STATEMENT 1: Significant unexpected fluctuations identified by analytical review procedures wil usualiy necessitate a review of internal control. STATEMENT 2: Working papers should generally contain the nature and extent of audit procedures done, the results of any testing, and the CPA's conclusion about how the findings will affect his report. A. Only Statement 1 is incorrect B. Only Statement 1 is correct C. Both statements are incorrect D. Both statements are correct

STATEMENT 1: Significant unexpected fluctuations identified by analytical review procedures wil usualiy necessitate a review of internal control. STATEMENT 2: Working papers should generally contain the nature and extent of audit procedures done, the results of any testing, and the CPA's conclusion about how the findings will affect his report. A. Only Statement 1 is incorrect B. Only Statement 1 is correct C. Both statements are incorrect D. Both statements are correct

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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1. S1: The concept of materiality would be very important to an auditor in determining transactions that should be validated. S2: The level of assurance expected to be issued affects the amount of procedures to be performed by the practitioner. Group of answer choices Both S1 and S2 are incorrect. Only S2 is correct. Both S1 and S2 are correct. Only S1 is correct. 2. S1: Analytical procedures used as substantive test focuses on detecting material misstatements. S2: The responsible party always prepare a representation that will be subjected to the validation of the practitioner. Group of answer choices Only S1 is correct. Both S1 and S2 are incorrect. Both S1 and S2 are correct. Only S2 is correct. 3. S1: After conducting an audit and release of the audit report, the primary responsibility on the fairness of the financial statements remains with the management and those charged with governance of the entity. S2: In recurring audits, the auditor may not send a new…
A significant scope limitation, determined to be pervasive, existed during an audit. The CPA will likely issue what type of report? a. Qualified Disclaimer Adverse Yes No No b. Qualified Disclaimer Adverse No Yes No c. Qualified Disclaimer Adverse No Yes Yes d. Qualified Disclaimer Adverse Yes Yes No e. Qualified Disclaimer Adverse No No Yes
7. Analytical procedures: A. are not a type of audit evidence. B. are not required during the completion phase of the audit. C. performed during the planning phase of the audit are used as a substantive test in support of account balances. D. do not provide reliable evidence unless it is corroborated with other evidence. 8. Reasonable assurance allows for: A. low likelihood that material misstatements will not be prevented or detected by internal controls. B. no likelihood that material misstatements will not be prevented or detected by internal controls. C. moderate likelihood that material misstatements will not be prevented or detected by internal controls. D. high likelihood that material misstatements will not be prevented or detccted by internal controls. 9. Management implements internal controls to ensure that all required footnote disclosures are accurate. Auditors tests those controls to provide evidence supporting the presentation. A. completeness and valuation B.…
STATEMENT 1: Audit working papers are the documents accumulated by the auditor showing the procedures performed, audit testing applied, information obtained, and conclusions reached. STATEMENT 2: Audit working papers aid the auditor in the conduct and supervision of the audit engagement. A. Only Statement 1 is incorrect B. Only Statement 1 is correct C. Both statements are incorrect D. Both statements are correct