Question
11. Which of the following is a documentation requirement of AU-C 230B that partners may want to mention at the engagement team discussion? A. Inclusion
11. Which of the following is a documentation requirement of AU-C 230B that partners may want to mention at the engagement team discussion?
A. | Inclusion of all contracts or agreements. | |
B. | Identification of all items considered for testing for operating effectiveness of controls. | |
C. | Documentation that going concern considerations were unnecessary. | |
D. | Documentation of the nature and effect of aggregated misstatements. |
12. The process used to understand the activities of an audit client is which of the following?
A. | Complete after the initial engagement. | |
B. | Complete after preliminary procedures. | |
C. | Continual throughout the engagement. | |
D. | Optional underneath a certain revenue threshold. |
13. Which of the following is a unique procedure that auditors might perform to form an understanding of a nonprofit organization that they would not do in a different type of audit?
A. | Obtain an in-depth understanding of the client's activities and operations. | |
B. | Read third-party reviews of grant programs, including federal award programs. | |
C. | Focus on areas that could cause material misstatements in the financial statements. | |
D. | Document the risk assessment procedures performed in order to gain the understanding. |
14. How might political and economic changes affect nonprofit organizations?
A. | Relief efforts for disasters can draw funding away from nonprofit organizations. | |
B. | States are prohibited from cutting funding to nonprofit organizations in order to balance budgets. | |
C. | Changes to the economic climate are rare and should only be considered during an initial audit. | |
D. | Nonprofit organizations react more quickly to downturns in the economy than for-profit businesses. |
15. How might performance measures affect the audit or the auditor's assessment of the risks of material misstatement?
A. | Typically, performance measures are used to highlight expected or normal results and trends that affect the organization being audited. | |
B. | Auditors are prohibited from using performance measures when performing analytical procedures, but they can be used for planning purposes. | |
C. | The pressure to meet performance targets could motivate intentional misstatements, which should be considered in the auditor's risk assessment. | |
D. | If the organization is small enough, it likely will not have performance indicators, so the audit will be unaffected by them. |
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