auditing

Part One: True / False Questions (2.5 marks/ question) 1. An aged trial balance of accounts receivable may provide evidence on the adequacy of the allowance for uncollectible accounts 2. Confirmation of accounts receivable by direct communication with the debtor tests the existence of accounts receivable. 3. The examination of warehouse receipts is sufficient verification of a material amount of goods stored in public warehouses. 4. The receiving department should accept only goods for which there is an approved purchase order on hand. 5. A major control procedure related to plant and equipment is a budget for acquisitions and disposition. 6. The primary purpose of internal control over plant and equipment is to safeguard the assets from theft 7. Confirmation of accounts payable is a required generally accepted auditing procedure. 8. The assertion most directly addressed when performing the search for unrecorded liabilities is completeness 9. Existence is of principle concern to the woditors in the examination of accounts payable. 10. Audit reports should be dated as the date on which sufficient appropriate audit evidence has been collected 11. If financial statements of a public company fail to disclose a material fact, the auditors may disclose the information in an additional paragraph added to the report and, depending upon materiality issue either a qualified opinion or adverse opinion on the statements. 12. The Sarbanes-Oxley Act shifted a majority of the responsibility for maintaining internal control from management to the auditors. 13. Independence is required for the performance for some, but not all assurance services. 14. Deficiencies in intermal control identified by the auditor that are lesser than significant deficiencies must be communicated to management, and the audit committee need only be informed of the communication to management 15. If audited financial statements include a balance sheet and an income statement, but do not include a statement of cash flows, the suditors should issue a qualified report for the departure from generally accepted accounting principles. 16. The auditors' search for recorded liabilities is completed subsequent to the balance sheet date. 17. In evaluating whether there is a sufficiently low probability of material misstatement in the financial statements, the waiters accumulate factual judgmental and projected misstatements and an allowance for undetected misstatements in the financial statements. 18. When the editors cannot observe ending inventory nor confirm accounts receivable and cannot obtain sufficient evidence using alternative procedures, the auditors should disclaim an opinion. 19. The subsequent events might require an adjustment to the client's financial statements, when major customer declares bankruptcy causing a material receivable to be uncollectible 20. When there is substantial doubt about a company's ability to remain a going concer, with the matter properly disclosed in the financial statements, the report issued is unmodified with an emphasis of matter paragraph or a disclaimer of opinion