acct 241 ch 11

Which of the following activities is ordinarily performed prior to year end?
A. audit documentation review
B. roll forward work
C. interim testing
D. subsequent event review

Procedures used to allow auditors to extend their conclusions to the end of the year under audit are referred to as:
A. test of controls
B. interim testing
C. roll forward work
D. analytical procedures

Which of the following transaction cycle(s) are most closely related to gains or losses on disposals of property, plant and equipment?
A. acquistion/expenditure cycle
B. finance/investment cycle
C. revenue/collection cycle
D. a and c above

Which of the following procedures is normally not considered in the auditors' substantive procedures for revenue and expense accounts?
A. individually confirm significant transactions with 3rd parties
B. examine "miscellaneous", "other", and "clearing" accounts classified as revenues and expenses
C. perform analytical procedures to verify the overall reasonableness of revenue and expense accounts
D. evaluate evidence gathered in the audit of balance sheet accounts and examination of transaction cycles

Which of the following is typically the auditors' initial procedure performed to identify litigation, claims, and assessments?
A. perform analytical procedures
B. obtain an attorney letter from the entity's legal counsel
C. inquire of the entity regarding the existence of litigation, claims, and assessments
D. confirm litigation, claims, and assessments with 3rd party litigants

Which of the following information is not included in the attorney letter?
A. a description of each item identified by management, including the nature of the case and management responses or intended responses to the case
B. the attorney's expert opinion as to the probability of an unfavorable judgement against the entity
C. a list of pending or threatened litigation, claims, or assessments
D. an estimate of the range of potential loss

Which of the following communications is ordinarily signed by auditors?
A. attorney letter
B. management respresentation letter
C. internal control deficiency letter
D. all of the above are signed by the auditor

Which of the following statements is true with respect to management representations?
A. management representations are dated as of the balance sheet date
B. management representations are signed by auditors and delivered to the entity's officers
C. management representations are used to corroborate information obtained during the audit
D. management representations may serve as a substitute for various types of substantive

Which of the following procedures would not be performed by auditors to identify subsequent events?
A. obtain attorney letters from legal counsel engaged by the entity
B. read minutes of meetings of shareholders, directors, and appropriate committees
C. review prior year financial statements and disclosures
D. inquire of officers and other executitves about various matters

Which of the following types of audit documentation review is focused on ensuring that the quality of audit work and reporting is consistent with the quality standards of the firm?
A. review of work by audit manager and audit partner
B. review of staff work by audit supervisor
C. review of staff work by audit manager
D. review of work by second (reviewing) partner

The main purpose of a management representation letter is to:
A. impress upon management its ultimate responsiblity for the financial statements and disclosures
B. provide management a place to make assertions about the quantity and valuation of the physical inventory
C. shift responsibility for financial statements from the management to the auditor
D. provide a substitute source of auditor evidence for substantive procedures auditors would otherwise perform

Which one of these substantive procedures or sources is not used to obtain evidence about contingencies?
A. examine terms of sale in sales contracts
B. scan expense accounts for credit entries
C. read the minutes of the board of directors' meetings
D. obtain a representation letter from the client's attorney

A type 1 subsequent event involves subsequent inforamtion about a condition that existed at the balance sheet date. Subsequent knowledge of which of the following would casue the company to adjust its December 31 financial statements
A. sales of an issue of new stock for $500,000 on January 30
B. Settlement of a damage lawsuit for a customer's injury sustained February 15 for $10,000
C. storm damage of $1 million to the company's buildings on March 1
D. Settlement of litigation in February for $100,000 that had been estimated at $12,000 in the December 31 financial statements

A. Griffin audited the financial statements of Dodger Magnificant Corporation for the year ended December 31, 2004. She completed the audit fieldwork 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 auditor report before sending it to the company. Which of the following is the proper form?
A. January 30, 2005, except as to Note X, which is dated February 5, 2005
B. December 31, 2004, except as to Note X which is dated February 5, 2005
C. February 5, 2005, except for completion of fieldwork for which the date is January 30, 2005
D. December 31, 2004, except as to Note X which is dated January 30, 2005

The auditing standards regarding "subsequent discovery of facts that existed at the balance sheet date" refers to knowledge obtained after:
A. the auditor report date
B. the date interim audit work was complete
C. the company's year end balance sheet date
D. the date the audit report was delivered to the client

Which of the following is ordinarily performed last in the audit examination?
A. securing a signed engagements letter from the client
B. performing a review for subsequent events
C. performing tests of controls
D. obtaining a signed management representation letter

Hall accepted an engagement to audit the year 1 financial statements XYZ Company. XYZ completed the preparation of the year 1 financial statements on February 13, year 2, and Hall began the fieldwork on February 17, year 2. Hall completed the field on March 24, year 2, and completed the report on March 28, year 2. The management representation letter normally would be dated:
A. February 17, year 2
B. March 28, year 2
C. March 24, year 2
D. February 13, year 2

Which of the following substantive procedures should an auditor perform regarding subsequent events?
A. send second requests to the client's customers who failed to respond to initial accounts receivable confirmation requests
B. compare the latest available interim statements with the financial statements being audited
C. Communicate material weaknesses in internal control to the client's audit committee
D. review the cutoff bank statements for several months after the year end

Which of the following substantive procedures would an auditor most likely perform to obtain evidence about the occurrence of subsequent events?
A. investigate changes in shareholders' equity occurring after year end
B. recompute a sample of large dollar transactions occurring after year end for arithmetic accuracy
C. inquire of the entity's legal counsel concerning litigation, claims, and assessments arising after year end
confirm bank accounts established after year end

The primary reason an auditor requests letters of inquiry from a client's attorneys is to provide the auditor with:
A. a description and evaluation of litigation, claims, and assessments that existed at the balance sheet date
B. corroboration of the information furnished by management about litigation, claims, and assessments
C. the probable outcome of asserted claims and pending or threatened litigation
D. the attorney's opinions of the client's historical experience in recent similar litigation