1.The purpose of this document is to inform the staff of the audited client about the recommendations of the CPA firm for the company to improve any part of your business. a. legal letter b. management letter c. letter of contingencies d. Letter of engagement e. None of the above is correct

2.Which of the following communications should be sent at the culmination of the audit a. Communication of fraud and illicit acts detected b. Internal control deficiencies c. Letters to the audit committee and management d. All the answers are correct e. None of the answers is correct

3.The Sarbanes-Oxley Act requires that lawyers who provide services in companies public authorities report material violations of federal securities laws committed by the company. At what point in the audit, the auditors request the legal letter. a. It is done in field work b. It is done in the planning of the audit c. It is done after the report is delivered d. Performed at the end of the audit e. no answer is correct

4.After the balance sheet date, but before the issuance of the audit, the client suffers an uninsured loss of its inventory as consequence of a fire. The amount of the loss is material. The auditor should... a. adjust the financial statements for the year under audit b. advise the client to delay the issuance of the financial statements until economic loss can be determined. c. add a paragraph to the audit report d. advising the client to disclose the event in the notes to the financial statements e. no answer is correct

5.Using probability for contingencies, the probability of occurrence of the event is classified as a. unlikely, likely, or very likely b. light, moderate, large c. remote, reasonably possible or likely d. remote, probable, possible e. no answer is correct

6.Audit procedures related to contingent liabilities are initially focus on a. Precision b. Complexity c. Existence d. Idea e. Divulgation 

7.Which of the following groups is responsible for identifying and deciding the appropriate accounting treatment to record or disclose contingent liabilities? a. Auditors b. Legal advisor (lawyer) c. Management (management) d. audit committee e. Internal Auditor

8.The first step in the completion of the audit is to make the disclosures of the financial statements by the auditors. a. true b. False

9.The application of procedures, the size of the sample and the time required with aspects that differ between the audits that a CPA firm can perform. a. true b. False

10.The audit tests performed in audit phases (the audit cycles) through often provide sufficient and appropriate evidence about contingent liabilities and subsequent or subsequent events. a. true b. False