ACT 5743 Quiz 2 Reporting

ACT 5743 Quiz 2 Reporting

1. Which of the following is true about subsequent events?a. They are events occurring between the date of the financial statements and the date of the audit report.b. Requires the reading minutes of the meetings of the entitys owners and management after the date of the financial statements and inquiring about matters discussed at any such meetings for which minutes are not yet availablec. The auditor should perform audit procedures designed to obtain sufficient appropriate audit evidence that all subsequent events that require adjustment of, or disclosure in, the financial statements have been identified.d. All of the above are true2. When performing audits on the financial information of components, the group engagement team or the component auditor should perform procedures designed to identify subsequent eventsa. Obtaining an understanding of any procedures that group management has established to ensure that such subsequent events are identifiedb. Requesting written representation from component management regarding subsequent eventsc. Reading the subsequent years capital and operating budgetsd. Review cash receipts after year end3. Factors that may affect the decision to use the work of component auditors or make reference to their audit include all of the following except:a. Differences in the FRF of the component financial statements vs. the financial reporting framework of the group financial statementsb. Differences in the auditing and other standards applied by the component auditor and those applied in the audit of the group financial statementsc. Whether the audit of the financial statements of the component will be completed in time to meet the group reporting timetabled. All of the above are factors affecting the decision4. A scope limitation of the audit may arise from all of the following except:a. Circumstances beyond the control of the entityb. Circumstances relating to the nature or timing of the auditors workc. Lack of understanding of a new FASB pronouncementd. Limitations imposed by management5. If management refuses to remove a client imposed scope limitation, the auditor should do all of the following except:a. Communicate the matter to those charged with governanceb. Determine whether it is possible to perform alternative procedures to obtain sufficient appropriate audit evidencec. Reduce the engagement to a review or compilationd. Withdraw from the engagement


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