51 Which of the following auditing procedures most likely would assist an auditor in identifying related-party transactions? A) Inspecting correspondence with lawyers for evidence of unreported contingent liabilities B) Vouching accounting records for recurring transactions recorded just after the balance sheet date C) Reviewing confirmations of loans receivable and payable for indications of guarantees D) Performing analytical procedures for indications of possible financial difficulties. 52 Which of the following conditions or events most likely would cause an auditor to have substantial doubt about an entity's ability to continue as a going concern? A) Cash flows from operating activities are negative C) Significant related-party transactions are pervasive; B) Research and development projects are postponed D) Stock dividends replace annual cash dividends 53 Auditing procedures differ from auditing standards in that "standards" relate to A) Measures of performance C) Audit principles B) Acts to be performed D) Audit objectives 54 A measure of success in meeting a set of established goals is called system; A) Control goals B) Effectiveness C) Efficiency D) Monitoring 55 Tests of controls are required to A) Accomplishing control over the occurrence of recorded transactions B) Analytical procedures applied to financial statement assertions C) Obtaining evidence about the financial statement assertions D) Obtaining evidence about the operating effectiveness of client control procedures. 56 Sampling risk is an inherent part of sampling that results from A) Failure to recognize exceptions C) Testing less than the entire population B) Inappropriate audit procedures D) Weaknesses in client's internal control system 57 Statistical sampling is applied by auditors because an audit has to be conducted A) In a detailed manner C) Subject to the reliability of records B) On a test basis D) None of the above 58 The main purpose of a management representation letter is to A) Impress upon management its ultimate responsibility for the financial statements and disclosures B) Provide management a place to make assertions about the quantity and valuation of the physical inventory C) Provide a substitute source of audit evidence for substantive procedures auditors would otherwise perform D) Shift responsibility for financial statements from the management to the auditor. 59 After issuing a report, an auditor has no obligation to make continuing inquiries or perform other procedures concerning the audited financial statements, unless A) Management of the entity requests the auditor to reissue the auditor's report. B) Information about an event that occurred after the end of fieldwork comes to the auditor's attention C) Information, which existed at the report date and may affect the report, comes to the auditor's attention. D) Final determinations or resolutions are made of contingencies that had been disclosed in the financial statements 60 Which of the following is ordinarily performed last in the audit examination? A) Obtaining a signed management representation letter. C) Performing tests of controls B) Performing a review of subsequent events D) Securing a signed engagement letter from the client The proper signature Patrick, a CPA not in public practice, is an employee in the internal audit department of Star Power Company. The management has asked Patrick to perform examination of potential acquisitions and to express an opinion thereon. Patrick will use the reports for internal purposes and to show to its bankers in accordance with certain loan agreements. How should Patrick sign the report?

Explain your (letter choice) answer A) Patrick, CPA B) Patrick, CPA (Internal Auditor) C) Patrick, Internal Auditor D) Patrick, Internal Auditor (CPA)

Plese explain your answer.