Audit Book quizzes test 1
In which of the following situations would a CPA be in violation of the AICPA Code of Professional Conduct in determining the audit fee? (1) A fee based on whether the CPA's report on the client's financial statements results in the approval of a bank loan (2) A fee based on the outcome of a bankruptcy proceeding (3) A fee based on the nature of the service rendered and the CPA's expertise instead of the actual time spent on the engagement (4) A fee based on the fee charged by the prior auditor
(1) A fee based on whether the CPA's report on the client's financial statements results in the approval of a bank loan
Which of the following statements describes why a properly designed and executed audit may not detect a material misstatement in the financial statements resulting from fraud? (1) Audit procedures that are effective for detecting unintentional misstatements may be ineffective for an intentional misstatement that is concealed through collusion. (2) An audit is designed to provide reasonable assurance of detecting material errors, but there is no similar responsibility concerning fraud. (3) The factors considered in assessing control risk indicated an increased risk of intentional misstatements, but only a low risk of unintentional misstatements. (4) The auditor did not consider factors influencing audit risk for account balances that have effects pervasive to the financial statements taken as a whole.
(1) Audit procedures that are effective for detecting unintentional misstatements may be ineffective for an intentional misstatement that is concealed through collusion.
The AICPA Code of Professional Conduct states that a CPA shall not disclose any confidential client information obtained in the course of a professional engagement except with the consent of the client. In which one of the following situations would disclosure by the CPA be in violation of the Code? (1) Disclosing confidential information to another accountant interested in purchasing the CPA's practice. (2) Disclosing confidential information in compliance with a subpoena issued by a court. (3) Disclosing confidential information in order to properly discharge the CPA'S responsibilities in accordance with the profession's standards. (4) Disclosing confidential information during an AICPA-authorized peer review
(1) Disclosing confidential information to another accountant interested in purchasing the CPA's practice.
Which of the following attributes is likely to be unique to the audit work of CPAs as compared to the work performed by practitioners of other professions? (1) Independence (3) Due professional care (2) Competence (4) Complex body of knowledge
(1) Independence
Which of the following internal controls will best detect the theft of valuable items from an inventory that consists of hundreds of different items selling for $1 to $10 and a few items selling for hundreds of dollars? (1) Maintain a perpetual inventory of only the more valuable items, with frequent periodic verification of the validity of the perpetual inventory records. (2) Have an independent auditing firm examine and report on management's assertion about the design and operating effectiveness of the control activities relevant to inventory. (3) Have separate warehouse space for the more valuable items, with sequentially numbered tags. (4) Require anauthorized officer's signature on al requisitions for the more valuable items.
(1) Maintain a perpetual inventory of only the more valuable items, with frequent periodic verification of the validity of the perpetual inventory records.
An independent auditor has the responsibility to design the audit to provide reasonable assurance of detecting errors and fraud that might have a material effect on the financial statements. Which of the following, if material, is a fraud as defined in auditing standards? (1) Misappropriation of an asset or groups of assets (2) Clerical mistakes in the accounting data underlying the financial statements (3) Mistakes in the application of accounting principles (4) Misinterpretation of facts that existed when the financial statements were prepared
(1) Misappropriation of an asset or groups of assets
An auditor of an entity subiect to the rules of the SEC must conduct the financial statement audit in accordance with (1) PCAOB standards. 2() Statements on Standards for Accounting and Review Services. (3) International Auditing Standards. (4) Generally Accepted Government Auditing Standards.
(1) PCAOB standards.
Which of the following engagements is most likely to be considered an operational audit? (1) The auditor evaluates the organization's efficiency in processing payments. (2) The auditor examines information presented in an entity's financial statements to determine whether the financial statements are presented fairly in accordance with the applicable financial reporting framework. (3) The auditor determines whether the organization is following provisions of laws and regulations. (4) The auditor assists the client in preparation of financial statements.
(1) The auditor evaluates the organization's efficiency in processing payments.
What is the meaning of the rule that requires the auditor be independent? (1) The auditor must be without bias with respect to the client under audit. (2) The auditor must adopt a critical attitude during the audit. (3) The auditor's sole obligation is to third parties. (4) The auditor may have a direct ownership interest in the client's business if it is not material.
(1) The auditor must be without bias with respect to the client under audit.
Which of the following characteristics is most likely to heighten an auditor's concern about the risk of material misstatements due to fraud in an entity's financial statements? (1) The entity's industry is experiencing declining customer demand. (2) Employees who handle cash receipts are not bonded. (3) Internal auditors have direct access to the board of directors and the entity's management. (4) The board of directors is active in overseeing the entity's financial reporting policies.
(1) The entity's industry is experiencing declining customer demand.
Cash receipts from sales on account have been misappropriated. Which of the following acts will conceal this embezzlement and be least likely to be detected by the auditor? (1) Understating the sales journal (2) Overstating the accounts receivable control account (3) Overstating the accounts receivable subsidiary records (4) Understating the cash receipts journal
(1) Understating the sales journal
One of a CPA firm's basic objectives is to provide professional services that conform with professional standards. Reasonable assurance of achieving this objective is provided through (1) a system of quality control. (2) a system ofpeer review. (3) continuing professional education. (4) compliance with generallyaccepted reporting standards.
(1) a system of quality control.
The date of the CPA's opinion on the financial statements of the client should be the date of the (1) completion of al important audit procedures. (2) closing of the client's books. (3) finalization of the terms of the audit engagement. (4) submission of the report to the client.
(1) completion of al important audit procedures.
The major reason an independent auditor gathers audit evidence is to (1) form an opinion on the financial statements. (2) detect fraud. (3) evaluate management. (4) assess control risk.
(1) form an opinion on the financial statements.
An auditor most likely would apply analytical procedures in the overall review stage of an audit to (1) identify unusual or unexpected balances that were not previously identified. (2) obtain an understanding of high-risk areas. (3) evaluate the design and implementation of internal control. (4) identify related party transactions that may not have been previously identified.
(1) identify unusual or unexpected balances that were not previously identified.
An entity changed from the straight-line method to the declining-balance method of depreciation for all newly acquired assets. This change has no material effect on the current year's financial statements but is reasonably certain to have a substantial effect in later years. If the change is disclosed in the notes to the financial statements, the auditor should issue a report with a(n) (1) unmodified opinion. (2) qualified opinion. (3) unmodified opinion with explanatory paragraph. (4) qualified opinion with explanatory paragraph regarding consistency.
(1) unmodified opinion.
When fraud risk factors are identified during an audit, the auditor's documentation should include: The risk factors identified, The Auditor's response to the risk factors identified (1) yes, yes (2) yes, no (3) no, yes (4) no, no
(1) yes, yes
The nature and extent of a CPA firm's quality control policies and procedures depend on: The CPA firm's size, the nature of the CPA firm's practice, cost-benefit considerations (1) yes, yes, yes (2) yes, yes, no (3) yes, no, yes (4) no, yes, yes
(1) yes, yes, yes
Which of the following types of audit evidence is generally the most reliable? (1) A bank statement (2) A bank confirmation (3) Analytical procedures (4) Inquiries made of the audit committee
(2) A bank confirmation
Which of the following professional services is an attestation engagement? (1) A consulting service engagement to provide computer-processing advice to a client (2) An engagement to report on compliance with statutory requirements (3) An income tax engagement to prepare federal and state tax returns (4) The preparation of financial statements from a client's financial records
(2) An engagement to report on compliance with statutory requirements
Which of the following is not a provision of the Sarbanes-Oxley Act of 2002? (1) The auditor of an issuer may not provide internal audit outsourcing services for the issuer. (2) Audit documentation must be maintained for five years. (3) The lead and reviewing partners must rotate of the audit after five years. (4) Tax services must be reapproved by the audit committee.
(2) Audit documentation must be maintained for five years.
Which of the following types of documentary evidence should the auditor consider to be the most reliable? (1) A sales invoice issued by the client and supported by a delivery receipt from an outside trucker (2) Confirmation of an account payable balance mailed by and returned directly to the auditor (3) A check, issued by the company and bearing the payee's endorsement, that is included with the bank statements mailed directly to the auditor (4) An audit schedule prepared by the client's controller and reviewed by the client's treasurer
(2) Confirmation of an account payable balance mailed by and returned directly to the auditor
Which of the following best describes the reason why an independent auditor reports on financial statements? (1) A misappropriation of assets may exist, and it is more likely to be detected by independent auditors. (2) Different interests may exist between the company preparing the statements and the persons using the statements. (3) A misstatement of account balances may exist and is generally corrected as the result of the independent auditor's work. (4) Poorly designed internal controls may be in existence.
(2) Different interests may exist between the company preparing the statements and the persons using the statements.
Which of the following best describes what is meant by US.. auditing standards? (1) Acts to be performed by the auditor (2) Measures of the quality of the auditor's performance (3) Procedures to be used to gather evidence to support financial statements (4) Audit objectives generally determined on audit engagements
(2) Measures of the quality of the auditor's performance
An auditor who qualified an opinion because of an insufficiency of audit evidence should refer to the scope limitation in the: Auditor's responsibility paragraph, opinion paragraph, notes to the financial statements (1) Yes, No, Yes (2) No, Yes, No (3) Yes, Yes, No (4) Yes, Yes, Yes
(2) No, Yes, No
Which of the following would not be considered to be an analytical procedure? (1) Estimating payroll expense by multiplying the number of employees by the average hourly wage rate and the total hours worked. (2) Projecting the error rate by comparing the results of a statistical sample with the actual population characteristics. (3) Computing accounts receivable turnover by dividing credit sales by the average net receivables. (4) Developing the expected current year sales based on the sales trend of the prior five years.
(2) Projecting the error rate by comparing the results of a statistical sample with the actual population characteristics.
What assurance does the auditor provide that errors and fraud that are material to the financial statements will be detected? Errors, Fraud (1) Limited, Negative (2) Reasonable, Reasonable (3) Limited, Limited (4) Reasonable, Limited
(2) Reasonable, Reasonable
Which of the following circumstances is most likely to cause an auditor to increase the assessment of the risk of material misstatement of the financial statements due to fraud? (1) Property and equipment are usually sold at a loss before being fully depreciated. (2) Unusual discrepancies exist between the entity's records and confirmation replies. (3) Monthly bank reconciliations usually include several in-transit items. (4) Clerical errors are listed on a computer-generated exception report.
(2) Unusual discrepancies exist between the entity's records and confirmation replies.
Operational audits generally have been conducted by internal auditors and governmental audit agencies but maybe performed by certified public accountants. A primary purpose of an operational audit is to provide 1) a means of assurance that internal accounting controls are functioning as planned. (2) a measure of management performance in meeting organizational goals. (3) the results of internal examinations of financial and accounting matters to a company's top-level management. (4) aid to the independent auditor, who si conducting the audit of the financial statements.
(2) a measure of management performance in meeting organizational goals.
Compliance auditing often extends beyond audits leading to the expression of opinions on the fairness of financial presentation and includes audits of efficiency, economy, effectiveness, as well as (1) accuracy. (3) evaluation. (4) internal control. (2) adherence to specific rules or procedures.
(2) adherence to specific rules or procedures.
An auditor will most likely review an entity's periodic accounting for the numerical sequence of shipping documents to ensure all documents are included to support management's assertion about classes of transactions of (1) occurrence. (2) completeness. (3) accuracv. (4) classification.
(2) completeness.
In the audit of accounts payable, an auditors' procedures will most likely focus primarily on management's assertion about account balances of (1) existence. (2) completeness. (3) valuation and allocation. (4) classification and understandability.
(2) completeness.
The auditor's report contains the following: "We did not audit the financial statements of EZ, Inc., a wholly owned subsidiary, which statements reflect total assets and rev- enues constituting 27 percent and 29 percent, respectively, of the consolidated totals. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as ti relates to the amounts included for EZ, Inc., is based solely on the report of the other auditors." These sentences (1) assume responsibility for the other auditor. (2) indicate adivision of responsibility. (3) require adeparture from an unmodified opinion. (4) are an improper form of reporting.
(2) indicate adivision of responsibility.
As compared to an unmodified opinion, an opinion qualified due to a material departure from generally accepted accounting principles would (1) include an extra paragraph, following the opinion paragraph. (2) indicate that, except for the problem noted, the financial statements are presented fairly. (3) include a slight modification to the introductory paragraph. (4) include a slight modification to the auditor's responsibility paragraph.
(2) indicate that, except for the problem noted, the financial statements are presented fairly.
If an independent audit leading to an opinion on financial statements causes the auditor to believe that a material misstatement due to fraud exists, the auditor should first (1) request that management investigate to determine whether fraud has actually occurred. (2) make the investigation necessary to determine whether fraud has actually occurred 3) consider the implications for other aspects of the audit and discuss the matter with the appropriate levels of management. (4) consider whether fraud was the result of a failure by employees to comply with existing controls.
(2) make the investigation necessary to determine whether fraud has actually occurred
Which of the following are elements of a CPA firm's quality control that should be considered in establishing its quality control policies and procedures?: Human Resources, monitoring, engagement performance (1) yes, yes, no (2) yes, yes, yes (3) no, yes, yes (4) yes, no, yes
(2) yes, yes, yes
While auditing a client's accounting estimates used for their specific elements and accounts, the auditor has certain responsibilities. Which of the following is not a required audit procedure that the auditor would perform when evaluating a clients' accounting estimate? (1) Verify that all material accounting estimates have been developed. (2) Ensure that the accounting estimates used are properly disclosed in accordance with GAAP. (3) Determine if the accounting estimates used are consistent with those of the client's primary competitors. (4) Evaluate the degree of uncertainty that is associated with the client's accounting estimates
(3) Determine if the accounting estimates used are consistent with those of the client's primary competitors.
This of the following is least likely to suggest that the client's management may have overridden internal control? (1) There are numerous delays in preparing timely internal financial reports. (2) Management does not correct internal control weaknesses that it knows about. (3) Differences are always disclosed on a computer exception report. (4) There have been two new controllers this year.
(3) Differences are always disclosed on a computer exception report.
While performing a preliminary assessment for a new client audit, the auditor determines that the client has had excessive growth over the past several years due to recent acquisitions and internal expansion. Through discussions with management, the auditor concludes that the company's operational staff is too lean and that internal controls in several operational functions may be currently insufficient to accommodate this rapid growth. About which of the following fraud risk factors related to the client would the auditor have the greatest concern? (1) Rationalization/attitude (2) Inadequate organizational structure (3) Opportunity (4) Incentives/pressures
(3) Opportunity
Which of the following services can be offered to public company audit clients under SEC requirements and the Sarbanes-Oxley Act? (1) Tax services for executives involved in financial reporting (2) Internal audit outsourcing (3) Tax planning not involving tax shelters (4) Bookkeeping and other accounting services
(3) Tax planning not involving tax shelters
What is the general character of the responsibilities characterized by the Performance principles? (1) The competence, independence, and professional care of persons performing the audit (2) Criteria for the content of the auditor's report on financial statements and related footnote disclosures (3) The criteria of audit planning and evidence gathering (4) The need to maintain an independence in mental attitude in all matters pertaining to the audit
(3) The criteria of audit planning and evidence gathering
Which one of the following is a true statement about the required fraud risk assessment discussion? (1) The discussion about the susceptibility of the entity's financial statements to material misstatement must be held separately from the discussion about the susceptibilityof the entity's financial statements to fraud. (2) The discussion should involve all members who participate on the audit team, including the engagement partner. (3) The discussion should include consideration of the risk of management override of controls. (4) The fraud risk assessment discussion should occur during the overall review stage of the audit.
(3) The discussion should include consideration of the risk of management override of controls.
Which of the following best describes why an independent auditor is asked to express an opinion on the fair presentation of financial statements? (1) It is difficult to prepare financial statements that fairly present a company's financial position, operations, and cash flows without the expertise of an independent auditor. (2) It is management's responsibility to seek available independent aid in the appraisal of the financial information shown in its financial statements. (3) The opinion of an independent party is needed because a company may not be objective with respect to its own financial statements. (4) It is a customary courtesy that al stockholders of a company receive an independent report on management's stewardship of the affairs of the business.
(3) The opinion of an independent party is needed because a company may not be objective with respect to its own financial statements.
Which of the following is not a primary purpose of audit documentation? (1) To coordinate the audit (2) To assist in preparation of the audit report (3) To support the financial statements (4) To provide evidence of the audit work performed
(3) To support the financial statements
.The Public Company Accounting Oversight Board (PCAOB) has the duty to (1) select the public accounting firm for the issuer's annual audit. (2) establish rules related to the preparation of audit reports for non-issuers. (3) conduct investigations concerning registered public accounting firms. (4) conduct disciplinary proceedings for nonpublic accounting firms.
(3) conduct investigations concerning registered public accounting firms.
The concept of materiality would be least important to an auditor when considering the (1) adequacy of disclosure of a client's illegal act. (2) discovery of weaknesses in a client's internal control structure. (3) effects of a direct financial interest in the client on the CPA's independence. (4) types of evidence to use in testing accounts receivable.
(3) effects of a direct financial interest in the client on the CPA's independence.
An auditor discovers that a client's accounts receivable turnover is substantially lower for the current year than for the prior year. This trend may indicate that (1) the client recently tightened its credit-granting policies. (2) employees have stolen inventory just before year-end. (3) fictitious credit sales have been recorded during the year. (4) an employee has been lapping receivables in both years.
(3) fictitious credit sales have been recorded during the year.
According to the profession's ethical standards, which of the following events may justify a departure from GAAP? I New legislation. Il Conflicting industry practices. Ill Evolution of a new form of business transaction. (1) l and Il (2) Il and III (3) l and III (4) I, II and III
(3) l and III
An auditor strives to achieve independence in appearance to (1) comply with auditing standards related to audit performance. (2) become independent in fact. (3) maintain public confidence in the profession. (4) maintain an unbiased mental attitude
(3) maintain public confidence in the profession.
For all audits of financial statements made in accordance with auditing standards, the use of analytical procedures is required to some extent: In the planning stage, as a substantive test, in the completion stage (1) yes, no, yes (2) no, yes, no (3) no, yes, yes (4) yes, no, no
(3) no, yes, yes
In a financial statement audit, the auditor obtains a reasonable level of assurance about whether the financial statements are free of material misstatement in order to express an opinion. In order to obtain reasonable assurance, the auditor must (1) have prior experience in the industry in which the audit client operates. (2) examine all documents available that support the financial statements. (3) obtain sufficient audit evidence. (4) test controls around significant transaction cycles.
(3) obtain sufficient audit evidence.
The Responsibilities principle underlying AICPA auditing standards includes a requirement that (1) the audit be adequately planned and supervised. (2) the auditor's report state whether or not the financial statements conform to generally accepted accounting principles. (3) professional judgment be exercised by the auditor. (4) informative disclosures in the financial statements be reasonably adequate.
(3) professional judgment be exercised by the auditor.
Because of the risk of material misstatement, an audit should be planned and performed with an attitude of (1) objective judgment. (2) independent integrity. (3) professional skepticism. (4) impartial conservatism.
(3) professional skepticism.
A CPAs' retention of client records as a means of enforcing payment of an overdue audit fee is an action that is (1) not addressed by the AICPA Code of Professional Conduct. (2) acceptable if sanctioned by the state laws. (3) prohibited under the AICPA rules of conduct. (4) a violation of generally accepted auditing standards.
(3) prohibited under the AICPA rules of conduct.
During an audit engagement, pertinent data are compiled and included ini the audit files. The audit files primarily are considered to be (1) a client owned record of conclusions reached by the auditors who performed the engagement. (2) evidence supporting financial statements. (3) support for the auditor's representations as to compliance with auditing (4) a record to be used as a basis for the following year's engagement.
(3) support for the auditor's representations as to compliance with auditing
The auditor's responsibility regarding material misstatements caused by fraud is (1) less than the auditor's responsibility regarding material misstatements caused by error. (2) greater than the auditor's responsibility regarding material misstatements caused by error. (3) the same as the auditor's responsibility regarding material misstatements caused by error. (4) either less than or greater than the auditor's responsibility regarding material misstatements caused by error, depending on the circumstances.
(3) the same as the auditor's responsibility regarding material misstatements caused by error.
An auditor reviews aged accounts receivable to assess likelihood of collection to support management's assertion about account balances of (1) existence. (2) completeness. (3) valuation and allocation. (4) rights and obligations.
(3) valuation and allocation.
Which of the following statements reflects an auditor's responsibility for detecting fraud? (1) An auditor is responsible for detecting employee errors and simple fraud, but not for discovering fraudulent acts involving employee collusion or management override. (2) An auditor should plan the audit to detect fraud caused by departures from GAAP. 3 ) An auditor is not responsible for detecting fraud unless the application of auditing standards would result in such detection (4) An auditor should design the audit to provide reasonable assurance of detecting errors and fraud that are material to the financial statements.
(4) An auditor should design the audit to provide reasonable assurance of detecting errors and fraud that are material to the financial statements.
Which of the following is considered an assurance engagement? (3) Compilation (1) Bookkeeping (4) Audit (2) Preparation
(4) Audit
Which of the following presumptions is correct about the reliability of audit evidence? (1) Information obtained indirectly from outside sources is the most reliable audit evidence. (2) To be reliable, audit evidence should be convincing rather than merely persuasive. (3) Reliability of audit evidence refers to the amount of corroborative evidence obtained. (4) Effective internal control provides more assurance about the reliability of audit evidence.
(4) Effective internal control provides more assurance about the reliability of audit evidence.
Which of the following best describes the operational audit? (1) It requires the constant review by internal auditors of the administrative controls as they relate to the operations of the company. (2) It concentrates on implementing financial and accounting control in a newly organized company. (3) It focuses on verifying the fair presentation of a company's results of operations. (4) It concentrates on seeking aspects of operations in which waste could be reduced by the introduction of controls.
(4) It concentrates on seeking aspects of operations in which waste could be reduced by the introduction of controls.
Audit evidence can come in different forms with different degrees of persuasiveness. Which of the following is the least persuasive type of evidence? (1) Vendor's invoice (2) Bank statement obtainedfrom the client (3) Computations made by the auditor (4) Prenumbered sales invoices
(4) Prenumbered sales invoices
Which of the following provides authoritative guidance for the auditor of a nonpublic company? (1) An article in the journal ofAccountancy that discusses new audit requirements (2) Information obtained from continuing professional education programs (3) Publication from state CPA societies that provides questions and answers on frequently asked audit questions (4) Statements on Auditing Standards
(4) Statements on Auditing Standards
Which of the following circumstances would most likely cause an auditor to suspect that there are material misstatementsi n an entity's financial statements? (1) The entity's management strictly enforces itsintegrity and ethical values. (2) Monthly bank reconciliations ordinarily include several outstanding checks. (3) Management outsources the internal audit function to another CPAfirm. (4) The auditor identifies an inappropriate valuation method that is widely applied by the entity.
(4) The auditor identifies an inappropriate valuation method that is widely applied by the entity.
When determining the auditor's or management's responsibility for compliance with laws and regulations during an audit, which of the following statements below would be incorrect? (1) The auditor is not responsible for preventing noncompliance with laws and regulations. (2) Management and those charged with governance are responsible for ensuring that the company's operations are conducted in accordance with al applicable laws and regulations. (3) The auditor provides reasonable assurance that the financial statements are free of material misstatement due to noncompliance with laws and regulations. (4) The auditor is expected to detect the client's noncompliance with all laws and regulations affecting transaction cycles under review during the audit itself.
(4) The auditor is expected to detect the client's noncompliance with all laws and regulations affecting transaction cycles under review during the audit itself.
Which of the following situations has the best chance of being detected when a CPA compares 2016 revenues and expenses with the prior year and investigates all changes exceeding a fixed percent? (1) An increase in property tax rates has not been recognized in the company's 2016 accrual. (2) The cashier began lapping accounts receivable in 2016. (3) Because of worsening economic conditions, the 2016 provision for uncollectible accounts was inadequate. (4) The company changed its capitalization policy for small tools in 2016.
(4) The company changed its capitalization policy for small tools in 2016.
Which of the following is not a requirement of a standard unmodified opinion audit report issued in accordance with AICPA auditing standards? (1) A title that emphasizes the report is from an independent auditor (2) The city and state of the audit firm issuing the report (3) A statement explaining management's responsibilities for the financial statements (4) The signature of the engagement partner
(4) The signature of the engagement partner
Although the quantity, type, and content of audit documentation will vary with the circumstances, audit documentation generally will include the (1) copies of those client records examined by the auditor during the course of the engagement. (2) evaluation of the efficiency and competence of the audit staff assistants by the partner responsible for the audit. (3) auditor's comments concerning the efficiency and competence of client management personnel. (4) auditing procedures followed and the testing performed in obtaining audit evidence
(4) auditing procedures followed and the testing performed in obtaining audit evidence
An adverse opinion and a disclaimer of opinion (1) may be used interchangeably. (2) both require modification of the introductory paragraph. (3) result in the auditor's withdrawal from the engagement. (4) indicate situations in which there are material departures from the standards.
(4) indicate situations in which there are material departures from the standards.
If a principal auditor decides to refer in his or her report to the audit of another auditor, he or she is required to disclose the (1) name of the other auditor. (2) nature of the inquiry into the other auditor's professional standing and extent of the review of the other auditor's work. (3) reasons for being unwilling to assume responsibility for the other auditor's work. (4) portion of the financial statements audited by the other auditor.
(4) portion of the financial statements audited by the other auditor.
According to PCAOB audit standards, audit documentation must be retained for (1) one year. (2) three years. (3) five years. (4) seven years.
(4) seven years.
When the financial statements are fairly stated but the auditor concludes there is substantial doubt whether the client can continue in existence, the auditor should issue a(n) (1) adverse opinion. (2) qualified opinion only. (3) unmodifiedopinion. (4) unmodified opinion with explanatory paragraph.
(4) unmodified opinion with explanatory paragraph.