Comprehensive Review of Auditing, Engagements, and Financial Procedures in Various Professional Contexts

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Comprehensive Review of Auditing, Engagements, and Financial Proceduresin Various Professional ContextsAssignment 5—Session 3 (spring)(This assignment is based on Modules 1 through 9)Question 1 (15 marks)(Multiple choice) (1½ marks each)Note: For multiple-choice questions, select the best answer. Answer each item by giving thenumber of your choice. Incorrect answers will be marked as zero. Multiple-choice questionsmust be completed in your Assignment Submission section. This portion of the assignment willbe automatically graded. Do not include your answers in your Word document as they will notbe graded.a.Which of the following statements about the similarities between audit andreviewengagements is true?1.Under both engagements, there is no need to corroborate management’s assertions.2.Both rely on plausibility rather than assurance.3.Neither requires an assessment of the client’s control system.4.Both require assessment whereGAAP is the criteria.b.Which of the following descriptions doesnotrepresent an attest assurance engagement?1.A report on the effectiveness of an entity’s system of internal controls over financialreporting2.A report on a client’s compliance with their rental contract3.Areportconfirmingtheaccountant’spreparationofanorganization’sfinancial statements4.Areportontheexaminationofcontrolproceduresatapayrollprocessingorganization

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c.Which of the following statements would not be included in a report for a review ofinterim financial statements?1.A statement of the procedures followed by the auditor2.A statement of the restrictions on the use of the report3.A statement of the scope of the engagement4.A statement of the auditor’sresponsibility for the financial statementsd.Which of the following statements best describes a public accountant who is engaged toperform a compilation engagement?1.Thepublicaccountantattemptstocheckthecompletenessoftheclient’sinformation.2.The public accountant verifies the accuracy of the client’s information.3.The public accountant is completely independent of the client.4.The public accountant has proficiency in accounting.e.Zheng is one of three partners in a local CGA firm. Zheng’s firm has received a requestfrom his sister to prepare a set of financial statements for her new business. Which of thefollowingstatementsconcerningthissetoffinancialstatements,anditsrelatedcommunication, isnottrue?1.This partner should refuse such an engagement.2.There should be a report entitled “Notice to Reader.”3.None of the communications should express any type of opinion or assurance.4.Each page should be marked “Unaudited—see Notice to Reader.”f.Which of the followingprocedures would the public accountant normally perform duringthe review of a private company’s financial statements?1.Test sales cut-off.2.Observe the client’s inventory count.3.Obtain a bank confirmation from the company's banker.4.Request a letter ofrepresentation from management.g.Which of the following statements about the framework for applying specified auditingprocedures to financial information other than financial statements is true?

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1.The end report specifies the factual results of the procedures applied.2.The auditor is responsible for both the sufficiency and appropriateness of thespecified procedures.3.The auditor must clearly state that this is an assurance engagement.4.The auditor provides an overall conclusion on the procedures performed.h.AuG-6 provides guidance when future-oriented financial information is included in aprospectusandmusthaveanauditor’sreportattached.Whichofthefollowingisnotexpressed as part of the auditor’s report?1.Management’s assumptions are suitablysupported and consistent with the plans ofthe entity.2.The auditor agrees with management’s assertion that the forecast will beachieved.3.The forecast complies with GAAP in regard to its presentation and disclosure.4.The forecast reflects accurately the assumptions made in preparing the forecast.Source: Companion website forAuditing and Assurance Services, Second CanadianEdition,©2007,McGraw-HillHigherEducation.Chapter20,pre-testquestion6,http://highered.mcgraw-hill.com/sites/0070919151/student_view0/chapter20/multiple_choice_quiz.html(accessedJuly 13, 2007). Adapted with permission.i.Which of the following working papers would most likely be found in a file associatedwith a review engagement?1.Documentation of knowledge of the client’s business2.Confirmations of bank balances3.Results of test counts of inventory4.Documentation of tests of controls over disbursementsj.Under what circumstances is a consent letter issued in association with aprospectus?1.The previous auditor of the client agrees to allow prior year financial statements tobe included in the prospectus.2.The auditor has reviewed the entire prospectus and believes it is not misleading.3.The auditor states the opinion that all the information contained in the prospectus isfairly presented in accordance with GAAP.

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