Week 5 Extended Study Auditing Exam Essay

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1) If reported sales for 2010 erroneously include sales that occur in 2011, the assertion violated on the 2010 statements would be:
a. presentation and disclosure
b. valuation or allocation
c. existence or occurrence
d. completeness

2. The completeness assertion would be violated if
a. disclosure in the statements of pledged receivables was inadequate
b. unbilled shipments occurred during the period
c. fictitious sales transactions were included in accounts receivable
d. the allowance for doubtful accounts was understated 2) The rights and obligations assertion applies to:

A: Transactions on accounts

3) Which of the following assertions is NOT made by management in placing an item in the financial statements?

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audit risk- engagement risk
b. control risk
c. analytical procedures risk
d. test of detail risk

19) In accepting an engagement, an auditor takes on professional responsibilities to
A: Before an auditor accepts an engagement he or she has to exercise due diligence. It means, finding out about the client's reputation. It can be achieved through bankers, attorneys, the predecessor auditor, etc.

20) In communicating with the previous auditor, the potential successor should make specific and reasonable inquiries regarding matters that may affect the decision to accept the engagement. Which of the following items is least likely to be included in the inquiries?
A: This is what should be included
Information that might bear on the integrity of management.
Disagreements with management as to accounting principles, auditing procedures, or other similarly significant matters.
Communications to audit committees or others with equivalent authority and responsibility fn 4regarding fraud, illegal acts by clients, and internal-control-related matters. fn 5
The predecessor auditor's understanding as to the reasons for the change of auditors.
The successor auditor may wish to consider other reasonable inquiries.

21) The importance of the accept/reject decision for a particular client is reflected in the inclusion of acceptance and

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