Option (c) is the correct answer.
An auditor most likely inquires about
the entity’s legal counsel concerning litigation, claims, and assessments arising after year-end
because it may arise after year-end but before issuance of financial statements for the period.
Which of the following is most likely a procedure that would be performed by the auditor regarding subsequent events?
Option (c) is the correct answer.
An auditor most likely inquires about
the entity’s legal counsel concerning litigation, claims, and assessments arising after year-end
because it may arise after year-end but before issuance of financial statements for the period.
Which of the following statements would an auditor most likely require management to indicate in a written?
Which of the following statements would an auditor most likely require management to indicate in a written representation letter obtained for an audit?
Management acknowledges its responsibilities for
the design and implementation of programs and controls to detect fraud.
Under which of the following circumstances might an auditor disclaim an opinion?
Under which of the following circumstances might an auditor disclaim an opinion? …
There are significant uncertainties affecting the financial statements for which the auditor is unable to obtain sufficient evidence to support management’s assertions
.
Which of the following procedures would an auditor most likely perform?
The correct option is (d).
In order to obtain evidence about subsequent events, an auditor would like to
investigate or examine the changes in long-term debt
which occur after the end of a particular financial period but before the release of the financial statements of an organization.
Which of the following is an example of a Type I subsequent event?
An example of a Type I subsequent event is:
A tornado that destroys an entity’s factory after the balance sheet date
. An event after the balance sheet date that confirms the auditor’s belief (documented prior to the end of the entity’s fiscal year) that a large portion of the entity’s inventory is obsolete.
What is the primary purpose of obtaining written representations?
A written representation is a (written) statement by management provided
to the auditor to confirm certain matters or to support other audit evidence
(ISA 580 Written Representations).
What is appropriate evidence?
Appropriateness of evidence is
the quality of the evidence
, i.e., its relevance and reliability to support the auditor’s opinion. Audit evidence includes information provided in books of accounts as well as information from other sources.
What is an auditor’s primary method to corroborate information on litigation claims and assessments?
An attorney’s letter
is the primary method used to corroborate information on litigation, claims, and assessments.
Which of the following matters is most likely to be included in a management representation letter?
Which of the following matters will an auditor most likely include in a management representation letter?
Management’s acknowledgment of its responsibility to detect employee fraud
.
What does a qualified audit opinion mean?
A qualified opinion is
an auditor’s opinion that the financials are fairly presented, with the exception of a specified area
. Unlike an adverse or disclaimer of opinion, a qualified opinion is generally still acceptable to lenders, creditors, and investors.
When can an auditor issue an unqualified opinion?
It is issued
when the auditor believes that all changes, accounting policies, and their application and effects, have accurately been disclosed
.
What is adverse opinion in auditing?
An adverse opinion is a professional opinion made by an auditor indicating that
a company’s financial statements are misrepresented, misstated, and do not accurately reflect its financial performance and health
.
What are the two most important qualities for an operational auditor?
18) The two most important qualities for an operational auditor to possess are
independence and competence
.
Which of the following is the most reliable type of evidence?
Answer: A.
Confirmation of accounts receivable balance
. Confirmation of accounts receivable balance is considered to be the most reliable because it…
Why would the auditor assess control risk?
Assessment of control risk is a
measure of the auditor’s expectation that internal controls will neither prevent material misstatements from occurring
nor detect and correct them if they have occurred; control risk is assessed for each transaction-related audit objective in a cycle or class of transactions.
