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WorksheetsCOMPLETING THE AUDIT
Total questions: 20
Worksheet time: 11mins
What does “dual dating” in the auditor’s report indicate?
The auditor conducted two separate audits
The auditor’s responsibility is limited to a specific subsequent event before the original report date
The auditor’s responsibility is limited to a specific subsequent event after the original report date
The audit report is signed by two auditors
During the final review, if analytical procedures identify significant unexpected relationships, the auditor must:
Perform other audit procedures
Inquire of management and obtain evidence
Issue an adverse opinion
Document them for next year
Which of the following is a specific responsibility of "Those Charged with Governance" regarding related party transactions?
Designing and implementing internal controls for identifying RPTs.
Preparing the detailed accounting entries for RPTs.
Obtaining information from management to understand the business rationale of RPTs.
Performing substantive audit procedures on transaction balances.
What is the primary responsibility of management regarding the going concern assumption?
To agree with the auditor's assessment without question.
To perform a specific assessment and disclose any material uncertainties.
To issue an adverse opinion if the company is in financial trouble.
To wait for the auditor to identify potential problems.
During the audit, an auditor discovers a significant loan made to a senior executive at a zero percent interest rate with no fixed repayment schedule. This transaction is best described as a:
Routine operating transaction with normal trade terms.
Red flag for an unidentified related party transaction due to its unusual terms.
Indicator of strong employee compensation practices.
Transaction that does not require disclosure in the financial statements.
During the final review, if analytical procedures identify significant unexpected trends, the auditor must first:
Perform other audit procedures
Inquire of management
Inquire of treasurer
Issue a qualified opinion
A written representation letter from management concerning related parties is required by the auditor to confirm:
That all transactions were conducted at fair market value.
The completeness of information provided and the adequacy of financial statement disclosures.
That no fraud has occurred within the company.
The incompleteness of information provided and the adequacy of financial statement disclosures.
Which of the following is an example of a Type II (Non-adjusting) event?
Discovery of a fraud that existed before year-end
Settlement of a lawsuit confirming an existing obligation
Destruction of a major plant by fire after the reporting date
Customer bankruptcy confirming a loss on receivables
If management refuses permission to communicate with external legal counsel, and the potential effect is pervasive, the auditor should issue a:
Modified Opinion
Unmodified Opinion
Disclaimer of Opinion
Adverse Opinion
If the entity's legal counsel refuses to respond to an inquiry, and the potential effect is material but not pervasive, the auditor should issue a:
Qualified Opinion
Unmodified Opinion
Disclaimer of Opinion
Adverse Opinion
Which type of subsequent event requires an adjustment to the financial statements?
Type I (Adjusting Event)
Type II (Non-adjusting Event)
Type III (Extraordinary Event)
Type IV (Future Event)
What is the primary purpose of the auditor examining invoices and executed copies of agreements for an identified related party transaction?
To take over the management's responsibility for identifying related parties.
To obtain evidence that the transaction has been properly recorded and disclosed.
To determine if the transaction was profitable for the company.
To advise management on how to structure future transactions.
What is the auditor’s primary responsibility regarding subsequent events?
To prepare adjusting journal entries for management
To prevent all events from occurring after the report date
To obtain sufficient evidence that all events up to the auditor’s report date requiring adjustment or disclosure are identified
To issue the report before the end of the reporting period
If an auditor is unable to obtain sufficient appropriate audit evidence concerning material related party transactions, which type of audit opinion is most likely to be issued?
Unmodified Opinion
Adverse Opinion
Qualified Opinion or Disclaimer of Opinion
Emphasis of Matter Paragraph without qualification
What is the purpose of an auditor seeking "written representations" from management regarding its future plans?
To take over responsibility for managing the company.
To officially document management's plans and hold them accountable.
To automatically remove any material uncertainty.
To replace the need for other audit evidence.
When a significant delay in approving the financial statements is linked to going concern issues, what is the auditor NOT required to do?
Consider the effect on their audit conclusion.
Perform additional audit procedures.
Immediately issue a disclaimer of opinion.
Seek to understand the reasons for the delay.
If management adequately discloses a material uncertainty about the company's ability to continue, but the going concern assumption is still appropriate, what is the most likely audit opinion?
Qualified Opinion due to inadequate disclosure
Unqualified Opinion with an Emphasis of Matter
Disclaimer of Opinion
Adverse Opinion
During the completion phase, the auditor places greater concern on the completeness assertion for liabilities primarily because companies tend to:
Overstate their expenses
Understate their liabilities
Misclassify their assets
Overstate their revenue
Which of the following is considered a "Other Final Audit Procedure" as mentioned in the text?
Evaluate audit findings
Obtain a management representation letter
Perform a review for related parties
Perform test of unprocessed invoices of the management or employees
In forming an overall audit opinion, which of the following is a required procedure?
Performing final review stage analytical procedures
Issuing a management representation letter
Forecasting the following year's financial results
Preparing the client's financial statements
