corporation of a major shareholder.
Sale of land to the corporation by the spouse of a director.
A sale of another corporation with a similar name.
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Which of the following conditions or events most likely would cause an auditor to have substantial doubt about an entity’s ability to continue as a going concern?
Cash flows from operating activities are negative
Stock dividends replace annual cash dividends
Significant related party transactions are pervasive
Research and development projects are postponed
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
When an auditor concludes that there is substantial doubt about a continuing audit client’s ability to continue as a going concern for a reasonable period of time, the auditor’s responsibility is to
Consider the adequacy of disclosure about the client’s possible inability to continue as a going concern
Consider the adequacy of disclosure about the client’s possible inability to continue as a going concern
Report to the client’s audit committee that management’s accounting estimates may need to be adjusted.
Reissue the prior year’s auditor’s report and add an emphasis of matter paragraph that specifically refers to “substantial doubt” and “going concern”.
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
The date of the written representation shall be
After the date of the auditor’s report
After the date of approval of the entity’s financial statements
Before the entity’s financial statements are issued
As near as practicable to, but not after the date of the auditor’s report on the financial statements
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