Description of this paper

1.A limitation on the scope of an audit sufficient...

Description

Solution


Question

1.A limitation on the scope of an audit sufficient to preclude an unqualified opinion will usually result when management A.Presents financial statements that are prepared in accordance with the cash receipts and disbursements basis of accounting. B.States that the financial statements are not intended to be presented in conformity with generally accepted accounting principles. C.Does not make the minutes of the board of directors? meetings available to the auditor. D.Asks the auditor to report on the balance sheet and not on the other basic financial statements. 3.Which of the following procedures most likely would not be included in a review engagement of a nonpublic entity? A.Inquiring about subsequent events. B.Considering whether the financial statements conform with GAAP. C.Assessing control risk. D.Obtaining a management representation letter 5 In which of the following situations would a principal auditor least likely make reference to another auditor who audited a subsidiary of the entity? A.The principal auditor finds it impracticable to review the other auditor?s work or otherwise be satisfied as to the other auditor?s work. B.The other auditor was retained by the principal auditor and the work was performed under the principal auditor?s guidance and control. C.The principal auditor is unable to be satisfied as to the independence and professional reputation of the other auditor. D.The financial statements audited by the other auditor are material to the consolidated financial statements covered by the principal auditor?s opinion. 7.A CPA?s report on agreed-upon procedures related to an entity?s compliance with specified requirements should contain A.An acknowledgment of responsibility for the sufficiency of the procedures. B. An opinion about whether the entity complied with specified requirements. C.A statement of limitations on the use of the report. D.Negative assurance that control risk has not been assessed. 9.One of the conditions required for an accountant to submit a written personal financial plan containing unaudited financial statements to a client without complying with the requirements of AR 100, Compilation and Review of Financial Statements, is that the A.Client agrees that the financial statements will not be used to obtain credit. B.Accountant compiled or reviewed the client?s financial statements. C.Engagement letter acknowledges that the financial statements will contain departures from GAAP. D.Accountant expresses limited assurance that the financial statements are free of any material misstatements. 11.A CPA should not express negative or limited assurance in a standard A.Review report on financial statements of a nonpublic entity. B.Comfort letter on financial information included in a registration statement of a public entity. C.Compilation report on financial statements of a nonpublic entity. D.Review report on interim financial statements of a public entity. 13.An auditor?s decision concerning whether to dual date the audit report is based upon the auditor?s willingness to A.Accept responsibility for subsequent events. B.Assume responsibility for events subsequent to the issuance of the auditor?s report. C.Permit inclusion of a footnote captioned: event (unaudited) subsequent to the date of the auditor?s report. D.Extend auditing procedures. 15.When there has been a change in accounting principles, but the effect of the change on the comparability of the financial statements is not material, the auditor should A.Refer to the change in an explanatory paragraph. B.Refer to the change in the opinion paragraph. C.Not refer to consistency in the auditor?s report. D.Explicitly concur that the change is preferred. 17.An auditor is engaged to report on selected financial data that are included in a client-prepared document containing audited financial statements. Under these circumstances, the report on the selected data should A.Indicate that the data are not fairly stated in all material respects. B.Be limited to data derived from the audited financial statements. C.State that the presentation is a comprehensive basis of accounting other than GAAP. D.Be distributed only to senior management and the board of directors. 19.The objective of the consistency standard is to provide assurance that A.There are no variations in the format and presentation of financial statements. B.Substantially different transactions and events are not accounted for on an identical basis. C.The comparability of financial statements between periods is not materially affected by changes in accounting principles without disclosure. D.The auditor is consulted before material changes are made in the application of accounting principles. 21.When a CPA reports on audited financial statements prepared on the cash receipts and disbursements basis of accounting, the report should A.State that the basis of presentation is a comprehensive basis of accounting (OCBOA) other than GAAP. B.Refer to the note in the financial statements that describes management?s responsibility for the financial statements. C.Explain why this basis of accounting is more useful for the readers of this entity?s financial statements than GAAP. D.Include a separate explanatory paragraph that discusses the justification for, and the CPA?s concurrence with, the departure from GAAP. 23.The AICPA Code of Professional Conduct requires compliance with accounting principles promulgated by the body designated by the AICPA Council to establish such principles. The pronouncements considered officially established accounting principles include all of the following except A.APB Opinions. B.Interpretations issued by the FASB. C.AICPA Issues Papers. D.AICPA Accounting Research Bulletins. 25.What is an auditor?s reporting responsibility concerning information accompanying the basic financial statements in an auditor-submitted document? A.The auditor should report on the accompanying information only if it contains obvious material misstatements. B.The auditor should report on the accompanying information only if the auditor did not participate in its preparation. C.The auditor should report on all the accompanying information included in the document. D.The auditor should report on the accompanying information only if the auditor participated in its preparation. 27.Grant Company?s financial statements adequately disclose uncertainties that concern future events, the outcome of which are not susceptible to reasonable estimation. The auditor?s report should include A.An unqualified opinion. B.An adverse opinion. C.An ?except for? qualified opinion. D.A ?subject to? qualified opinion. 29.Under which of the following circumstances may audited financial statements contain a note disclosing an event occurring after the balance sheet date that is labeled unaudited? A.When the event occurs after completion of field work and before issuance of the auditor?s report. B.When the subsequent event requires adjustment of the financial statements. C.When audit procedures with respect to the event were not performed by the auditor. D.When the event occurs between the date of the auditor?s original report and the date of the reissuance of the report. 31.In the first audit of a new client, an auditor was able to extend auditing procedures to gather sufficient evidence about consistency. Under these circumstances, the auditor should A.Not refer to consistency in the auditor?s report. B.State that the consistency standard does not apply. C.Not report on the client?s income statement. D.State that the accounting principles have been applied consistently. 33.Which of the following requires recognition in the auditor?s report as to consistency? A.Changing the presentation of prepaid insurance from inclusion in other assets to disclosing it as a separate line item. B.Division of the consolidated subsidiary into two subsidiaries that are both consolidated. C.Changing the salvage value of an asset. D.Changing the companies included in combined financial statements. 35.If management declines to present supplementary information required by GAAP, the auditor should express A.An unqualified opinion with an additional explanatory paragraph. B.An adverse opinion. C.A qualified opinion with an explanatory paragraph. D.An unqualified opinion. 37.The auditor?s judgment concerning the overall fairness of the presentation of financial position, results of operations, and cash flows is applied within the framework of A.Quality control. B.Generally accepted accounting principles. C.Generally accepted auditing standards, which include the concept of materiality. D.The auditor?s assessment of control risk. 39.Delta Life Insurance Co. prepares its financial statements on an accounting basis insurance companies use pursuant to the rules of a state insurance commission. If Wall, CPA, Delta?s auditor, discovers that the statements are not suitably titled, Wall should A.Disclose any reservations in an explanatory paragraph and qualify the opinion. B.Issue a special statutory basis report that clearly disclaims any opinion. C.Apply to the state insurance commission for an advisory opinion. D.Explain in the notes to the financial statements the terminology used. 41.The Securities and Exchange Commission has authority to A.Require a change of auditors of governmental entities after a given period of years as a means of ensuring auditor independence. B.Deny lack of privity as a defense in third-party actions for gross negligence against the auditors of public companies. C.Determine accounting principles for the purpose of financial reporting by companies offering securities to the public. D.Prescribe specific auditing procedures to detect fraud concerning inventories and accounts receivable of companies engaged in interstate commerce. 43.If the auditor obtains satisfaction with respect to the accounts receivable balance by alternative procedures because it is impracticable to confirm accounts receivable, the auditor?s report should be unqualified and could be expected to A.Refer to a footnote that discloses the alternative procedures. B.Disclose in the opinion paragraph that confirmation of accounts receivable was impracticable. C.Disclose that alternative procedures were used because of a client-imposed scope limitation. D.Not mention the alternative procedures 45.Trotman, Inc., a manufacturing company, has engaged a CPA to audit its financial statements for the year ended June 30, year 2. The CPA observed the physical inventory count at June 30, year 2, but no physical inventory had been taken at June 30, year 1. The CPA has not been able to become satisfied as to the value of the inventory at June 30, year 1. Assuming that the financial statements are fairly presented in all other material respects, the CPA should A.Express an unqualified opinion on the financial statements taken as a whole; no mention of the scope limitation is necessary. B.Disclaim an opinion on the statements of income, retained earnings, and cash flows but express an unqualified opinion on the balance sheet. C.Express an unqualified opinion on the financial statements taken as a whole but clearly indicate in a separate paragraph of the report the limitations on the work. D.Disclaim an opinion on the statements of income and retained earnings but express an unqualified opinion on the balance sheet and the statement of cash flows. 47.On August 13, a CPA completed field work on an engagement to audit financial statements for the year ended June 30. On August 27, an event came to the CPA?s attention that should be disclosed in the notes to the financial statements. The event was properly disclosed by the entity, but the CPA decided not to dual-date the auditor?s report and dated the report August 27. Under these circumstances, the CPA was taking responsibility for A.All subsequent events that occurred through August 13 and the specific subsequent event disclosed by the entity. B.All subsequent events that occurred through August 27. C.Only the subsequent events that occurred through August 13. D.Only the specific subsequent event disclosed by the entity. 49.Field is an employee of Gold Enterprises. Hardy, CPA, is asked to express an opinion on Field?s profit participation in Gold?s net income. Hardy may accept this engagement only if A.Field owns a controlling interest in Gold. B.Gold?s financial statements are prepared in conformity with GAAP. C.Hardy also audits Gold?s complete financial statements. D.Hardy?s report is available for use by Gold?s other employees. 1.Which of the following factors is(are) considered in determining the sample size for a test of controls? ? Expected Tolerable ? Deviation Rate Deviation Rate A. yes no B. no no C. no yes D. yes yes 3.When using classical variables sampling for estimation, an auditor normally evaluates the sampling results by calculating the possible misstatement in either direction. This statistical concept is known as A.Reliability. B.Projected misstatement. C.Precision. D.Standard deviation.,ok,Hi Michael, Are you sure about these answer?

 

Paper#4386 | Written in 18-Jul-2015

Price : $25
SiteLock