23. Where would the auditor make mention of issues noted during audit procedures that are not of

audit significance?

a. Engagement letter.

b. Management letter.

c. Representation letter.

d. Attorney letter.

24) Which of the following is not a required communication with the audit committee?

a. Accounting policies.

b. Accounting estimates.

c. Economic trends.

d. Difficulties encountered

25. A common technique used to fraudulently misstate financial statements involves the

undervaluing of existing long-lived assets.

a. True

b. False

26. The FASB standard on accounting for leases issued in 2016 requires most leases to be reported

on the lessees balance sheet, which is a significant change from the previous accounting

requirements.

a. True

b. False

27. When assessing fair value of Level 2 assets, auditors will use information on the sale of

identical items in active or inactive markets as a source of audit evidence.

a. True

b. False

28. Which statement is true?

a. Management is always reluctant to write down asset values.

b. Intangible assets do not require effective controls because they have low inherent risk.

c. Complex ownership structures may create challenges in the recording of assets.

d. The incomplete recording of asset disposals understates the asset balance.

29. Audit procedures should be proportional to which of the following?

a. Size of the client.

b. Size of the firm.

c. The assessed risks.

d. The assessed misstatements

30. Which is the primary assertion tested in conjunction with obtaining evidence regarding impairment?

a. Valuation.

b. Cutoff.

c. Existence.

d. Rights

31. Which of the following is not a significant challenge related to valuation issues for audits of

merger and acquisition transactions?

a. Valuing the assets upon acquisition.

b. Valuing the liabilities upon acquisition.

c. Measuring restructuring charges.

d. Measuring the qualifications of personnel from the acquired company.