CPA Auditing and Attestation

CPA Auditing and Attestation practice questions, page 18 of 41, with answer review and explanations.

Question 86

Which of the following statements is not true regarding the auditor's responsibility for subsequent events?

  1. The auditor has an active responsibility to make continuing inquiries between the date of the auditor's report and the date on which the report is submitted.
  2. The auditor has an active responsibility to make continuing inquiries between the date of the financial statements and the date of the auditor's report.
  3. The auditor has an active responsibility to make continuing inquiries between the date of the financial statements and the date on which sufficient appropriate audit evidence has been obtained.
  4. The auditor has no active responsibility to make continuing inquiries after the date of the auditor's report.

Question 87

Which of the following procedures would an auditor most likely perform to obtain evidence about the occurrence of subsequent events?

  1. Confirming a sample of material accounts receivable established after year-end.
  2. Comparing the financial statements being reported on with those of the prior period.
  3. Investigating personnel changes in the accounting department occurring after year-end.
  4. Inquiring as to whether any unusual adjustments were made after year-end. D

Question 88

Which of the following events occurring after the issuance of an auditor's report most likely would cause the auditor to make further inquiries about the previously issued financial statements?

  1. An uninsured natural disaster occurs that may affect the entity's ability to continue as a going concern.
  2. A contingency is resolved that had been disclosed in the audited financial statements.
  3. New information is discovered concerning undisclosed lease transactions of the audited period.
  4. A subsidiary is sold that accounts for 25% of the entity's consolidated net income.

Question 89

Which of the following procedures would an auditor most likely perform in obtaining evidence about subsequent events?

  1. Determine that changes in employee pay rates after year-end were properly authorized.
  2. Recompute depreciation charges for plant assets sold after year-end.
  3. Inquire about payroll checks that were recorded before year-end but cashed after year-end.
  4. Investigate changes in long-term debt occurring after year-end.

Question 90

An auditor is considering whether the omission of a substantive procedure considered necessary at the time of an audit may impair the auditor's present ability to support the previously expressed opinion. The auditor need not apply the omitted procedure if the:

  1. Financial statements and auditor's report were not distributed beyond management and the board of directors.
  2. Auditor's previously expressed opinion was qualified because of a departure from GAAP.
  3. Results of other procedures that were applied tend to compensate for the procedure omitted.
  4. Omission is due to unreasonable delays by client personnel in providing data on a timely basis.