408t2F18 - with answers.pdf - Accounting 408 Exam 2 Chapters 3 4 5 6 E F Fall 2018 Name Section Row Multiple Choice Questions(2 points each 100 points

408t2F18 - with answers.pdf - Accounting 408 Exam 2...

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Accounting 408 Name __________________________ Exam 2, Chapters 3, 4, 5, 6, E, F Fall 2018 Section _______ Row _______ Multiple Choice Questions. (2 points each, 100 points total) Read each question carefully and indicate the one best answer to each question by placing a mark in the appropriate space on the answer sheet. 1. An auditor’s engagement letter most likely will include a. Management’s acknowledgment of its responsibility for maintaining effective internal control. b. The auditor’s preliminary assessment of the risk factors relating to misstatements arising from fraudulent financial reporting. c. A reminder that management is responsible for illegal acts committed by employees. d. A request for permission to contact the clien t’s lawyer for assistance in identifying litigation, claims, and assessments. 2. Which of the following factors would most likely cause an auditor not to accept a new audit engagement? a. An inadequate understanding of the entity’s internal controls. b. The close proximity to the end of the entity’s fiscal year. c. Concluding that the entity’s management probably lacks integrity. d. An inability to perform preliminary analytical procedures before assessing control risk. 3. Before accepting an engagement to audit a new client, an auditor is required to a. Make inquiries of the predecessor auditor after obtaining the consent of the prospective client. b. Obtain the prospective client’s signature to the engagement letter. c. Prepare a memorandum setting forth the staffing requirements and documenting the preliminary audit plan. d. Discuss the management representation letter with the prospective client’s audit committee. 4.Which of the following statements is true concerning analytical procedures used as risk assessment procedures? a.Analytical procedures usually involve comparisons of ratios developed from recorded amounts with assertions developed by management. b.Analytical procedures used as risk assessment procedures ordinarily use data aggregated at a high level. c.Analytical procedures can replace tests of controls in gathering evidence to support the assessed level of control risk. d.Analytical procedures are more efficient, but not more effective, than tests of details and transactions. 5.An auditor most likely obtains an understanding of a new client to
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  • Winter '18
  • Jack Armitage

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