Saturday Quiz Flashcards
Which of the following management roles would typically be acknowledged in a management representation letter?
Management has responsibility for the design of controls to detect fraud
Which of the following is not a required procedure to be performed regarding supplementary information?
Recomputing the underlying accounting data used to prepare
The supplementary information
Precision is a statistical measure of the maximum likely difference between the sample estimate and the true but unknown population total, and is directly related to…
Materiality
Which of the following procedures most likely would assist an auditor to identify litigation, claims, and assessments?
Read the file correspondence from taxing authorities
Comparative financial statements include the prior year’s statements that were audited by a predecessor auditor whose report is not presented. If the predecessor’s report was unqualified, the successor should…
Indicate in the auditor’s report that the predecessor auditor
expressed an unqualified opinion.
An auditor should examine minutes of board of directors’ meetings…
Through the date of his report
Analytical procedures used in planning an audit should focus on…
Enhancing the auditor’s understanding of the client’s business
If an accountant issues a document including both a separate restricted use report and a general use report, both reports should be restricted to specified parties. This statement is…
False
What is a procedure an auditor would likely perform to test controls relating to management’s assertion about the completeness of cash receipts for cash sales at a retail outlet?
Observe the consistency of the employees’ use of cash registers
and tapes
In assessing the objectivity of internal auditors, an independent auditor should…
Determine the organizational level to which the internal auditors
Report
An independent auditor is engaged to submit unaudited financial statements to a client that are not expected to be used by third parties. In documenting her understanding with the client, what should not be included in the engagement letter?
A description of the report
A successor accountant is required to communicate with a predecessor accountant in connection with acceptance of a compilation or review engagement. This statement is…
False
A letter issued on significant deficiencies relating to an entity’s internal control observed during an audit of financial statements should include a…
Restriction on the distribution of the report
The auditor should report supplementary information in either…2
1 an explanatory paragraph following the opinion paragraph in
auditor’s report
2 in separate report on supplementary information
In confirming accounts receivable, an auditor decided to confirm customers’ account balances rather than individual invoices. Which of the following most likely would be included with the client’s confirmation letter?
A client-prepared statement of the account showing the details
Of the customer’s account balance
