1. For each of the communications listed below, select the appropriate time period during which the communication is typically obtained or provided and whether the communication is oral, written, or either oral or written.

Internal control deficiencies

Multiple Choice

A) Following the date of the auditors' report; Either oral or written

B) Either following the date of the auditors' report or as significant matters are identified; Written

C) Prior to or at the date of the auditors' report; Written

D) Prior to the engagement; Written

2. Long and Short, CPAs, were auditing Island Corporation for the year ended December 31, 2023. On January 11, 2024, a major customer of Island Corporation declared bankruptcy as the result of an uninsured loss due to a major fire in their warehouse on January 8, 2024. As a result, a material accounts receivable from the customer was determined to be uncollectible. Long and Short, CPAs, would expect the client to

Multiple Choice

A) treat the loss as a subsequent event and provide a footnote about the loss in the 2023 financial statements.

B) treat the loss as a subsequent event and adjust the 2023 financial statements to record the loss on uncollectible accounts.

C) file a lawsuit against the customer in hopes of collecting some of the money owed to the client.

D) record the loss on uncollectible accounts as a routine transaction in the year 2024.

3. Auditors may conclude that depreciation charges are too small by noting

Multiple Choice

A) large and frequent losses on assets retired.

B) large numbers of fully depreciated assets.

C) insured values much larger than book values.

D) frequent trade-ins of relatively new assets.