Unformatted text preview: 13. 14. 15. 16. 17, (a) withdraw from the engagement as soon as possible. épfjconsider this situation to be a scope_limi§§ti&ub perfornxappropriate substantive procedures to investigate
these differences further. (d) immediately increase the scope of the audit with special
forensigxtype procedures expecting to detect fraud. Risks of material misstatement from non—routine transactions
may be greater than risks from routine transactions due to: (a) effective internal controls pertaining to these types of
transactions. (b) the likelihood that the auditor will test controls
pertaining to these types of transactions.
(0) greater management intervention to specify accounting treatment.
(§:>none of the above. Regarding environmental matters for an audit of financial
statements, identify the correct statement. (a) the external auditor normally expresses an opinion on the adequacy of the entity’s compliance with environmental
laws and regulationsJ< (b) based on his/her understanding the entity, the external auditor is normally able to assess inherent risk arising
from environmental matters. (c) the external auditor normally expresses an opinion on the
entity's environmental management. the external auditor normally consults with a specialist
for most environmental matters. Some indications that inherent risk of misstatement due to
environmental matters may be other than low are: (a) adverse comments in the media about how the company
disposes of waste material. (b) significant fees to environmental specialists. (c) continuous inspections and complaints by regulators.
@} all of the above. which of the following are important criteria for revenue
recognition: (a) the value_of contract has been collected before the
company’s year end. _
(b) there are no significant acts of performance outstanding. the receivable cannot be from a related party.
all of the above. If fictitious sales were recorded in the current year and the fictitious accounts receivable were written off as a bad debt
in the following year: (a) accOunts receivable would be understated at the end of
the first year. the total earnings for the two years when added together
would not be misstatedr' ' (c) earnings would be overstated for the second year.
(d) earnings would be understated for the first year. ...
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- Spring '10