1. Which of the following is not an example of the application of professional s
ID: 2473074 • Letter: 1
Question
1. Which of the following is not an example of the application of professional skepticism?
1.Designing additional auditing procedures to obtain more reliable evidence in support of a particular financial statement assertion
2.Obtaining corroboration of management's explanations through consultation with a specialist
3.Inquiring of prior year engagement personnel regarding their assessment of management's honesty and integrity
4.Using third-party confirmations to provide support for management's representations
2.
1. An investment held through a nonclient regulated mutual fund
2. An investment held through a nonclient investment club
3. An investment held in a blind trust
4. An investment held by the trustee of a trust
3.
1.The financial statements are free from material misstatement, and no disclosure is required in the notes to the financial statements.
2.The financial statements do not conform with generally accepted accounting principles (GAAP).
3.The financial statements contain unadjusted misstatements that should result in a qualified opinion.
4.The financial statements are free from material misstatement, but disclosure of the proposed adjustments is required in the notes to the financial statements.
4.
1. the failure to bill or record sales.
2. duplicate billings and recording of sales.
3. Both A and B
4. Neither A nor B
5.
1.Audit procedure to use
2.Sample size
3.Timing of each audit procedure
4.Each of the above is a decision that must be made
6.
1. inherent risk.
2. acceptable audit risk.
3.statistical risk.
4. financial risk.
Explanation / Answer
1. Which of the following is not an example of the application of professional skepticism?
1.Designing additional auditing procedures to obtain more reliable evidence in support of a particular financial statement assertion
2.Obtaining corroboration of management's explanations through consultation with a specialist
3.Inquiring of prior year engagement personnel regarding their assessment of management's honesty and integrity
4.Using third-party confirmations to provide support for management's representations
2.
Under the ethical standards of the profession, which of the following investments in a client is not considered to be a direct financial interest?
1. An investment held through a nonclient regulated mutual fund
2. An investment held through a nonclient investment club
3. An investment held in a blind trust
4. An investment held by the trustee of a trust
3.
A client decides not to make an auditor's proposed adjustments that collectively are not material, and wants the auditor to issue the report based on the unadjusted numbers. Which of the following statements is correct regarding the financial statement presentation?
1.The financial statements are free from material misstatement, and no disclosure is required in the notes to the financial statements.
2.The financial statements do not conform with generally accepted accounting principles (GAAP).
3.The financial statements contain unadjusted misstatements that should result in a qualified opinion.
4.The financial statements are free from material misstatement, but disclosure of the proposed adjustments is required in the notes to the financial statements.
4.
The use of prenumbered sales invoices is meant to prevent
1. the failure to bill or record sales.
2. duplicate billings and recording of sales.
3. Both A and B
4. Neither A nor B
5.
Auditors must make decisions regarding what evidence to gather and how much to accumulate. Which of the following is not a decision that must be made by auditors related to evidence?
1.Audit procedure to use
2.Sample size
3.Timing of each audit procedure
4.Each of the above is a decision that must be made
6.
A measure of how willing the auditor is to accept that the financial statements may be materially misstated after the audit is completed and an unqualified opinion has been issued is the
1. inherent risk.
2. acceptable audit risk.
3.statistical risk.
4. financial risk.
Under the ethical standards of the profession, which of the following investments in a client is not considered to be a direct financial interest?
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