Chapter 12
15. Which of the following procedures is not a procedure that is completed near the end of the engagement? A. Review cash transactions. B. Review to identify subsequent events. C. Obtain the lawyer's letter. D. Obtain the letter of representations.
A
17. Analytical procedures used in the overall review stage of an audit generally include a. Considering unusual or unexpected account balances that were not previously identified. b. Performing tests of transactions to corroborate management's financial statement assertions. c. Gathering evidence concerning accounts that have not changed from the prior year. d. Retesting control procedures that appeared to be ineffective during the assessment of control risk.
A
18. Which of the following procedures should an auditor ordinarily perform regarding subsequent events? a. Compare the latest available interim financial statements with the financial statements being audited. b. Send second requests to the client's customer who failed to respond to initial accounts receivable confirmation requests. c. Communicate material weaknesses in the internal control to the client's audit committee. d. Review the cutoff bank statements for several months after the year-end.
A
19. An auditor's decision concerning whether or not to "dual date" the audit report is based upon the auditor's willingness to: A. Extend auditing procedures. B. Accept responsibility for year-end adjusting entries. C. Permit inclusion of a note captioned: event (unaudited) subsequent to the date of the auditor's report. D. Assume responsibility for resolving all events subsequent to the issuance of the auditor's report.
A
19. Which of the following is least likely a procedure that would be performed by the auditor near the auditor's report date? a. Reading the minutes of the meetings of shareholders, the board of directors and audit executive committees held throughout the audit year. b. Reading the entity's latest available interim financial statements. c. Inquiring of the client's legal counsel concerning litigations and claims. d. Reviewing the procedures that management has established to ensure that subsequent events are identified.
A
20. After issuing a report, an auditor has no obligation to make continuing inquiries or perform other procedures concerning audited financial statements, unless a. Information, which existed at the report date and may affect the report, comes to the auditor's attention. b. The control environment changes after issuance of the report. c. Information about an event that occurred after the end of field work comes to the auditor's attention. d. Final determinations or resolutions are made of contingencies that had been disclosed in the financial statements.
A
21. The auditor should obtain evidence that management acknowledges its responsibility for the fair presentation of the financial statements in accordance with GAAP in the Philippines, and has approved the financial statements. The auditor can obtain evidence of management's acknowledgment of such responsibility and approval I. From relevant minutes of meetings of the board of directors or similar body. II. By obtaining a written representation from management. III. By obtaining a signed copy of the financial statements. a. Any of the above b. Either I or II c. I only d. None of the above
A
24. The auditor's primary means of obtaining corroboration of management's information concerning litigation is a: A. Letter of audit inquiry to the client's lawyer. B. Letter of corroboration from the auditor's lawyer upon review of the legal documentation. C. Confirmation of claims and assessments from the other parties to the litigation. D. Confirmation of claims and assessments from an officer of the court presiding over the litigation.
A
25. When considering the use of management's written representations as audit evidence about the completeness assertion, an auditor should understand that such representations a. Complement, but do not replace, substantive tests designed to support the assertion. b. Constitute sufficient evidence to support the assertion when considered in combination with a sufficiently low assessed level of control risk. c. Are not part of the evidence considered to support the assertion. d. Replace a low assessed level of control risk as evidence to support the assertion.
A
26. A written representation from a client's management that, among other matters, acknowledges responsibilit0y for the fair presentation of financial statements, should normally be signed by the a. Chief executive officer and the chief financial officer. b. Chief financial officer and the chair of the board of directors. c. Chair of the audit committee of the board of directors. d. Chief executive officer, the chair of the board of directors, and the client's lawyer.
A
5. After the date of the audit report but before the financial statements are issued, the auditor becomes aware of a material subsequent event which requires adjustment in the financial statements. If management amends the financial statements, and assuming the auditor is satisfied after the performance of the necessary additional audit procedures, the audit opinion to be issued would be: a. Unqualified opinion b. 'Except for' qualified opinion c. 'Subject to' qualified opinion d. Adverse opinion
A
5. The audit of which of the following balance sheet accounts does not normally result in verification of an income statement account? A. Cash. B. Accounts receivable. C. Property, plant and equipment. D. Intangible assets.
A
6. Shortly after the audit report has already been released to the entity, an auditor discovered that a material subsequent event requiring adjustment of the financial statements. Accordingly, the auditor should: a. Notify the persons ultimately responsible for the overall direction of the entity not to issue the financial statements and the audit report thereon to third parties. b. Issue a modified report, as a corrigendum, together with a written apology addressed to the board of directors and shareholders of the entity. c. Issue a modified report, as a corrigendum, but without a written apology. d. Issue a statement, in a newspaper of general circulation, asking the public at large not to rely on the financial statements and the audit report thereon.
A
7. An example of an internal control weakness is to assign the personnel department responsibility for: A. Distribution of paychecks. B. Hiring personnel. C. Authorizing deductions from pay. D. Interviewing employees for jobs.
A
7. Which of the following statements is incorrect regarding the reliability of audit evidence? a. Oral representation by the client management is not a valid evidence. b. Audit evidence obtained directly by the auditor is more reliable than that one provided by the client management. c. The effectiveness of accounting and internal control adds to the reliability of internal audit evidence. d. While internal audit evidence is considered to be acceptable, the auditor usually prefers audit evidence form external sources.
A
9. The auditor considers the status of legal matters up to a. The date of the audit report. c. The issuance of financial statements. b. The balance sheet date. d. Up to the date of receipt of letter fro
A
9. Which of the following types of matters do not generally require disclosure in the financial statements? A. General risk contingencies. B. Commitments. C. Loss contingencies. D. Liabilities to related parties.
A
10. A refusal by a lawyer to furnish information related to litigation included in the letter of inquiry is likely to result in: A. Confirmation of related lawsuits with the claimants. B. Qualification of the audit report. C. An assessment that loss of the litigation is probable. D. An adverse opinion.
B
12. The audit inquiry letter to the client's legal counsel should be mailed only by the a. Client after the auditor has reviewed it for appropriate content. b. Auditor after preparation by the client and review by the auditor. c. Auditor's attorney after preparation by the client and review by the auditor. d. Client after review by the auditor's attorney.
B
12. Which of the following subsequent events might require an adjustment to the client's financial statements? A. A business combination with another company. B. Loss on the sale of a closely-held investment. C. Loss of plant and equipment due to a fire. D. Retirement of bonds payable at a loss.
B
12. Which statement is correct regarding auditing fair value measurements and disclosures? a. Many measurements based on estimates, including fair value measurements, are inherently precise. b. Assumptions used in fair value measurements are similar in nature to those required when developing other accounting estimates. c. Underlying the concept of fair value measurements is a presumption that the entity will be liquidated. d. The measurement of fair value may be relatively complex for assets that are bought and sold in active and open markets.
B
13. The auditor needs to be aware of the existence of related parties and transactions between such parties. Which of the following is the least likely reason? a. GAAP in the Philippines require disclosure in the financial statements of certain related party relationships and transactions. b. Related parties and transactions between such parties are considered unusual features of business. c. The source of audit evidence affects the auditor's assessment of its reliability. d. A related party transaction may be motivated by other than ordinary business considerations.
B
14. If a lawyer refuses to furnish corroborating information regarding litigation, claims, and assessments, the auditor should: a. Honor the confidentiality of the client-lawyer relationship. b. Consider the refusal to be tantamount to a scope limitation. c. Seek to obtain the corroborating information from management. d. Disclose this fact in the notes to the financial statements.
B
14. Which of the following is most likely a procedure that would be performed by the auditor regarding subsequent events? a. Reading the minutes of the meetings of shareholders, the board of directors and audit executive committees held throughout the audit year. b. Reading the entity's latest available interim financial statements. c. Send second requests to the client's customer who failed to respond to initial accounts receivable confirmation requests. d. Review the cutoff bank statements for several months after the year-end.
B
16. If a representation by management is contradicted by other audit evidence, the auditor should a. Withdraw from the engagement. b. Investigate the circumstances and, when necessary, reconsider the reliability of other representations made by management. c. Issue a qualified or adverse opinion. d. Issue a qualified or disclaimer of opinion.
B
18. With respect to issuance of an audit report which is dual dated for a subsequent event occurring after the completion of field work but before issuance of the auditors' report, the auditors' responsibility for events occurring subsequent to the completion of field work is: A. Extended to include all events occurring until the date of the last subsequent event referred to. B. Limited to the specific event referred to. C. Limited to all events occurring through the date of issuance of the report. D. Extended to include all events occurring through the date of submission of the report to the client.
B
20. This refers to a written statement by management provided to the auditor to confirm certain matters to support other audit evidence. a. Assertions b. Written representation c. Confirmation reply d. Management letter
B
25. An auditor should obtain written representations from management concerning litigation claims and assessments. These representations may be limited to matters that are considered individually or collectively material, provided an understanding on the limits of materiality for this purpose has been reached by: a. The auditor and the client's lawyer b. Management and the auditor c. Management, the client's lawyer, and the auditor d. The auditor independently of management
B
27. The auditor concludes that the omission of a substantive procedure considered necessary at the time of the examination may impair the auditor's present ability to support the previously expressed opinion. The auditor need not apply the omitted procedure if: a. The risk of adverse publicity or litigation is low. b. The results of other procedures that were applied tend to compensate for the procedure omitted. c. The auditor's opinion was qualified because of a departure from PFRS. d. The results of the subsequent period's test of controls make the omitted procedure less important.
B
28. A management representation letter would ordinarily be dated as of the a. Date the report is delivered to the entity audited. b. Date the financial statements were approved by the client management. c. Balance sheet date of the latest period reported on. d. Date a letter of audit inquiry is received from the entity's attorney of record.
B
6. Assertions used by the auditor fall into three categories. Existence is included under a. Assertions about classes of transactions and events for the period under audit. b. Assertions about account balances at the period end. c. Assertions about presentation and disclosure. d. All of the above.
B
8. Shortly after the financial statements have been issued, the auditor becomes aware of a material subsequent event, requiring adjustment of the financial statements. Steps are taken to prevent reliance on the previously issued financial statements and the auditor is satisfied after performing the necessary audit procedures. Accordingly: a. The old audit report is re-issued after revising the audit report date. b. A new audit report is issued, with an emphasis of a matter paragraph to discuss the reason for the revision of the previously issued financial statements and the earlier report issued by the auditor. c. A new audit report is issued, without an emphasis of a matter paragraph since to add an explanation would increase the chances of confusion on the part of the readers of the financial statements. d. The old audit report is re-issued after revising the audit report date, and after adding an emphasis of a matter paragraph to discuss the reason for the revision of the previously issued financial statements and the earlier report issued by the auditor.
B
8. Which of the following is not a procedure that is designed to provide evidence about the existence of loss contingencies? A. Obtaining a lawyers' letter. B. Confirming accounts payable. C. Reviewing the minutes of board of directors' meetings. D. Review correspondence with banks.
B
1. According to PSA 560, 'subsequent events' refer to: a. Events occurring between the period end and the date of the auditor's report. b. Facts discovered after the date of the auditor's report. c. Events occurring between the period end and the date of the auditor's report and facts that become known to the auditor after the date of the auditor's report. d. Events occurring between the week immediately before the end of the period and the date of the auditor's report.
C
1. Analytical procedures are required as a part of the A. Detailed tests of balances. B. Internal control assessment. C. Overall review at the conclusion of the audit. D. Substantive testing.
C
1. Which statement is incorrect regarding the auditor's responsibilities and audit procedures regarding related parties and transactions with such parties? a. The auditor should perform audit procedures designed to obtain sufficient appropriate audit evidence regarding the identification and disclosure by management of related parties and the effect of related party transactions that are material to the financial statements. b. An audit cannot be expected to detect all related party transactions. c. The auditor is responsible for the identification and disclosure of related parties and transactions with such parties. d. The auditor needs to have a level of knowledge of the entity's business and industry that will enable identification of the events, transactions and practices that may have a material effect on the financial statements.
C
10. The auditor notices significant fluctuations in key elements of the company's financial statements. If management is unable to provide an acceptable explanation, the auditor should a. Withdraw from the engagement. b. Consider the matter a scope limitation. c. Perform additional audit procedures to investigate the matter further. d. Intensify the examination with the expectation of detecting management fraud.
C
10. The primary source of information to be reported about litigation, claims, and assessments is the a. Client's lawyer b. Court records c. Client's management d. Independent auditor
C
11. Regarding litigation, the auditor's primary means of obtaining corroboration of management's information is a: a. Letter of corroboration from the auditor's lawyer upon review of the legal documentation. b. Confirmation of claims and assessments from the other parties to the litigation. c. Letter of audit inquiry to the client's lawyer. d. Confirmation of claims and assessments from an officer of the court presiding over the litigation.
C
16. In evaluating whether there is a sufficiently low probability of material misstatement in the financial statements, the auditors accumulate: A. Likely misstatements in the financial statements. B. Known misstatements in the financial statements. C. Known, projected and other estimated misstatements in the financial statements. D. Known, projected and potential misstatements in the financial statements.
C
16. The primary objective of analytical procedures used in the final review of the audit is to a. Obtain evidence from details tested to corroborate particular assertions. b. Identify areas that represent specific risks relevant to the audit. c. Assist the auditor in assessing the validity of the conclusions reached. d. Satisfy doubts when questions arise about a client's ability to continue in existence.
C
19. Soon after Ate Gurl's audit report was issued, Ate Gurl learned of certain related party transactions that occurring during the year under audit. These transactions were not disclosed in the notes to the financial statements. Ate Gurl should a. Plan to audit the transactions during the next engagements. b. Recall all copies of the audited financial statements. c. Determine whether the lack of disclosure would affect the auditor's report. d. Ask the client to disclose the transactions in subsequent interim statements.
C
2. In auditing the balance sheet, most revenue and expense accounts are also audited. Which accounts are most likely to be audited when auditing Accounts Receivable? A. Sales and Cost of Goods Sold. B. Interest and Bad Debt Expense. C. Sales and Bad Debt Expense. D. Interest and Cost of Goods Sold.
C
2. The following events occurred subsequent to the balance sheet date, December 31, 2010. Which of these would require an adjustment to the financial statements before they are issued? a. A Company converted majority of its convertible bonds into ordinary shares. b. B Company lost all its cement line due to a flash flood that hit the area. c. C Company settled its damages payable, originally estimated at P500,000, by paying P525,000 to the parties concerned. The damages have risen from an accident in C Company's plant in October 2009. d. D Company acquired E Company through stock acquisition.
C
2. When auditing related-party transactions, an auditor places primary emphasis on a. Confirming the existence of the related parties. b. Verifying the valuation of the related-party transactions. c. Evaluating the disclosure of the related-party transactions. d. Ascertaining the rights and obligations of the related parties.
C
21. The auditor should obtain evidence of management's acknowledgment of responsibility for I. The fair presentation of the financial statements in accordance with GAAP in the Philippines. II. Approval of the financial statements. a. I only b. II only c. Both I and II d. Neither I nor II
C
21. Which of the following auditing procedures is ordinarily performed last? A. Reading of the minutes of the directors' meetings. B. Confirming accounts payable. C. Obtaining a management representation letter. D. Testing of the purchasing function.
C
22. A purpose of a management representation letter is to reduce a. Audit risk to an aggregate level of misstatement that could be considered material. b. An auditor's responsibility to detect material misstatements only to the extent that the letter is relied on. c. The possibility of a misunderstanding concerning management's responsibility for the financial statements. d. The scope of an auditor's procedures concerning related party transactions and subsequent events.
C
23. The date the auditor grants the client permission to use the audit report in connection with the financial statements is the: A. Last day of significant field work. B. Report cutoff date. C. Report release date. D. Representation date
C
23. When an audit is made in accordance with Philippine Standards on Auditing, the auditor should always a. Document the understanding of the client's internal control and the basis for all conclusions about the assessed level of control risk for financial statement assertions. b. Employ analytical procedures as substantive tests to obtain evidence about specific assertions related to account balances. c. Obtain appropriate representations from management. d. Observe the taking of physical inventory on the balance sheet date.
C
23. Written client representation letters are normally signed by the a. President and the chairperson of the board b. Treasurer and the internal auditor c. Chief executive officer and the chief financial officer d. Corporate counsel and the audit committee chairperson
C
24. For which of the following matters should an auditor obtain written management representations? a. Management's cost-benefit justifications for not correcting internal control weaknesses. b. Management's knowledge of future plans that may affect the price of the entity's stock. c. Management's compliance with contractual agreements that may affect the financial statements. d. Management's acknowledgment of its responsibility for employee's violations of laws.
C
24. Management representation letters should be dated as of the date of the: a. Balance sheet b. Latest interim financial statements c. Auditor's report d. Latest related party transaction
C
27. If management refuses to furnish certain written representations that the auditor believes are essential, which of the following is appropriate? a. The auditor can rely on oral evidence relating to the matter as a basis for an unqualified opinion. b. The client's refusal does not constitute a scope limitation that may lead to a modification of the opinion. c. The client's refusal may have an effect on the auditor's ability to rely on other representations of management. d. The auditor should express an adverse opinion because of management's refusal.
C
3. After determining that a related-party transaction has, in fact, occurred, and auditor should a. Add a separate paragraph to the auditor's standard report to explain the transaction. b. Perform analytical procedures to verify whether similar transactions occurred, but were not recorded. c. Obtain an understanding of the business purpose of the transaction. d. Substantiate that the transaction was consummated on terms equivalent to an arm's-length transaction
C
3. Auditors should perform audit procedures relating to subsequent events? A. Through year end. B. Through issuance of the audit report. C. Through the last day of field work. D. For a reasonable period after year end.
C
4. After issuing a report, an auditor has no obligation to make continuing inquiries or perform other procedures concerning the audited financial statements unless: a. The auditor becomes aware of a fact which existed at the date of the auditor's report and which, if known at that date, may have caused the auditor to amend the auditor's report. b. Management of the entity has made a written request for the external auditor to re-print the report. c. The auditor becomes aware of a fact which existed at the date of the financial statements for the latest period, and which, if known at that date, may have caused the auditor to modify the auditor's report. d. Management of the entity admits to a material fraud which has been committed between the date of the financial statements and the date of the auditor's report.
C
4. Which of the following least likely indicates the existence of previously unidentified related parties? a. Transactions which have abnormal terms of trade., such as unusual prices, interest rates, guarantees, and repayment terms. b. Transactions which lack an apparent logical business reason for their occurrence. c. Transactions in which substance does not differ from form. d. Unrecorded transactions such as the receipt or provision of management services at no charge.
C
5. Which statement is correct regarding the audit evidence? a. The greater the risk, the less audit evidence is likely to be required. b. The higher the quality, the more may be required c. Merely obtaining more audit evidence may not compensate for its poor quality. d. Obtaining audit evidence relating to a particular assertion is a substitute for obtaining audit evidence regarding another assertion.
C
6. An example of an internal control weakness is to assign the payroll department the responsibility for: A. Preparing the payroll expense distribution. B. Preparing the payroll checks. C. Authorizing increases in pay. D. Preparing journal entries for payroll expense.
C
7. Refer to no. 6. Despite asking the client not to release the financial statements and the audit report thereon, the client issued both documents. Related to this, what is the best course of action on part of the auditor? a. Issue a modified report, as a corrigendum, together with a written apology addressed to the board of directors and shareholders of the entity. b. Issue a modified report, as a corrigendum, but without a written apology. c. Ask for legal advice, and take action to prevent reliance on the auditor's report. d. Issue a modified report, with a qualified or adverse opinion, to be printed in a newspaper of general circulation, no less than 15 days after the issuance of the unamended financial statements and the original audit report.
C
9. Nimingho, CPA, dated her audit report (on a client's 2013 financial statements) as of February 10, 2014, except for Note J, as to which the date is March 3, 2014. In this case, Nimingho is taking responsibility for: a. All subsequent events occurring through March 3, 2014. b. All subsequent events occurring through February 10, 2014 only. c. All subsequent events occurring through February 10, 2014, and the specific subsequent event referred to in Note J through March 3, 2014. d. Only the specific subsequent event referred to in Note J through March 3, 2014.
C
11. In evaluating the assumptions on which the estimate is based, the auditor would least pay particular attention to assumptions which are a. Subjective. b. Sensitive to variation. c. Susceptible to material misstatement. d. Reasonable in light of actual results in prior periods.
D
11. Which of the following is not a procedure that auditors typically perform to search for significant events during the subsequent period? A. Review minutes of board of directors' meeting. B. Review the latest available interim financial statements. C. Inquire about any unusual adjustments made subsequent to the balance sheet date. D. Review changes in internal control during the period subsequent to the balance sheet date.
D
13. An attorney responding to an auditor as a result of the client's letter of audit inquiry may appropriately limit the response to a. Items, which have high probability of being resolved to the client's detriment. b. Asserted claims and pending or threatened litigation. c. Legal matters subject to unsettled points of law, uncorroborated information, or other complex judgments. d. Matters to which the attorney has given substantive attention in the form of legal consultation or representation.
D
13. Authorization of which of the following is least likely to be found during a review of the minutes of the board of directors? A. Dividends. B. New debt issuance. C. New bank accounts. D. Write-off of trade accounts receivable.
D
14. Which of the following is not a procedure normally performed while completing the audit? A. Obtain a lawyer's letter. B. Obtain a representations letter. C. Perform an overall review using analytical procedures. D. Obtain confirmation of capital stockholdings from shareholders.
D
15. A client acquired 30% of its outstanding capital stock after year-end and prior to the completion of the auditor's fieldwork. The auditor should a. Disclose the acquisition in the opinion paragraph of the auditor's report. b. Advise management to adjust the balance sheet to reflect the acquisition. c. Issue pro forma financial statements giving effect to the acquisition as if it had occurred at year-end. d. Advise management to disclose the acquisition in the notes to the financial statements.
D
15. The appropriate date for the client to specify as the effective date in the audit inquiry to a lawyer is: a. The balance sheet date. b. Seven working days after the request is received by the lawyer. c. The date of the audit inquiry itself. d. The expected date of the completion of audit field work.
D
17. Which of the following material events occurring subsequent to the balance sheet date would require an adjustment to the financial statements before they could be issued? A. Sale of long-term debt or capital stock. B. Loss of a plant as a result of a flood. C. Major purchases of a business which is expected to double the sales volume. D. Settlement of litigation in excess of the recorded liability.
D
17. Which of the following statements best expresses the auditor's responsibility with respect to events occurring in the subsequent events period? a. The auditor has no responsibility for events occurring in the subsequent period unless these events affect transactions recorded on or before the balance sheet date. b. The auditor's responsibility is to determine that transactions recorded on or before the balance sheet date actually occurred. c. The auditor is fully responsible for events occurring in the subsequent period and should extend all detailed procedures through the last day of field work. d. The auditor is responsible for determining that a proper cutoff has been made and for performing a general review of events occurring in the subsequent period.
D
18. Peemak, CPA, believes there is substantial doubt about the ability of Washiwep Washineyney Co. to continue as a going concern for a reasonable period of time. In evaluating Washiwep Washineyney Co.'s plans for dealing with the adverse effects of future conditions and events, Peemak most likely would consider, as a mitigating factor, Washiwep Washineyney Co.'s plans to: a. Accelerate R&D projects related to future products. b. Accumulate treasury stock at prices favorable to Alice Co.'s historic price range. c. Purchase equipment and production facilities currently being leased. d. Negotiate reductions in required dividends being paid on preference shares.
D
20. Auditors often request that the audit client send a letter of inquiry to those attorneys who have been consulted with respect to litigation, claims, or assessments. The primary reason for this request is to provide the auditors with: A. An estimate of the dollar amount of the probable loss. B. An expert opinion as to whether a loss is possible, probable or remote. C. Information concerning the progress of cases to date. D. Corroborative audit evidence.
D
22. Management representation letters a. Reduce inherent risk and control risk to an aggregate level of misstatement that could be considered material. b. Increase an auditor's responsibility to detect material misstatements only to the extent that the letter is relied on. c. Clarifies the scope of a professional accountant's procedures concerning the going concern assumption and events after the balance sheet date. d. Reduce the possibility of misunderstanding or misinterpretation concerning management's responsibility for the financial statements.
D
22. Which of the following is not correct relating to representation letters? A. They are ordinarily dated as of the date of the audit report. B. They are signed by members of top management. C. They must be obtained for audits. D. They often serve as a substitute for the application of other procedures.
D
26. Management's refusal to furnish a written representation letter on a matter, which the auditor considers essential, constitutes a. Prima facie evidence that the financial statements are not presented fairly. b. A violation of the International Corrupt Practices Act. c. An uncertainty sufficient to preclude an unqualified opinion. d. A scope limitation sufficient to preclude an unqualified opinion.
D
4. Which of the following procedures would an auditor most likely perform while evaluating audit findings at the conclusion of an audit? A. Obtain assurance from the entity's attorney that all material litigation has been disclosed in the financial statements. B. Verify the clerical accuracy of the entity's proof of cash and its bank cutoff statement. C. Determine whether reportable conditions have corrected. D. Develop an estimate of the total likely misstatement in the financial statements.
D
8. Which statement is incorrect regarding the auditor's attendance at physical inventory counting? a. When inventory is material to the financial statements, the auditor should obtain sufficient appropriate audit evidence regarding its existence and condition by attendance at physical inventory counting unless impracticable. b. When the quantities are to be determined by a physical inventory count and the auditor attends such a count, the auditor would ordinarily observe count procedures and perform test counts. c. To obtain assurance that management's procedures are adequately implemented, the auditor would observe employees' procedures and perform test counts. d. The physical inventory count cannot be conducted at a date other than period end.
D
3. Which of the following procedures should an auditor generally perform regarding subsequent events? a. Obtaining an understanding of any procedures management has established to ensure that subsequent events are identified. b. Inquiring of management and, where appropriate, those charged with governance as to whether any subsequent events have occurred which might affect the FS. c. Reading minutes, if any, of the meetings, of the entity's owners, management and those charged with governance, that have been held after the date of the financial statements and inquiring about the matters discussed at any such meetings for which minutes are not yet available. d. Reading the entity's latest subsequent interim financial statement, if any. e. All of these.
E
