AUD

AUD practice questions, page 25 of 41, with answer review and explanations.

Question 121

An auditor determines that the entity is presenting certain supplementary financial disclosures of pension information that are required by the GASB. Under these circumstances, the auditor should:

  1. Add an explanatory paragraph to the auditor's report that refers to the required supplementary information.
  2. State that the audit is not being performed in accordance with generally accepted auditing standards.
  3. Document in the working papers that the required supplementary information is presented, but should not apply any procedures to the information.
  4. Compare the required supplementary information for consistency with the audited financial statements.

Question 122

An auditor reads the letter of transmittal accompanying a county's comprehensive annual financial report and identifies a material inconsistency with the financial statements. The auditor determines that the financial statements do not require revision. Which of the following actions should the auditor take?

  1. Request that the client revise the letter of transmittal.
  2. Include an explanatory paragraph in the auditor's report.
  3. Consider withdrawing from the engagement.
  4. Request a client representation letter acknowledging the inconsistency.

Question 123

Pell, CPA, decides to serve as principal auditor in the audit of the financial statements of Tech Consolidated, Inc. Smith, CPA, audits one of Tech's subsidiaries. In which situation(s) should Pell make reference to Smith's audit? I. Pell reviews Smith's audit documentation and assumes responsibility for Smith's work, but expresses a qualified opinion on Tech's financial statements. II. Pell is unable to review Smith's audit documentation; however, Pell's inquiries indicate that Smith has an excellent reputation for professional competence and integrity.

  1. I only.
  2. II only.
  3. Both I and II.
  4. Neither I nor II.

Question 124

Which of the following best describes what is meant by the term generally accepted auditing standards?

  1. Rules acknowledged by the accounting profession because of their universal application.
  2. Pronouncements issued by the Auditing Standards Board.
  3. Measures of the quality of the auditor's performance.
  4. Procedures to be used to gather evidence to support financial statements.

Question 125

According to the profession's ethical standards, which of the following events may justify a departure from a Statement of Financial Accounting Standards?

  1. Option A
  2. Option B
  3. Option C
  4. Option D