Which of these persons generally does not participate in writing the management letter?

2. Which of the following statements is most likely to be included in an attorney letter?
A. “Certain representations in this letter are described as being limited to matters that are material.”
B. “Please furnish to our auditors such explanation, if any, that you consider necessary to supplement the foregoing information.”
C. “Our work enabled us to notice some actions that could enhance the profitability of the Company.”
D. “If any unasserted claims or assessments are omitted from this disclosure, please provide this information directly to our
auditors.”

“Please furnish to our auditors such explanation, if any, that you consider necessary to supplement the foregoing information.”

3.
The auditing standards regarding subsequently discovered facts refers to knowledge obtained after
A. The date the fieldwork began.
B. The date of the auditor’s report.
C. The date interim audit work was complete.
D. The date of the financial statements.

The date of the auditor’s report.

6. Which of the following normally occurs earliest in the audit examination?
A. Preparation of the management letter.
B. Review of audit documentation.
C. Discovery of an omitted audit procedure.
D. Dual dating the auditor’s report on the entity’s financial statements for subsequent events that exist at the date of the financial
statements.

Review of audit documentation.

8.
Which of the following statements is not true with respect to written representations?
A. They are dated the same date as the auditor’s reports.
B. Auditors use them to corroborate information received during the audit from the client and its employees.
C. They should address management’s responsibility for designing internal control to prevent and detect fraud.
D. The failure of management to furnish them is a significant scope limitation, resulting in either an adverse opinion or a disclaimer
of opinion.

The failure of management to furnish them is a significant scope limitation, resulting in either an adverse opinion or a disclaimer of opinion

9. Which of the following is ordinarily performed last in the audit examination?
A. Securing a signed engagement letter from the client.
B. Performing a review for subsequent events.
C. Obtaining signed written representations.
D. Performing tests of controls.

Obtaining signed written representations.

10. The primary reason auditors request responses to attorney letters is to provide auditors
A. Corroboration of the information furnished by management about litigation, claims, and assessments.
B. The probable outcome of asserted claims and pending or threatened litigation.
C. The attorney’s opinions of the client’s historical experiences in recent similar litigation.
D. A description and evaluation of litigation, claims, and assessments that existed at the date of the financial statements.

Corroboration of the information furnished by management about litigation, claims, and assessments.

15. Subsequent knowledge of which of the following would cause the entity to adjust its December 31 financial statements?
A. Storm damage of $1 million to the entity’s buildings on March 1.
B. Settlement of a damage lawsuit for a customer’s injury sustained February 15 for $10,000.
C. Sale of an issue of new stock for $500,000 on January 30.
D. Settlement of litigation in February for $100,000 that had been estimated at $12,000 in the December 31 financial statements.

Settlement of litigation in February for $100,000 that had been estimated at $12,000 in the December 31 financial statements.

16. Which of the following substantive procedures would auditors most likely perform to obtain evidence about the occurrence of subsequent events?
A. Send confirmations to vendors with whom the client normally does business but for which no balance in accounts payable is
noted.
B. Confirm bank accounts established after the date of the financial statements.
C. Recompute a sample of large-dollar transactions occurring after the date of the financial statements for arithmetic accuracy.
D. Investigate changes in shareholders’ equity occurring after the date of the financial statements.

Investigate changes in shareholders’ equity occurring after the date of the financial statements.

17.
What is an auditor’s primary method to corroborate information on litigation, claims, and assessments?
A. Reviewing the response from the client’s lawyer to a letter of audit inquiry.
B. Verifying attorney-client privilege through interviews.
C. Examining legal invoices sent by the client’s attorney.
D. Reviewing the written representation letter obtained from management.

Reviewing the response from the client’s lawyer to a letter of audit inquiry.

21. Auditors have a responsibility related to management’s disclosure of new information related to subsequent events until
A. The following year’s date of the financial statements.
B. The audit report release date.
incorrect The date of the auditor’s report.
D. The date of the financial statements.

The audit report release date.

22. The scope of an audit is not restricted when an attorney letter limits the response to
A. The probable outcome of asserted claims and pending or threatened litigation.
B. The attorney’s opinion of the entity’s historical experience in recent similar litigation.
C. Matters to which the attorney has given substantive attention in the form of legal representation.
D. An evaluation of the likelihood of an unfavorable outcome of the matters disclosed by the entity.

Matters to which the attorney has given substantive attention in the form of legal representation.

24.
After the audit report release date, auditors determine that an important auditing procedure was omitted. Which of the following initial courses of action is most appropriate?
A. Engage another public accounting firm to conduct a quality assurance review.
B. Perform the omitted procedure or an alternative procedure.
C. Determine whether the omitted procedure is important in supporting the auditors’ opinion on the entity’s financial statements.
D. Notify the board of directors and regulatory agencies that are currently relying on auditors’ reports.

Determine whether the omitted procedure is important in supporting the auditors’ opinion on the entity’s financial statements.

25. A)
For each of the following types of communications, indicate the party issuing or providing the communication, the party receiving the communication, and the time period during which the communication is typically issued. When addressing the time period for item (e), assume the entity is public.

From To When: Acceptance Letter

From Client

To Auditor

Before Engagement

25. B)
For each of the following types of communications, indicate the party issuing or providing the communication, the party receiving the communication, and the time period during which the communication is typically issued. When addressing the time period for item (e), assume the entity is public.

From To When: Attorney letter response

From attorney

To auditor

Near date of auditors report

25. C)
For each of the following types of communications, indicate the party issuing or providing the communication, the party receiving the communication, and the time period during which the communication is typically issued. When addressing the time period for item (e), assume the entity is public.

From To When:
Communication with individuals charged with governance

From auditors

To individuals charged with governance (audit committee)

After Audit

25. D)
For each of the following types of communications, indicate the party issuing or providing the communication, the party receiving the communication, and the time period during which the communication is typically issued. When addressing the time period for item (e), assume the entity is public.

From To When: Engagement letter

From Auditor

To Client

Before engagement

25. E)
For each of the following types of communications, indicate the party issuing or providing the communication, the party receiving the communication, and the time period during which the communication is typically issued. When addressing the time period for item (e), assume the entity is public.

From To When:
Internal control deficiency communication

From auditors

To individuals charged with governance (audit committee)

Prior to audit report release date

25. F)
For each of the following types of communications, indicate the party issuing or providing the communication, the party receiving the communication, and the time period during which the communication is typically issued. When addressing the time period for item (e), assume the entity is public.

From To When: Management letter

From auditors

To client

After audit

25. G)
For each of the following types of communications, indicate the party issuing or providing the communication, the party receiving the communication, and the time period during which the communication is typically issued. When addressing the time period for item (e), assume the entity is public.

From To When: Written representations

From Client

To Auditors

Date of auditors' report

29.
Which of the following substantive procedures should auditors ordinarily perform regarding subsequent events?
A. Review the cutoff bank statements for several months after the date of the financial statements.
B. Compare the latest available interim financial statements with the financial statements being audited.
C. Communicate material weaknesses in internal control to the client’s audit committee.
D. Send second requests to the client’s customers who failed to respond to initial accounts receivable confirmation requests.

Compare the latest available interim financial statements with the financial statements being audited.

31. Assume that Krenzel Company is subject to a class action lawsuit from its customers resulting from the failure of one of its projects. The suit
was filed on November 10, 2014 and properly disclosed in Krenzel’s December 31, 2014 financial statements. Krenzel’s auditors completed
their engagement and their report (along with Krenzel’s financial statements) were released on February 5, 2014. How would a settlement of
this lawsuit on January 17, 2015 be properly reflected in Krenzel’s financial statements?
A. Krenzel would provide a separate disclosure to persons known to be relying on its financial statements to describe the effects
of this settlement.
B. Krenzel would adjust its disclosure of the lawsuit to reflect the effects of this settlement.
C. Krenzel would prepare pro forma financial statements to reveal the effects of this settlement.
D. The financial statements would not reflect the settlement of the lawsuit, since it occurred after the date of the financial
statements.

Krenzel would adjust its disclosure of the lawsuit to reflect the effects of this settlement.

33. Which of these persons generally does not participate in writing the management letter?
A. Client’s accounting and production managers.
B. Public accounting firm’s consulting and tax experts.
C. Client’s outside attorneys.
D. Public accounting firm’s audit team on the engagement.

Client’s outside attorneys.

34. Which of these substantive procedures is not used to obtain evidence about contingencies?
A. Examining terms of sale in sales contracts.
B. Obtaining a letter from the client’s attorney.
C. Scanning expense accounts for credit entries.
D. Reading the minutes of the board of directors’ meetings.

Scanning expense accounts for credit entries.

37. Which of the following parties provides a review of audit documentation for the primary purpose of ensuring that the quality of the work and
reporting is consistent with the quality standards of the public accounting firm?
A. Engagement quality reviewer.
B. Audit manager.
C. Audit supervisor.
D. Engagement partner.

Engagement quality reviewer.

41. Navarre, CPA has just issued his report on Big Blue’s financial statements. Following the audit report release date, he learned of an event that
occurred after the date of the auditors’ report. What is Navarre’s most appropriate response?
A. Withdraw his report on Big Blue’s financial statements and reissue the report following his substantive procedures.
B. Inform users who are currently known to be relying on the financial statements of the nature of the event.
C. Because the event occurred after the date of the auditors’ report, Navarre has no responsibility for the event.
D. Perform the appropriate substantive procedures related to the event and dual date the audit report.

Because the event occurred after the date of the auditors’ report, Navarre has no responsibility for the event.

43. Which of the following is not a subject that appears in written representations in the audit of both public and nonpublic entities?
A. Management’s assessment of the effectiveness of its internal control over financial reporting.
B. Information concerning fraud involving management.
C. Availability of all financial records and related data.
D. Management’s responsibility for the fair presentation of the financial statements.

Management’s assessment of the effectiveness of its internal control over financial reporting.

45.
A. Griffin audited the financial statements of Dodger Magnificat Corporation for the year ended December 31, 2014. She completed gathering sufficient appropriate evidence on January 30 and later learned of a stock split voted by the board of directors on February 5. The financial statements were changed to reflect the split, and she now needs to dual date the report on the entity’s financial statements. Which of the following is the proper form?
A. January 30, 2015, except as to Note X, which is dated February 5, 2015.
B. December 31, 2014, except as to Note X, which is dated February 5, 2015.
C. December 31, 2014, except as to Note X, which is dated January 30, 2015.
D. February 5, 2015, except for the date of the auditor’s report, for which the date is January 30, 2015.

January 30, 2015, except as to Note X, which is dated February 5, 2015.

46.
A major objective of written representations is to
A. Provide management an opportunity to make assertions about the quantity and valuation of the physical inventory.
B. Shift responsibility for financial statements from the management to auditors.
C. Provide a substitute source of audit evidence for substantive procedures that auditors would otherwise perform.
D. Impress on management its ultimate responsibility for the financial statements and disclosures.

Impress on management its ultimate responsibility for the financial statements and disclosures.

47. Which of the following would ordinarily not be performed in the auditors' examination of litigation, claims, and assessments?
A. Confirm litigation, claims, and assessments with parties bringing suit or action against the client.
B. Inquire of client management with respect to litigation, claims, and assessment.
C. Examine documentary evidence maintained by the client with respect to litigation, claims, and assessments.
D. Read minutes of meetings of stockholders, directors, and appropriate committees.

Confirm litigation, claims, and assessments with parties bringing suit or action against the client.

49.
Which of the following best describes the role of analytical procedures near the end of the audit engagement?
A. To identify accounts that appear to be misstated with the intention of planning the nature, timing, and extent of other
substantive procedures.
B. To gather evidence to support one or more assertion(s) related to the account balance or class of transactions.
C. To provide an overall review of the financial information and assessment of the adequacy of evidence gathered during the audit engagement.
D. To identify possible deficiencies in the client’s internal control over financial reporting.

To provide an overall review of the financial information and assessment of the adequacy of evidence gathered during the audit engagement.

51.
Ambrose is auditing the financial statements of Mays (dated December 31, 2014). The date of the auditor’s report is February 17, 2015, and the audit report release date is February 20, 2015. For which of the following matters would Ambrose have the least responsibility?
A. A customer’s deteriorating financial condition that was identified on February 19, 2015.
B. The obsolescence of inventory held on December 31, 2014, that was identified on January 20, 2015.
C. A major loss due to a catastrophe that occurred and was known by Ambrose on March 1, 2015.
D. A merger that was announced by Mays and known by Ambrose on February 12, 2015.

A major loss due to a catastrophe that occurred and was known by Ambrose on March 1, 2015.