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

This review covers auditing procedures, engagements, and financial protocols used in various professional contexts to ensure accuracy and compliance.

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    Comprehensive Review of Auditing, Engagements, and Financial Procedures in Various Professional Contexts Assignment 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 the number of your choice. Incorrect answers will be marked as zero. Multiple - choice questions must be completed in your Assignment Submission section. This portion of the assignment will be automatically graded. Do not include your answers in your Word document as they will not be graded. a. Which of the following statements about the similarities between audit and review engagements 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 where GAAP is the criteria. b. Which of the following descriptions does not represent an attest assurance engagement? 1. A report on the effectiveness of an entity’s system of internal controls over financial reporting 2. A report on a client’s compliance with their rental contract 3. A report confirming the accountant’s preparation of an organization’s financial statements 4. A report on the examination of control procedures at a payroll processing organization

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    c. Which of the following statements would not be included in a report for a review of interim financial statements? 1. A statement of the procedures followed by the auditor 2. A statement of the restrictions on the use of the report 3. A statement of the scope of the engagement 4. A statement of the auditor’s responsibility for the financial statements d. Which of the following statements best describes a public accountant who is engaged to perform a compilation engagement? 1. The public accountant attempts to check the completeness of the client’s information. 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 request from his sister to prepare a set of financial statements for her new business. Which of the following statements concerning this set of financial statements, and its related communication, is not true? 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 following procedures would the public accountant normally perform during the 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 of representation from management. g. Which of the following statements about the framework for applying specified auditing procedures 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 the specified 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 a prospectus and must have an auditor’s report attached. Which of the following is not expressed as part of the auditor’s report? 1. Management’s assumptions are suitably supported and consistent with the plans of the entity. 2. The auditor agrees with management’s assertion that the forecast will be achieved . 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 for Auditing and Assurance Services , Second Canadian Edition, © 2007, McGraw - Hill Higher Education. Chapter 20, pre - test question 6, http://highered.mcgraw - hill.com/sites/0070919151/student_view0/chapter20/multiple_choice_quiz.html (accessed July 13, 2007). Adapted with permission. i. Which of the following working papers would most likely be found in a file associated with a review engagement? 1. Documentation of knowledge of the client’s business 2. Confirmations of bank balances 3. Results of test counts of inventory 4. Documentation of tests of controls over disbursements j. Under what circumstances is a consent letter issued in association with a prospectus? 1. The previous auditor of the client agrees to allow prior year financial statements to be 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 is fairly presented in accordance with GAAP.

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