12) Auditors carefully review estimates used my management in the preparation of the financial statements. This is because a) management may use estimates as a "cookie jar" to manage earnings. b) using estimates is considered "bad form" and estimates must be removed from financial statements. c) only auditors are permitted to create estimates used in audited financial statements. d) subsequent events bearing on the estimate may give assurance or question the veracity of an estimate. e) All of the above f) A and D 13) Lyle didn't like how the audit of his company was proceeding. He thought the auditors were being especially hard to deal with and uncooperative. Therefore, he took the audit workpapers out the conference room that they were working in and fired the firm. His company subsequently paid the firm for the work they did to date. a) Since the company paid the firm, the workpapers are properly the company's property. b) Audit workpapers are never the property of the client, they are the auditor's property. Lyle committed a crime by stealing the firm's property. c) Since the audit was being performed on the company's property, the workpapers belong to the company. d) Auditors must retrieve the workpapers so they can destroy them, since the engagement was cancelled. 14) James and Company has the opportunity to attract a new client to the firm. The firm should a) carefully consider and document its client acceptance. b) be prepared to address the beginning balances of the company. c) communicate with the previous audit firm. d) All of the above e) A and C 15) James and Co. was able to attract the company to become a client. They have determined that they will now communicate with the previous auditor. The following is true regarding this communication a) It is required under generally accepted auditing standards that James and Co. attempt communication. b) The client must authorize it. If the client does not, the predecessor auditor may not share information with James and Co. c) If the predecessor auditor has significant, negative information, James and Co. is prohibited from accepting the engagement. d) All of the above e) A and B