AUD

AUD practice questions, page 29 of 41, with answer review and explanations.

Question 141

Six months after issuing an unqualified opinion on audited financial statements, an auditor discovered that the engagement personnel failed to confirm several of the client's material accounts receivable balances. The auditor should first:

  1. Request the permission of the client to undertake the confirmation of accounts receivable.
  2. Perform alternative procedures to provide a satisfactory basis for the unqualified opinion.
  3. Assess the importance of the omitted procedures to the auditor's ability to support the expressed opinion.
  4. Inquire whether there are persons currently relying, or likely to rely, on the unqualified opinion.

Question 142

Which of the following procedures would an auditor ordinarily perform during the review of subsequent events?

  1. Review the cut-off bank statements for the period after the year-end.
  2. Inquire of the client's legal counsel concerning litigation.
  3. Investigate significant deficiencies in internal control previously communicated to the client.
  4. Analyze related party transactions to discover possible irregularities.

Question 143

An annual shareholders' report includes audited financial statements and contains supplementary information required by GAAP. Is it permissible for the auditor to report on such information?

  1. No, because such reporting may lead to the belief that the auditor is responsible for the information.
  2. No, because the auditor has no responsibility to read the other information in a document containing audited financial statements.
  3. Yes, provided the report provides negative assurance only.
  4. Yes, provided the auditor performs sufficient audit procedures to determine whether the information is fairly stated, in all material respects, in relation to the financial statements.

Question 144

Tech Company has disclosed an uncertainty due to pending litigation. The auditor's decision to issue a qualified opinion rather than an unqualified opinion most likely would be determined by the:

  1. Lack of sufficient evidence.
  2. Inability to estimate the amount of loss.
  3. Entity's lack of experience with such litigation.
  4. Lack of insurance coverage for possible losses from such litigation.

Question 145

It is not appropriate to refer a reader of an auditor's report to a financial statement footnote for details concerning:

  1. Subsequent events.
  2. The pro forma effects of a business combination.
  3. Sale of a discontinued operation.
  4. The results of confirmation of receivables.