2009 A-3 Class Questions Preview

2009 A-3 Class Questions Preview - Auditing and Attestation...

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Auditing and Attestation 3 Class Questions 1 © 2009 DeVry/Becker Educational Development Corp. All rights reserved. 1. CPA-04620 A successor auditor should request the new client to authorize the predecessor auditor to allow a review of the predecessor's: Engagement letter Working papers a. Yes Yes b. Yes No c. No Yes d. No No CPA-04620 Choice "c" is correct. It is not appropriate for the successor auditor to request a review of the predecessor auditor's engagement letter. This is a business matter between the client and the predecessor auditor that has no impact on the successor's audit. Conversely, review of the predecessor auditor's working papers (audit documentation) is appropriate and customary to facilitate the successor's audit. Choices "a", "b", and "d" are incorrect, based on the above explanation. 2. CPA-04621 A document in an auditor's working papers includes the following statement: "Our audit is subject to the inherent risk that material errors and fraud, including defalcations, if they exist, will not be detected. However, we will inform you of fraud that comes to our attention, unless it is inconsequential." The above passage is most likely from a(an): a. Comfort letter. b. Engagement letter. c. Letter of audit inquiry. d. Representation letter. CPA-04621 Choice "b" is correct. An engagement letter includes discussion of both the auditor's responsibilities and the limitations of the engagement. The fact that audit risk exists and that an audit may not detect material errors and fraud is typically included in this letter. Choice "a" is incorrect. A comfort letter provides negative assurance on certain unaudited financial information for the period from the last audit to the date of the registration of securities. It would not include discussion of the limitations of an audit or of the auditor's responsibilities during the audit. Choice "c" is incorrect. A letter of audit inquiry is sent to the client's attorney, requesting direct corroboration of information provided to the auditor by management. It would not include discussion of the limitations of an audit or of the auditor's responsibilities during the audit. Choice "d" is incorrect. The management representation letter is provided by management at the end of the engagement, to confirm representations given to the auditor. It would not include discussion of the limitations of an audit or of the auditor's responsibilities during the audit.
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Auditing and Attestation 3 Class Questions 2 © 2009 DeVry/Becker Educational Development Corp. All rights reserved. 3. CPA-05603 Which of the following is always necessary in a financial statement audit? I. Tests of the operating effectiveness of controls. II. Analytical procedures.
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This note was uploaded on 02/19/2011 for the course BMGT 360 taught by Professor Spina during the Spring '07 term at Maryland.

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2009 A-3 Class Questions Preview - Auditing and Attestation...

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