Question 1

When Paul Sliz was reviewing existing or possible obligations on the balance sheet, he was told that the outcome for these obligations was uncertain and that the company was awaiting a
Future event. Paul Sliz was reviewing
A) accruals.
B) going concern.
C) materiality.
D) contingent liabilities.

Accepted Answer

Paul Sliz was reviewing obligations on the balance sheet that were uncertain and depended on a future event. This indicates that he was reviewing contingent liabilities, which are potential obligations that may or may not become actual obligations depending on the outcome of a future event. Accruals are recognized expenses or revenues that have been incurred but not yet paid or received, going concern refers to the company's ability to continue operating into the future, and materiality refers to the significance of an item in relation to the financial statements as a whole.

Question 2

The final phase of an audit is to assess all of the audit evidence obtained and determine
whether it is sufficient and appropriate.

Accepted Answer

This statement is true. The final phase of an audit involves evaluating all of the audit evidence to determine whether it supports the audit opinion and whether it is sufficient and appropriate. This is a critical step in ensuring the audit is reliable and accurate.

Question 3

A limitation on the scope of the auditor's work could result from an inability to perform
procedures or an imposition by the entity.

Accepted Answer

Sometimes the auditor may not be able to perform certain procedures due to limitations in the scope of their work, such as lack of access to information or inability to physically observe certain processes. In other cases, the entity may impose restrictions on the scope of the auditor's work, which could also limit the effectiveness of their audit.

Question 4

An error is an intentional misstatement in the client's financial statements.

Accepted Answer

An error is an unintentional misstatement, while an intentional misstatement is considered fraud.

Question 5

Matters of governance that the auditor may wish to discuss with those charged with
governance include any practical difficulties encountered in performing the audit.

Accepted Answer

The statement is true. Matters of governance, including practical difficulties encountered in performing the audit, should be discussed with those charged with governance.

Question 6

Syed Hussein, the partner on the Rimouski Copper audit called a meeting of his senior staff during the engagement wrap-up. Which of the following areas would be the least likely to be
Covered during the wrap up?
A) consideration of the amount used for materiality
B) removal of all unnecessary documentation from the engagement files
C) performing analytical procedures on the adjusted financial statements
D) preparation of budgets for the following year's audit

Accepted Answer

The preparation of budgets for the following year's audit would not typically be covered during the engagement wrap-up as it is a forward-looking task. The other options, such as considering materiality, removing unnecessary documentation, and performing analytical procedures, are all part of the final steps in completing an audit engagement.

Question 7

Sufficiency relates to the quality of audit evidence gathered.

Accepted Answer

The answer of Sufficiency relates to the quality of audit...

Question 8

As soon as practicable, the auditor should communicate weaknesses in internal controls to
management or those charged with governance.

Accepted Answer

This is a requirement under generally accepted auditing standards. The auditor should communicate any significant deficiencies or material weaknesses in internal control promptly to management or those charged with governance.

Question 9

An unqualified audit report with an emphasis of matter should be issued if a subsequent
event has occurred that has resulted in a new audit report being prepared on a revised financial
statement.

Accepted Answer

An unqualified audit report with an emphasis of matter is issued when there is a matter that is appropriately presented or disclosed in the financial statements that, in the auditor's judgment, is of such importance that it is fundamental to users' understanding of the financial statements, but does not affect the auditor's opinion. If a subsequent event occurs that requires a revision to the financial statements and a new audit report is issued, the previous audit report becomes irrelevant and a new audit report is required.

Question 10

When Samantha Dieter was training her staff about the auditor's responsibility for subsequent events she made the two following statements:
(i) Type 2 subsequent events are those events that do not result in changes to financial statements.
(ii) Type 1 subsequent events do not require adjustments to financial statements.
Which of the above statements, if any is true?
A) (i)
B) (ii)
C) (i) and (ii)
D) neither (i) nor (ii)

Accepted Answer

Type 2 subsequent events are those that provide evidence about conditions that did not exist at the balance sheet date and do not result in changes to the financial statements, making statement (i) true. Type 1 subsequent events require adjustments, making statement (ii) false.

Question 11

A type 1 subsequent event provides evidence with respect to conditions that developed
subsequent to year-end.

Accepted Answer

A type 1 subsequent event provides evidence about conditions that existed at the balance sheet date, not conditions that developed after the year-end.

Question 12

Ron Nucci is trying to gather sufficient appropriate evidence. Which of these are factors to consider in evaluating the sufficiency and appropriateness of audit evidence?
A) audit risk
B) control risk
C) quality of information obtained
D) none of the above

Accepted Answer

The sufficiency and appropriateness of audit evidence depends on the quality of information obtained during the audit. Factors such as audit risk and control risk are important in determining the nature and extent of audit procedures, but do not directly impact the sufficiency and appropriateness of audit evidence.

Question 13

Generally, the further into the future an event is likely to take place, the greater the
uncertainty surrounding the event.

Accepted Answer

As time passes, there are more variables and factors that can potentially impact an event, making it more difficult to predict with certainty.

Question 14

The uninsured loss of inventory as a result of fire subsequent to year-end is an example of a
type 2 subsequent event.

Accepted Answer

The uninsured loss of inventory as a result of fire subsequent to year-end is an example of a type 2 subsequent event since it provides additional information about the value of inventory at the balance sheet date, but does not affect the financial statements for the period ended.

Question 15

The auditor's responsibility for the financial statements includes selecting and applying
appropriate accounting policies.

Accepted Answer

The responsibility for selecting and applying appropriate accounting policies lies with management, not the auditor. The auditor's responsibility is to ensure that management's chosen accounting policies are appropriate and accurately reflect the financial position of the company.

Question 16

Subsequent events procedures are normally performed through to and including the date of
the auditor's report.

Accepted Answer

Subsequent events procedures are performed up to and including the date of the auditor's report. This helps ensure the financial statements are free from material misstatements due to events that occurred after the balance sheet date.

Question 17

The client's compliance with contractual requirements of operating agreements is an example
of a qualitative factor that may cause misstatements of quantitatively immaterial amounts to be
considered material.

Accepted Answer

Qualitative factors such as compliance with contractual requirements can be significant enough to affect the overall impression of financial statements, even if the individual amount is not material in and of itself. Therefore, such factors may cause misstatements of quantitatively immaterial amounts to be deemed material.

Question 18

At year-end Marissa Albion sent out accounts receivable confirmations. One of the major customers of her client confirmed that they would not be able to pay off the receivable. The
Client subsequently went bankrupt and an aggrieved shareholder of Marissa's client sued her
Firm. What type of subsequent event was this?
A) Type 1
B) Type 2
C) Type 1 and 2
D) this was not a subsequent event

Accepted Answer

This is a Type 1 subsequent event, which provides additional evidence about conditions that existed at the balance sheet date and affects the estimates inherent in the financial statements. The customer's inability to pay existed at year-end, and the bankruptcy confirms this condition.

Question 19

When Eddie Okulicz released the audit report of C Corp. he did not anticipate that there would follow an announcement two days later that several days after year-end his client's
Foreign subsidiary had been nationalized by Libya for non-compliance to environmental laws of
The country. What type of subsequent event was this?
A) Type 1
B) Type 2
C) Type 1 and 2
D) this was not a subsequent event

Accepted Answer

This is a Type 2 subsequent event, which is an event that occurs after the balance sheet date but before the financial statements are issued. This event is not related to conditions that existed before the balance sheet date, but it does provide additional information about the client's financial condition that should be disclosed in the financial statements.

Question 20

14 A public auditor in practice can only perform audits and review and is prohibited from
completing non-assurance engagements such as compilations of financial information and tax
engagements.

Accepted Answer

This statement is false. A public auditor can perform non-assurance engagements such as compilations of financial information and tax engagements, in addition to audits and reviews. However, they should make it clear to users of the financial information that these services are not assurance engagements and do not provide the same level of assurance as an audit or review.

Quiz 12: Completing and Reporting on the Audit

When Paul Sliz was reviewing existing or possible obligations on the balance sheet, he was told that the outcome for these obligations was uncertain and that the company was awaiting a Future event. Paul Sliz was reviewing

The final phase of an audit is to assess all of the audit evidence obtained and determine whether it is sufficient and appropriate.

A limitation on the scope of the auditor's work could result from an inability to perform procedures or an imposition by the entity.

An error is an intentional misstatement in the client's financial statements.

Matters of governance that the auditor may wish to discuss with those charged with governance include any practical difficulties encountered in performing the audit.

Syed Hussein, the partner on the Rimouski Copper audit called a meeting of his senior staff during the engagement wrap-up. Which of the following areas would be the least likely to be Covered during the wrap up?

Sufficiency relates to the quality of audit evidence gathered.

As soon as practicable, the auditor should communicate weaknesses in internal controls to management or those charged with governance.

An unqualified audit report with an emphasis of matter should be issued if a subsequent event has occurred that has resulted in a new audit report being prepared on a revised financial statement.

A type 1 subsequent event provides evidence with respect to conditions that developed subsequent to year-end.

Ron Nucci is trying to gather sufficient appropriate evidence. Which of these are factors to consider in evaluating the sufficiency and appropriateness of audit evidence?

Generally, the further into the future an event is likely to take place, the greater the uncertainty surrounding the event.

The uninsured loss of inventory as a result of fire subsequent to year-end is an example of a type 2 subsequent event.

The auditor's responsibility for the financial statements includes selecting and applying appropriate accounting policies.

Subsequent events procedures are normally performed through to and including the date of the auditor's report.

The client's compliance with contractual requirements of operating agreements is an example of a qualitative factor that may cause misstatements of quantitatively immaterial amounts to be considered material.

14 A public auditor in practice can only perform audits and review and is prohibited from completing non-assurance engagements such as compilations of financial information and tax engagements.