n informs the auditor that they have now implemented a process to correct a serious nonconformity that the auditor found on the first day of a two-day Stage 2 audit. Th

Evaluate the following quotation: “If a CPA firm completes a nonpublic company audit of Adam Company’s financial statements following AICPA generally accepted auditing standards and is satisfied with the results of the audit, an unmodified audit report may be issued. On the other hand, if no audit is performed of the current year’s financial statements, but the CPA firm has performed satisfactory audits in prior years, has confidence in the management of the company, and make a quick review of the current year’s financial statements, a qualified report may be issued.” Do you agree? Give reasons to support your answer.

STATEMENT 1: Most of the information included in the permanent file are accumulated during the initial audit. STATEMENT 2: The auditor may at his/her discretion make some information from the audit working papers available to clients. A. Only Statement 1 is incorrect B. Only Statement 1 is correct C. Both statements are incorrect D. Both statements are correct

You are involved with the audit of Jelco Company for year 1 and have been asked to consider the confirmation reply results indicated below. For each confirmation reply, select the proper action to be taken from the following possible actions: (Each of the "Action" items may be used once, more than once, or not at all.) (1)Exception; propose an adjustment. (2)Send a second confirmation request to the customer. (3) Examine shipping documents and/or subsequent cash receipts. (4)Verify whether the additional invoices noted on the confirmation reply pertain to the year under audit or the subsequent year. (5) Not an exception; no further audit work is necessary. Proper Action Customer Reply (and any audit action already taken) a. "We mailed the check for this on December 31." "We returned those goods on December 2." You have been able to determine that the goods were received by the client on December 29, but not recorded until January 2. c. "We also owe for two more invoices for purchases…

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What matters are communicated to those charged with governance at the end of an audit? (Several choices may be correct.) Material uncertainties related to events and conditions casting doubt on the entity’s ability to continue as a going concern. Any suspected non-compliance with laws and regulations. Expected modifications to the audit report. General approach and overall scope of the audit. Any misstatements found during the audit that were corrected by management.

S1: The subsequent events period extends to the date of management representation letter and the auditor’s report. S2: The failure of management to provide a management representation letter is considered a scope limitation on the audit.a. Only S1 is true.b. Only S2 is true.c. Both S1 and S2 are true.d. Both S1 and S2 are false.

Which of the following information should a successor auditor obtain during the inquiry of the predecessor auditor before accepting engagement?                                                                                                               i) Information about integrity of management ii) Disagreement with management concerning auditing procedures iii) Review of internal control system.iv) Organisation structure                                                      a) (i) and (ii) b) (ii) and (iii)  c) (i) , (ii) and (iii)        d) i) and (iii) The audit engagement letter, generally, should include a reference to each of the following except a)limitations of auditing b)responsibilities of management with respect to audit work c)expectation of receiving a written management representation letter. d)a description of the auditor’s method of sample selection. 3. An auditor who accepts an audit but does not possess the industry expertise of the business entity should a) engage…

As part of the ongoing audit of Winter Enterprises, the external auditor, Ghassan CPAS are reviewing the client's balance sheet. An audit manager has noticed a contingent liability on the balance sheet, with an associated note explaining the client believes they may be the subject of litigation in the near future. What would be the auditor's best course of action at this juncture? O Directly contact the client's legal counsel and attempt to obtain further details of the potential litigation. This should be done independently of the client and without the client's knowledge so management cannot alter any documentation or attempt to influence the external legal counsel. Request written assurances from top management, indemnifying the external auditors from any lawsuits filed against the client. Request permission from the client's management to contact the client's legal counsel and discuss the details of this potential litigation. Immediately advise the client in writing of the…

Auditing standards require that a “brainstorming” session should be held at the beginning of each audit to help identify steps to assess the possibility that material misstatements/fraud in the financial statements exist. Discuss how brainstorming sessions might enhance audit judgments, professional skepticism, and decision making. Consider the groupthink dimension in your discussion.