1. Going concern is a fundamental principle in the preparation of financial statements. Which of the following statements regarding the assessment of going concern is true?

a) The period of management's assessment of going concern should cover a minimum of 12 months up to and including the date of the financial statements; if management is unwilling to present forecasts to meet this minimum period, an adverse opinion may be appropriate. b) The period of the auditor's assessment of going concern should consider the same period used by management and extend it six months further; if management is unwilling to present forecasts to meet this minimum period, a disclaimer of opinion may be appropriate. c) The period of management's assessment of going concern should cover a minimum of 12 months from the date of the financial statements; if management is unwilling to present forecasts to meet this minimum period, a disclaimer of opinion may be appropriate.

d) The period of the auditor's assessment of going concern should be a minimum of 24 months from the date of the financial statements; if management is unwilling to present forecasts to meet this minimum period, an adverse opinion may be appropriate.

2. CAS 230 Audit Documentation considers factors affecting the form, content, and extent of working papers. Which of the following statements regarding audit working papers is true?

a) The audit file should be prepared in such a way that an individual who is not familiar with auditing should be able to review the audit file and understand how the audit has been conducted and whether the evidence collected supports the audit opinion.

b) The audit file should be prepared in such a way that an individual who is familiar with auditing and the industry of the client but not with the client itself should be able to review the audit file and understand how the audit has been conducted and whether the evidence collected supports the audit opinion.

c) The audit file should be prepared in such a way that an individual who is familiar with auditing and with the industry of the client should be able to review the audit file and understand how the audit has been conducted and whether the evidence collected supports the audit opinion.

d) The audit file should be prepared in such a way that an individual who has been involved in the audit should be able to review the audit file and understand how the audit has been conducted and whether the evidence collected supports the audit opinion.

3. Amit, an auditor with Smith & Gill LLP, is unsure where in the auditor's report the reference to "internal controls ... to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error" should appear. Where should this reference appear, according to the sections in an audit report specified in CAS 700 Forming an Opinion and Reporting on Financial Statements?

a) Key audit matters

b) Responsibilities of management

c) Responsibilities of the auditor

d) Auditor's opinion

4. Which of the following statements regarding management's refusal to disclose related-party transactions on the financial statements is true?

a) It is a scope limitation, and a qualified opinion or a disclaimer of opinion would be issued, depending on materiality and pervasiveness.

b) It is a scope limitation, and a qualified or adverse opinion would be issued, depending on materiality and pervasiveness.

c) It is a GAAP departure, and a qualified or adverse opinion would be issued, depending on materiality and pervasiveness.

d) It is a GAAP departure, and a qualified opinion or a disclaimer of opinion would be issued, depending on materiality and pervasiveness.

5. Anil, Dragonfly Ltd.'s auditor, is conducting a subsequent events review to ensure that any events that occur after the balance sheet date (December 31, 20X5) and that may require adjustment or disclosure in the financial statements have been identified. Which of the following will Anil say is correct regarding the subsequent event identified?

a) A major accounts receivable customer is in liquidation due to a destructive fire that occurred on January 10, 20X6 (prior to the audit report being issued): an adjustment should be made to the financial statements.

b) A major accounts receivable customer is in liquidation due to a destructive fire that occurred on January 10, 20X6 (prior to the audit report being issued): there is no need for an adjustment or notes disclosure.

c) Dragonfly filed a lawsuit on December 27, 20X5, for $1.5 million. They won the lawsuit on January 2, 20X6, and received the payout on January 10, 20X6 (prior to the audit report being issued): an adjustment should be made to the financial statements.

d) Dragonfly filed a lawsuit on December 27, 20X5, for $1.5 million. They won the lawsuit on January 2, 20X6, and received the payout on January 10, 20X6 (prior to the audit report being issued): there should be a note disclosure only.