ACCT 444 Final Exam

The auditor is required to follow the guidance provided by the standards, without exception.
The auditor is generally required to follow the guidance provided by standards with which he or she is familiar, but will not be held responsible for departing from provisions of which he or she was unaware.
The auditor is generally required to follow the guidance provided by the standards, unless following such guidance would result in an audit that is not cost-effective.
The auditor is generally required to follow the guidance provided by the standards and should be able to justify any departures.

express an opinion on the information, if he or she has been engaged to examine such information.
express negative assurance on the information, if review procedures have been appropriately performed.
report on whether the information is fairly stated in relation to the financial statements taken as a whole, if appropriate procedures have been applied.
disclaim an opinion on the information.

The auditor did not observe the entity’s physical inventory and is unable to become satisfied about its balance by other auditing procedures.
Conditions that cause the auditor to have substantial doubt about the entity’s ability to continue as a concern are inadequately disclosed.
There has been a change in accounting principles that has a material effect on the comparability of the entity’s financial statements.
The auditor is unable to apply necessary procedures concerning an investor’s share of an investee’s earnings recognized on the equity method.

Designing additional auditing procedures to obtain more reliable evidence in support of a particular financial statement assertion
Obtaining corroboration of management’s explanations through consultation with a specialist
Inquiring of prior year engagement personnel regarding their assessment of management’s honesty and integrity
Using third-party confirmations to provide support for management’s representations

Provision of personal tax services to Johnson, the accounts payable manager of Perigee
Preparation of Perigee’s routine annual tax return, where Jackson’s fee will be calculated as a percentage of the tax refund obtained
An audit of Perigee’s internal control is performed contemporaneously with the annual financial statement audit
Discovering that Lowe, the chief financial officer of Perigee, started his accounting career 10 years earlier as a staff accountant for Jackson & Company, and continues to maintain ties with current partners at the firm

The financial statements are free from material misstatement, and no disclosure is required in the notes to the financial statements.
The financial statements do not conform with generally accepted accounting principles (GAAP).
The financial statements contain unadjusted misstatements that should result in a qualified opinion.
The financial statements are free from material misstatement, but disclosure of the proposed adjustments is required in the notes to the financial statements.

required by GAAP.
required by the IRS.
recommended by the AICPA.
required by GAAS.

A sales invoice issued by the client and supported by a delivery receipt from an outside trucker
Confirmation of an accounts payable balance mailed by and returned directly to the auditor
A check, issued by the company and bearing the payee’s endorsement, that is included with the bank statements mailed directly to the auditor
An audit schedule prepared by the client’s controller, and reviewed by the client’s treasurer

acceptable audit risk.
control risk.
inherent risk.
statistical risk.

both agree that it should be greater than 5%.
both agree that materiality should be set at an amount greater than 10% of current assets.
both agree that materiality should be set at an amount greater than 10% of current assets.
no specific materiality guidelines are provided by either of them.

The documents related to the chosen sample may not be available to the auditor for inspection.
An auditor may fail to recognize errors in the documents from the sample.
A randomly chosen sample may not be representative of the population as a whole for the characteristic of interest.
An auditor may select audit procedures that are not appropriate to achieve the specific objective.

general computer controls, but does not test application computer controls.
application computer controls, but does not test general computer controls.
neither general nor application computer controls.
both general and application computer controls.

There is a potential future payment to an outside party that would result from a current condition.
There is uncertainty about the amount of the future payment.
The outcome of an uncertainty will be resolved by some future event.
The amount of the future payment is reasonably estimable.

Tests of the specific items making up the balance in a given general ledger account
Tests of the inventory pricing to vendor’s invoices
Tests of the signatures on canceled checks to the board of directors’ authorizations
Tests of the additions to property, plant, and equipment by physical inspections

Documentation
Confirmation
Inquiries of the client
Reperformance

The same amount of audit evidence would be required.
Less evidence is required.
More evidence is required.
None of the above

Cost of obtaining evidence is a valid reason for excluding that evidence from the audit.
Physical examination is the most expensive type of audit evidence.
The least expensive type of evidence is analytical procedures.
Each of the above is correct

variable (sometimes larger, sometimes smaller).
direct (larger ARACR = larger sample).
inverse (larger ARACR = smaller sample).
not determinable.