CPA Auditing and Attestation

CPA Auditing and Attestation practice questions, page 20 of 41, with answer review and explanations.

Question 96

After issuing a report, an auditor has no obligation to make continuing inquiries or perform other procedures concerning the audited financial statements, unless:

  1. Information, which existed at the report date and may affect the report, comes to the auditor's attention.
  2. Management of the entity requests the auditor to reissue the auditor's report.
  3. Information about an event that occurred after the date of the auditor's report comes to the auditor's attention.
  4. Final determinations or resolutions are made of contingencies that had been disclosed in the financial statements.

Question 97

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

  1. Examine a sample of transactions that occurred since the year-end to verify the effectiveness of computer controls.
  2. Inquire of management whether there have been significant changes in working capital since the year-end.
  3. Recompute depreciation charges for plant assets sold for substantial gains since the year-end.
  4. Reperform the tests of controls that indicated significant deficiencies in the operation of internal control.

Question 98

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. A lawsuit is resolved that is explained in a separate paragraph of the prior-year's auditor's report.
  2. New information is discovered concerning undisclosed related party transactions of the prior year.
  3. A technological development occurs that affects the entity's ability to continue as a going concern.
  4. The entity sells a subsidiary that accounts for 35% of the entity's consolidated sales.

Question 99

On February 9, Brown, CPA, expressed an unqualified opinion on the financial statements of Web Co. On October 9, during a peer review of Brown's practice, the reviewer informed Brown that engagement personnel failed to perform a search for subsequent events for the Web engagement. Brown should first:

  1. Request Web's permission to perform substantive procedures that would provide a satisfactory basis for the opinion.
  2. Inquire of Web whether there are persons currently relying, or likely to rely, on the financial statements.
  3. Take no additional action because subsequent events have no effect on the financial statements that were reported on.
  4. Assess the importance of the omitted procedures to Brown's present ability to support the opinion.

Question 100

Which of the following is not true regarding an engagement to provide a written report on the application of accounting principles?

  1. An accountant is prohibited from providing a report on the application of accounting principles to a transaction not involving the facts and circumstances of a specific entity.
  2. The accountant's written report on the application of accounting principles should include an identification of the specific entity involved.
  3. An accountant is prohibited from providing a report on the application of accounting principles to a proposed future transaction involving the facts and circumstances of a specific entity.
  4. The accountant's written report on the application of accounting principles should include a paragraph restricting the use of the report.