Help for Education: Auditing and Assurance Concepts and Application 1

Auditing and Assurance Concepts and Application 1

Question text

Which of the following should an auditor obtain from the predecessor auditor prior to accepting an audit engagement?

Select one:

Facts that might bear on the integrity of management

Analysis of income statement accounts

All matters of continuing accounting significance

Analysis of balance sheet accounts

Question text

Set the following phases in proper order:

i. Pre-Engagement

ii. Internal Controls

iii. Evidence-Gathering

iv. Planning

v. Post-Audit Responsibilities

vi. Reporting

Select one:

i, iv, ii, iii, v, vi

i, iv, ii, iii, vi, v

i, ii, iii, iv, v, vi

i, iv, iii, ii, v, vi

Question text

Which of the following is least likely included in an audit engagement letter?

Select one:

Arrangement concerning the involvement of other auditors or experts in some aspects of the audit.

Management responsibility for the financial statements.

The objective of financial reporting.

The form of any reports or other communication of the results of the engagement.

Question text

Before accepting an audit engagement, a successor auditor should make specific inquiries of the predecessor auditor regarding the predecessor’s

Select one:

Opinion of any subsequent events occurring since the predecessor’s audit report was issued.

Understanding as to the reasons for the change of auditors

Evaluation of all matters of continuing accounting significance.

Awareness of the consistency in the application of GAAP between periods.

Question text

As part of a periodic planning exercise, AAA Company discovers that a political dispute may interfere with the company's supply sources. This is an example of:

Select one:

monitoring of controls

risk assessment

control activities

control environment

Question text

The objective and scope of the audit and the extent of the auditor’s responsibilities to the client are best documented in

Select one:

Client’s representation letter

Audit program

Audit engagement letter

Independent auditor’s report

Question text

In an audit of financial statements, an auditor's primary consideration regarding a control is whether it:

Select one:

provides adequate safeguards over access to assets.

reflects management's philosophy and operating style.

enhances management's decision-making processes.

affects management's financial statement assertions.

Question text

It involves establishing the overall audit strategy for the engagement and developing an audit plan in order to reduce audit risk to an acceptably low level.

Select one:

field work

planning

organizing

reporting

Question text

Which statement is incorrect regarding the timing of further audit procedures?

Select one:

If the auditor performs tests of controls or substantive procedures prior to period end, the auditor considers the additional evidence required for the remaining period.

The auditor may perform tests of controls or substantive procedures at an interim date or at period end.

All audit procedures can be performed prior to period end.

Timing refers to when audit procedures are performed or the period or date to which the audit evidence applies.

Question text

Which statement is incorrect regarding the extent of further audit procedures?

Select one:

The auditor ordinarily decreases the extent of audit procedures as the risk of material misstatement increases.

The extent of an audit procedure is determined by the judgment of the auditor after considering the materiality, the assessed risk, and the degree of assurance the auditor plans to obtain.

Increasing the extent of an audit procedure is effective only if the audit procedure itself is relevant to the specific risk.

Extent includes the quantity of a specific audit procedure to be performed.

Question text

Which of the following least likely requires the auditor to send a new engagement letter?

Select one:

Legal requirements and other government agencies’ pronouncements.

Any revised or special terms of the engagement.

An indication that the client misunderstands the objective and scope of the audit.

A recent change in the audit firm’s management.

Question text

PSA 315 Redrafted requires the auditor to obtain an understanding of the client's internal controls

Select one:

for every audit

for first-time audits

whenever it would be appropriate

sufficient to find any frauds which may exist

Question text

Which of the following is an example of an inherent limitation in a client's internal control system?

Select one:

in the performance of most control procedures, there are possibilities of errors arising from mistakes in judgment

the effectiveness of procedures depends on the segregation of employee duties

procedures for handling large numbers of transactions are processed by information technology (IT) equipment

procedures are designed to assure the execution and recording of transactions in accordance with management's authorization

Question text

An internal control that is working effectively

Select one:

cannot be circumvented by management

eliminates risk and potential loss to the entity

reduces the need for management the review exception reports on a day-to-day basis

is unaffected by changing circumstances and conditions encountered by the entity

Question text

The primary purpose of the auditor's consideration of internal control is to provide a basis for

Select one:

constructive suggestions to clients concerning deficiencies in internal control.

determining whether procedures and records that are concerned with the safeguarding of assets are reliable.

determining the nature, timing and extent of audit tests to be applied.

the expression of an opinion.

Question text

Which of the following is an effective audit planning and control procedures that helps prevent misunderstandings and inefficient use of audit personnel?

Select one:

Provide the client with copies of the audit programs to be used during the audit.

Arrange to have the auditor prepare and post any necessary adjusting or reclassification entries prior to final closing.

Arrange a preliminary conference with the client to discuss audit objectives, fees, timing, and other information.

Make copies, for inclusion in the working papers, of those client supporting documents examined by the auditor.

Question text

Prior to the acceptance of an audit engagement with a client who has terminated the services of the predecessor auditor, the CPA should

Select one:

Not communicate with the predecessor auditor because this would in effect be asking the auditor to violate the confidential relationship between auditor and client.

Accept the engagement without contacting the predecessor auditor since the CPA can include audit procedures to verify the reason given by the client for the termination.

Contact the predecessor auditor without advising the prospective client and request a complete report of the circumstance leading to the termination with the understanding that all information disclosed will be kept confidential.

Advise the client of the intention to contact the predecessor auditor and request permission for the contact.

Question text

There is an inverse relationship that exists between the acceptable level of detection risk and the

Select one:

assurance provided by substantive tests

preliminary judgments about materiality levels

risk of misapplying audit process

risk of falling to discover material misstatement

Question text

The auditor should plan the audit work so that the audit will be performed in an effective manner. The extent of planning will vary according to any of the following, except:

Select one:

the nature and complexity of the audit engagement

size of the audit client

auditor's experience with the entity and knowledge of the business

the assessed level of control risk

Which of the following procedures would an auditor most likely perform in planning a financial statement audit?

Select one:

Comparing the financial statements to anticipated results.

Inquiring of the client’s legal counsel concerning pending litigation.

Examining computer generated exception reports to verify the effectiveness of internal controls.

Searching for unauthorized transactions that may aid in detecting unrecorded liabilities.

Question text

If permission from client to discuss its affairs with the proposed auditor is denied by the client, the predecessor auditor should:

Select one:

Keep silent of the denial.

Disclose adequately to proposed auditor all noncompliance made by the client.

Disclose the fact that the permission to disclose is denied by the client.

Seek legal advice before responding to the proposed auditor

Question text

The form and content of the audit engagement letters may vary for each client, but they would generally include reference to except:

Select one:

unrestricted access to whatever records, documentation and other information requested in connection with the audit.

management's responsibility for all the financial statements

the form of any reports or any communication of results of engagement.

the scope of the audit, excluding reference to applicable legislation, regulations, or pronouncements of professional bodies to which the auditor adheres.

Question text

The following are components of internal control:

Select one:

legal environment of the firm, management philosophy, and organizational structure.

control environment, risk assessment process, control activities, information system and communication, and monitoring of controls.

risk assessment process, backup facilities, responsibility accounting and natural laws.

organizational structure, management philosophy, and planning.

Question text

Arrangements concerning with which of the following are least likely to be included in the engagement letter?

Select one:

Other services to be provided in addition to the audit

CPA investment in client securities

A predecessor auditor

Fees and billing

Question text

A successor auditor most likely would make specific inquiries of the predecessor auditor regarding

Select one:

Disagreements with management as to auditing procedures.

The competency of the client’s internal audit staff.

The uncertainty inherent in applying sampling procedures.

Specialized accounting principles of the client’s industry.

Question text

Engagement letters are widely used in practice for

Select one:

related services only

assurance engagements only

audits only

professional engagements of all types

Question text

Which of the following is/are correct?

Statement 1: The client should plan the audit work so that the audit will be performed in an effective manner.

Statement 2: The auditor should develop and document an overall audit plan describing the scope and conduct of the audit.

Select one:

only statement 1 is correct

both statements are correct

only statement 2 is correct

both statements are incorrect

Question text

Which of the following statements is/are correct?

Statement 1: On recurring audits, the auditor should consider whether circumstances require the terms of the engagement to be revised and whether there is a need to remind the client of the existing terms of engagement.

Statement 2: The auditor should send a new engagement letter ecah year to an established client.

Select one:

both statements are correct

only statement 2 is correct

both statements are incorrect

only statement 1 is correct

Question text

According to PSA 210, the auditor and the client should agree on the terms of engagement. The agreed terms would need to be recorded in

Select one:

memo placed in the permanent section of the working papers

engagement letter

comfort letter

client representation letter

Question text

Which statement is incorrect regarding the nature of tests of controls?

Select one:

A material misstatement detected by the auditor’s procedures that was not identified by the entity ordinarily is indicative of the existence of a material weakness in internal control.

As the planned level of assurance increases, the auditor seeks more reliable audit evidence.

The absence of misstatements detected by a substantive procedure provides audit evidence that controls related to the assertion being tested are effective.

Those controls subject to testing by performing inquiry combined with inspection or reperformance ordinarily provide more assurance than those controls for which the audit evidence consists solely of inquiry and observation.

Question text

A reason to establish internal control is to:

Select one:

encourage compliance with organizational objectives

ensure the accuracy, reliability and timeliness of information

have a basis for planning the audit

provide reasonable assurance that the objectives of the organization are achieved.

Question text

On recurring audit engagements, the auditor may decide not to send a new engagement letter each period. In which of the following situations will there be no need to send a new letter?

Select one:

indications of misunderstanding of the objective and scope of the audit

significant change in nature or size of the client's business

recent change of middle management and rank and file organizational structure

revisions or special terms of the engagement

Question text

Information about segregation of duties ordinarily is best obtained by

Select one:

developing audit objectives that reduce control risk.

performing test of transactions that corroborate management's financial statement's assertions.

observing employees as they apply specific controls.

obtaining a flowchart of activities performed by entity personnel.

Question text

When an independent auditor is approached to perform an audit for the first time, he or she should make inquiries of the predecessor auditor. Inquiries are necessary because the predecessor may be able to provide the successor with information that will assist the successor in determining whether

Select one:

The engagement should be accepted.

In the predecessor’s opinion, control risk is low.

The predecessor’s work should be used.

The company rotates auditors.

Question text

Internal control can only provide reasonable, not absolute, assurance of achieving entity control objectives. One of the factors limiting the likelihood of achieving those objectives is that:

Select one:

the auditor's primary responsibility is the detection of fraud

management monitors internal control

the board of directors is active and independent

The cost of internal control should not exceed its benefits

Question text

When a CPA is the auditor of a parent entity and also the auditor of its subsidiary, branch or division (component), which of the following are least likely to be included in the engagement letter?

Select one:

number of reports to be prepared during the peak audit season

legal requirements

who appoints the auditor of the component

whether a separate audit report is to be issued on the component

Question text

It is the process designed and effected by those charged with governance, management, and other personnel to provide reasonable assurance about the achievement of the entity's objectives.

Select one:

internal auditing

accounting process

business strategy

internal control

Question text

Which statement is incorrect regarding the nature of further audit procedures?

Select one:

The nature of further audit procedures refers to their purpose and their type.

The higher the auditor’s assessment of risk, the less reliable and relevant is the audit evidence sought by the auditor from substantive procedures.

The auditor is required to obtain audit evidence about the accuracy and completeness of information produced by the entity’s information system when that information is used in performing audit procedures.

Certain audit procedures may be more appropriate for some assertions than others.

Question text

An audit engagement letter least likely includes

Select one:

Description of any letters or reports that the auditor expects to submit to the client.

Identification of specific audit procedures that the auditor needs to undertake.

A reference to the inherent limitation of an audit that some material misstatements may remain undiscovered.

Arrangements concerning the involvement of internal auditors and other client’s staff.

Question text

An engagement letter is prepared with the interest(s) of

Select one:

the client only

the auditor only

the public

both the client and the auditor

Question text

Analytical procedures used in planning an audit should focus on

Select one:

Providing assurance that potential material misstatements will be identified.

Reducing the scope of tests of controls and substantive tests.

Enhancing the auditor’s understanding of the client’s business.

Assessing the adequacy of the available evidential matter.

Question text

The primary objective of procedures performed to obtain an understanding of internal control is to provide an auditor with

Select one:

evidence to use in reducing detection risk

a basis for modifying test of controls

knowledge necessary to plan the audit

information necessary to prepare flowcharts

Question text

Which statement is incorrect regarding tests of controls?

Select one:

Tests of controls are required under certain circumstances.

Tests of the operating effectiveness of controls are performed only on those controls that the auditor has determined are suitably designed to prevent, or detect and correct, a material misstatement in an assertion.

Testing the operating effectiveness of controls is the same as obtaining audit evidence that controls have been implemented.

Tests of controls are required when an entity conducts its business using IT and no documentation of transactions is produced or maintained, other than through the IT system.

Question text

Engagement letter that documents and confirms the auditor's acceptance of the engagement would normally be sent to the client

Select one:

at the end of the fieldwork

before the auditor report is issued

before the commencement of the engagement

after the audit report is issued

Question text

Analytical procedures, which means the analysis of significant ratios and trends including the resulting investigation of fluctuations and relationships that are inconsistent with other relevant information or which deviate from predicted amounts, are not required to be applied

Select one:

As substantive procedures

At the planning stage of the audit

Overall review stage of the audit

None of the above

Question text

In planning the audit engagement, the auditor should consider each of the following, except

Select one:

the kind of opinion that is likely to be expressed

materiality level and audit risk

matters relating to the entity's business and the industry in which it operates

the entity's accounting policies and procedures

Question text

Which of the following statements is correct concerning analytical procedures?

Select one:

Analytical procedures usually involve comparisons of ratios developed from recorded amounts to assertions developed by management.

Analytical procedures used in planning an audit generally use data aggregated at a high level.

Analytical procedures are more efficient, but not more effective, than tests of details and transactions.

Analytical procedures can replace tests of controls in gathering evidence to support the assessed level of control risk.

Question text

Internal controls are not designed to provide reasonable assurance that

Select one:

access to assets is permitted only in accordance with management's authorization

the recorded accountability for assets is compared with the existing assets at reasonable intervals

transactions are executed in accordance with management's authorization

irregularities will be eliminated

Question text

Control activities constitute one of the five components of internal control. Which of the following is not included in this internal control component?

Select one:

performance reviews

authorization

segregation of duties

an internal audit function

Question text

To obtain an understanding of the relevant policies and procedures of internal control, the auditor performs all of the following except:

Select one:

inspect documents and records

make inquiries

design substantive tests

make observations

Question text

Which of the following is an example of an inherent limitation in a client's internal control system?

Select one:

procedures for handling large numbers of transactions are processed by information technology (IT) equipment

the effectiveness of procedures depends on the segregation of employee duties

in the performance of most control procedures, there are possibilities of errors arising from mistakes in judgment

procedures are designed to assure the execution and recording of transactions in accordance with management's authorization

Question text

The assessment of the risks of material misstatement at the financial statement level is affected by the auditor’s understanding of the control environment. Weaknesses in the control environment ordinarily will lead the auditor to

Select one:

Have more confidence in internal control and the reliability of audit evidence generated internally within the entity.

Modify the nature of audit procedures to obtain more persuasive audit evidence.

Conduct some audit procedures at an interim date rather than at period end.

Decrease the number of locations to be included in the audit scope.

Question text

The auditor’s assessment of the identified risks at the assertion level provides a basis for considering the appropriate audit approach for designing and performing further audit procedures. Which of the following is incorrect?

Select one:

The auditor needs to be satisfied that performing only substantive procedures for the relevant assertion would be effective in reducing the risk of material misstatement to an acceptably low level.

The auditor may determine that only by performing tests of controls may the auditor achieve an effective response to the assessed risk of material misstatement for a particular assertion.

The auditor designs and performs substantive procedures for each material class of transactions, account balance, and disclosure only when the auditor uses the substantive approach.

The auditor may determine that performing only substantive procedures is appropriate for specific assertions and, therefore, the auditor excludes the effect of controls from the relevant risk assessment.

Question text

In planning the audit engagement, the auditor should consider each of the following, except

Select one:

matters relating to the entity's business and the industry in which it operates

materiality level and audit risk

the entity's accounting policies and procedures

the kind of opinion that is likely to be expressed

Question text

Which of the following would a successor auditor normally perform after acceptance of an audit client?

Select one:

Inquiry of predecessor auditor regarding the client.

Review the SEC filings of the client.

Review of predecessor auditor working papers.

Inquiry of bankers regarding the client.

Question text

Internal control can only provide reasonable, not absolute, assurance of achieving entity control objectives. One of the factors limiting the likelihood of achieving those objectives is that:

Select one:

the auditor's primary responsibility is the detection of fraud

the board of directors is active and independent

management monitors internal control

The cost of internal control should not exceed its benefits

Question text

A reason to establish internal control is to:

Select one:

ensure the accuracy, reliability and timeliness of information

encourage compliance with organizational objectives

have a basis for planning the audit

provide reasonable assurance that the objectives of the organization are achieved.

Question text

Internal controls are not designed to provide reasonable assurance that

Select one:

transactions are executed in accordance with management's authorization

the recorded accountability for assets is compared with the existing assets at reasonable intervals

irregularities will be eliminated

access to assets is permitted only in accordance with management's authorization

Question text

The auditor should plan the audit work so that the audit will be performed in an effective manner. The extent of planning will vary according to any of the following, except:

Select one:

the nature and complexity of the audit engagement

auditor's experience with the entity and knowledge of the business

size of the audit client

the assessed level of control risk

Question text

Which of the following is/are correct?

Statement 1: The client should plan the audit work so that the audit will be performed in an effective manner.

Statement 2: The auditor should develop and document an overall audit plan describing the scope and conduct of the audit.

Select one:

both statements are incorrect

both statements are correct

only statement 2 is correct

only statement 1 is correct

Question text

The development of a general strategy and a detailed approach for the expected nature, timing, and extent of audit refers to :

Select one:

Directing

Supervision

Planning

Audit procedures

Question text

To obtain an understanding of a continuing client’s business in planning an audit, an auditor most likely would

Select one:

Read specialized industry journals.

Perform tests of details of transactions and balances.

Reevaluate client’s internal control environment.

Review prior-year working papers and the permanent file for the client.

Question text

There is an inverse relationship that exists between the acceptable level of detection risk and the

Select one:

risk of misapplying audit process

preliminary judgments about materiality levels

assurance provided by substantive tests

risk of falling to discover material misstatement

Question text

It involves establishing the overall audit strategy for the engagement and developing an audit plan in order to reduce audit risk to an acceptably low level.

Select one:

reporting

field work

planning

organizing

Question text

It is the process designed and effected by those charged with governance, management, and other personnel to provide reasonable assurance about the achievement of the entity's objectives.

Select one:

internal auditing

internal control

accounting process

business strategy

Question text

Which of the following is correct statement?

Select one:

The auditor should obtain an understanding of the accounting and internal control systems sufficient to plan the audit and develop an effective audit approach.

The subsequent discovery that a material misstatement exists in the financial statements is evidence of inadequate planning, performance, or judgment on the part of the auditor.

The auditor should use professional judgment to assess audit risk and to design audit procedures to ensure it is eliminated.

The auditor is an insurer, and his or her report constitutes a guarantee.

Question text

Which of the following is required documentation in an audit in accordance with generally accepted auditing standards?

Select one:

A flowchart or narrative of the information system describing the recording and classification of transactions for financial reporting.

An audit program setting forth in detail the procedures necessary to accomplish the engagement’s objectives.

A planning memorandum establishing the timing of the audit procedures and coordinating the assistance of entity personnel.

An internal control questionnaire identifying policies and procedures that assure specific objectives will be achieved.

Question text

The auditor should determine overall responses to address the risks of material misstatement at the financial statement level. Such responses least likely include

Select one:

Performing substantive procedures at an interim date instead of at period end.

Incorporating additional elements of unpredictability in the selection of further audit procedures to be performed.

Assigning more experienced staff or those with special skills or using experts.

Emphasizing to the audit team the need to maintain professional skepticism in gathering and evaluating audit evidence.

Question text

The auditor should design and perform further audit procedures whose nature, timing, and extent are responsive to the assessed risks of material misstatement at the assertion level. Which of the following is the most important consideration in responding to the assessed risks?

Select one:

All of these are equally important.

The nature of the audit procedures.

The timing of the audit procedures.

The extent of the audit procedures.

Question text

The auditor should consider the nature, extent, and timing of the work to be performed and should prepare a written audit program for every audit. Which audit standard is most closely related to this requirement?

Select one:

Due professional care is to be exercised in the planning and performance of the audit and preparation of the report.

The audit is to be performed by a person or persons having adequate technical training and proficiency as an auditor.

In all matters relating to the assignment, an independent mental attitude is to be maintained by the auditor(s).

The work is to be adequately planned and assistants, if any, are to be properly supervised.

Question text

Arrangements concerning with which of the following are least likely to be included in the engagement letter?

Select one:

A predecessor auditor

Fees and billing

Other services to be provided in addition to the audit

CPA investment in client securities

Question text

According to PSA 210, the auditor and the client should agree on the terms of engagement. The agreed terms would need to be recorded in

Select one:

comfort letter

engagement letter

client representation letter

memo placed in the permanent section of the working papers

Question text

Select one:

In the predecessor’s opinion, control risk is low.

The company rotates auditors.

The predecessor’s work should be used.

The engagement should be accepted.

Question text

Before accepting an audit engagement, a successor auditor should make specific inquiries of the predecessor auditor regarding the predecessor’s

Select one:

Opinion of any subsequent events occurring since the predecessor’s audit report was issued.

Evaluation of all matters of continuing accounting significance.

Understanding as to the reasons for the change of auditors

Awareness of the consistency in the application of GAAP between periods.

Question text

Set the following phases in proper order:

i. Pre-Engagement

ii. Internal Controls

iii. Evidence-Gathering

iv. Planning

v. Post-Audit Responsibilities

vi. Reporting

Select one:

i, iv, ii, iii, v, vi

i, iv, iii, ii, v, vi

i, iv, ii, iii, vi, v

i, ii, iii, iv, v, vi

Question text

Engagement letters are widely used in practice for

Select one:

audits only

professional engagements of all types

related services only

assurance engagements only

Question text

Prior to the acceptance of an audit engagement with a client who has terminated the services of the predecessor auditor, the CPA should

Select one:

Accept the engagement without contacting the predecessor auditor since the CPA can include audit procedures to verify the reason given by the client for the termination.

Not communicate with the predecessor auditor because this would in effect be asking the auditor to violate the confidential relationship between auditor and client.

Advise the client of the intention to contact the predecessor auditor and request permission for the contact.

Question text

Which of the following should an auditor obtain from the predecessor auditor prior to accepting an audit engagement?

Select one:

Analysis of income statement accounts

Analysis of balance sheet accounts

All matters of continuing accounting significance

Facts that might bear on the integrity of management

Question text

Which of the following statements is/are correct?

Statement 2: The auditor should send a new engagement letter ecah year to an established client.

Select one:

only statement 1 is correct

only statement 2 is correct

both statements are correct

both statements are incorrect

Question text

Engagement letter that documents and confirms the auditor's acceptance of the engagement would normally be sent to the client

Select one:

before the auditor report is issued

before the commencement of the engagement

after the audit report is issued

at the end of the fieldwork

Question text

If permission from client to discuss its affairs with the proposed auditor is denied by the client, the predecessor auditor should:

Select one:

Keep silent of the denial.

Seek legal advice before responding to the proposed auditor

Disclose the fact that the permission to disclose is denied by the client.

Disclose adequately to proposed auditor all noncompliance made by the client.

Question text

On recurring audit engagements, the auditor may decide not to send a new engagement letter each period. In which of the following situations will there be no need to send a new letter?

Select one:

recent change of middle management and rank and file organizational structure

revisions or special terms of the engagement

indications of misunderstanding of the objective and scope of the audit

significant change in nature or size of the client's business

Question text

Which of the following is least likely included in an audit engagement letter?

Select one:

Management responsibility for the financial statements.

Arrangement concerning the involvement of other auditors or experts in some aspects of the audit.

The form of any reports or other communication of the results of the engagement.

The objective of financial reporting.

Question text

An audit engagement letter least likely includes

Select one:

Identification of specific audit procedures that the auditor needs to undertake.

A reference to the inherent limitation of an audit that some material misstatements may remain undiscovered.

Description of any letters or reports that the auditor expects to submit to the client.

Arrangements concerning the involvement of internal auditors and other client’s staff.

Question text

The form and content of the audit engagement letters may vary for each client, but they would generally include reference to except:

Select one:

the form of any reports or any communication of results of engagement.

the scope of the audit, excluding reference to applicable legislation, regulations, or pronouncements of professional bodies to which the auditor adheres.

management's responsibility for all the financial statements

unrestricted access to whatever records, documentation and other information requested in connection with the audit.

Question text

An engagement letter is prepared with the interest(s) of

Select one:

both the client and the auditor

the public

the client only

the auditor only

Question text

A successor auditor most likely would make specific inquiries of the predecessor auditor regarding

Select one:

Disagreements with management as to auditing procedures.

The competency of the client’s internal audit staff.

The uncertainty inherent in applying sampling procedures.

Specialized accounting principles of the client’s industry.

Question text

When a CPA is the auditor of a parent entity and also the auditor of its subsidiary, branch or division (component), which of the following are least likely to be included in the engagement letter?

Select one:

legal requirements

whether a separate audit report is to be issued on the component

who appoints the auditor of the component

number of reports to be prepared during the peak audit season

Question text

The objective and scope of the audit and the extent of the auditor’s responsibilities to the client are best documented in

Select one:

Independent auditor’s report

Client’s representation letter

Audit engagement letter

Audit program

Question text

Which of the following least likely requires the auditor to send a new engagement letter?

Select one:

An indication that the client misunderstands the objective and scope of the audit.

A recent change in the audit firm’s management.

Any revised or special terms of the engagement.

Legal requirements and other government agencies’ pronouncements.