Auditing and Assurance Services: A Systematic Approach, 7/e - Chap 17

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Completing the Audit Engagement

When auditing contingent liabilities, which of the following procedures would generally be least effective:

When auditing contingent liabilities, which of the following procedures would generally be least effective:

Which of the following is an example of a contingent liability?

Warranty payable.

Which of the following is an example of a subsequent event that requires disclosure in the notes to the financial statements (but not adjustments to the financial statements)?

A chemical explosion at a customer's warehouse causes all accounts receivable from that customer to be uncollectible.

With respect to the issuance of an audit report which is dual dated because of an event occurring after the date on which the auditor has obtained sufficient appropriate audit evidence but before the audit report was issued, the auditor's responsibility for events occurring after the completion of fieldwork is:

Limited to the specific event referred to.

Analytical procedures performed at the overall review stage of an audit appear to indicate that several accounts have unexpected balances and/or relationships. The result of these procedures most likely would indicate that:

Additional detail tests of account balances are necessary.

Which of the following conditions or events most likely would cause an auditor to have substantial doubt about an entity's ability to continue as a going concern?

Normal trade credit from major suppliers has recently been restricted or denied.

According to the Public Company Accounting Oversight Board's [PCAOB] third auditing standard related to auditor documentation and retention, an auditor should retain audit documentation for how long of a period of time beyond completion of the engagement?

Seven years, unless a longer period is required by state law.

Dewey, Needham, & Howe accept an engagement to audit the 2009 financial statements [F/S] of Syracuse Co. and begin their fieldwork in September 2009. Syracuse (December 31st year-end) gives the unaudited F/S to the auditors on 1/17/2010. The auditors completed the fieldwork on 3/12/2010 and distributed the audit report on 3/21/2010. The client's letter of representation should be dated ________ and the audit report should be dated __________:

March 12th; March 12th

To which of the following matters would an auditor not apply materiality limits when obtaining specific written client representations?

Fraud involving employees with significant roles in the internal control system.

Which of the following material events occurring after the issuance of an auditor's report would most likely cause the auditor to make further inquiries about the previously issued financial statements to determine if they may need to be restated?

New information is discovered leading the auditor to believe that lease transactions during the audit period should have been accounted for as capital rather than operating leases.

According to FASB ASC Topic 450, "Contingencies," which of the following terms means that the future event is "likely to occur"?

Probable.

A lawyer's response to an auditor's inquiry concerning litigation, claims, and assessments may be limited to matters that are considered individually or collectively material to the client's financial statements. Which parties should reach an understanding on the limits of materiality for this purpose?

The lawyer and the auditor.

In most cases, commitments:

Are disclosed in a footnote to the financial statements.

All of the following are typical audit procedures used to identify subsequent events except:

Extending the search for unrecorded liabilities to the report date.

The auditor must communicate several items to "those charged with governance" at the conclusion of the audit. Which of the following is not a typical communication?

The planned audit procedures for the audit.

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