Audit/Analysis

18-1. In terms of its value as audit evidence, the letter of management representations . . . a. serves as a substitute for evidence the auditor would otherwise have to obtain. b. serves as a complement to evidence the auditor has already obtained. c. is sufficient appropriate audit evidence. d. is not audit evidence.

18-2. Which of the following statements best describes the rationale for an engagement quality review? a. The opinion to be issued cannot be determined until a thorough review of the preliminary engagement findings has been performed. b. Professional standards require such reviews on every audit engagement to make certain that auditors reports are free of superfluous language. c. Review by a firm partner or management-level professional not associated with the client may identify concerns overlooked by the engagement team. d. A review of the engagement by an auditor from another firm can bring a more objective perspective to sensitive issues that may have arisen during the audit. 18-3. Consider (1) the auditors views about the qualitative aspects of the clients accounting practices and (2) any major difficulties encountered during the audit or disagreements with management. What do these two matters share in common? a. They represent material FRF departures that will prevent the auditor from issuing an unmodified opinion. b. They represent significant findings or issues that the auditor must communicate to those charged with governance. c. They represent potentially sensitive matters that professional standards identify as red flags indicating probable material weaknesses. d. They represent points of discussion internal to the engagement and as such should not be disclosed to anyone not assigned to the engagement team.