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ACCT 591 DeVry Week 1 Quiz Latest

o o o o Significant

o o o o Significant related party transactions are pervasive. Usual trade credit from suppliers is denied. Arrearages in preferred stock dividends are paid. Restrictions on the disposal of principal assets are present. Question 5.5.(TCO E) (CPA-02566.B) When an independent CPA assists in preparing the financial statements of a publicly held entity but has not audited or reviewed them, the CPA should issue a disclaimer of opinion. In such situations, the CPA has no responsibility to apply any procedures beyond (Points : 10) o o o o Documenting that internal control is not being relied on. Reading the financial statements for obvious material misstatements. Ascertaining whether the financial statements are in conformity with GAAP. Determining whether management has elected to omit substantially all required disclosures. Question 6.6.(TCO E) (CPA-04621.B) As of August 13, a CPA had obtained sufficient appropriate audit evidence with respect to fieldwork on an engagement to audit financial statements for the year ended June 30. On August 27, an event came to the CPA's attention that should be disclosed in the notes to the financial statements. The event was properly disclosed by the entity, but the CPA decided not to dual date the auditor's report and dated the report August 27. Under these circumstances, the CPA was taking responsibility for(Points : 10) o All subsequent events that occurred through August 27. o Only the specific subsequent event disclosed by the entity. o All subsequent events that occurred through August 13 and the specific subsequent event disclosed by the entity. o Only the subsequent events that occurred through August 13. Question 7.7.(TCO E) (CPA-02820.B) Which of the following is not an example of the application of professional skepticism? (Points : 10) o o o o 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 Question 8.8.(TCO E) (CPA-02749.B) An auditor includes a separate paragraph in an otherwise unmodified report to emphasize that the entity being reported on had significant transactions with related parties. The inclusion of this separate paragraph (Points : 10) o o o o Is considered an "except for" qualification of the opinion. Violates generally accepted auditing standards if this information is already disclosed in footnotes to the financial statements. Necessitates a revision of the opinion paragraph to include the phrase "with the foregoing explanation.” Is appropriate and would not negate the unqualified opinion. Question 9.9.(TCO E) (CPA-02444.B) An auditor most likely would express an unqualified opinion and would not add explanatory language to the report if the auditor (Points : 10) o o o o Wishes to emphasize that the entity had significant transactions with related parties. Concurs with the entity's change in its method of computing depreciation. Discovers that supplementary information required by FASB has been omitted. Believes that there is a probable likelihood of a material loss resulting from an uncertainty that is sufficiently supported and disclosed.

Question 10.10.(TCO E) (CPA-03151.B) 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? (Points : 10) o o o o A technological development that could affect the entity's future ability to continue as a going concern The discovery of information regarding a contingency that existed before the financial statements were issued The entity's sale of a subsidiary that accounts for 30% of the entity's consolidated sales The final resolution of a lawsuit explained in a separate paragraph of the auditor's report