ch4 - ch4 Student: _ 1. Which of the following auditor...

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ch4 Student: ___________________________________________________________________________ 1. Which of the following auditor concerns most likely could be so serious that the auditor concludes that a financial statement audit cannot be conducted? A. The entity has no formal written code of conduct. B. The integrity of entity's management is suspect. C. Procedures requiring separation of duties are subject to management override. D. Management fails to modify prescribed controls for changes in conditions. 2. 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. 3. Which of the following factors most likely would 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. 4. The auditor is not required to ask the predecessor auditor about A. Facts that might bear on the integrity of management. B. Disagreements the predecessor may have had with management about accounting principles and audit procedures. C. The fees charged for the previous audit. D. The predecessor's understanding about the reasons for the change of auditors. 5. Audit documentation does not normally include the A. Specific assertions under audit. B. Industry accounting guides. C. Record of the procedures performed. D. Decisions made in the course of the audit. 6. Hill, CPA, has been retained to audit the financial statements of Monday Co. Monday's predecessor auditor was Post, CPA, who has been notified by Monday that Post's services have been terminated. Under these circumstances, which party should initiate the communications between Hill and Post? A. Hill, the auditor. B. Post, the predecessor auditor. C. Monday's controller or CFO. D. The chair of Monday's board of directors.
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7. Which of the following provides the best method of obtaining an understanding of a continuing client's business for planning an audit? A. Performing tests of details of transactions and balances. B. Reviewing prior year audit documentation and the permanent file for the client. C. Reading specialized industry journals. D. Reevaluating the client's internal control environment.
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This note was uploaded on 10/04/2011 for the course SOM 6401 taught by Professor Chrits during the Spring '11 term at University of Texas at Austin.

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ch4 - ch4 Student: _ 1. Which of the following auditor...

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