1. When an adverse opinion is expressed, the opinion paragraph should include a direct reference to:

A) A note to the financial statements which discusses the basis for the opinion

B) The scope paragraph which discusses the basis for the opinion rendered.

C) The consistency or lack of consistency in the application of generally accepted accounting principles.

D) A separate paragraph which discusses the basis for the opinion expressed.

2. Which of the following reports could not be issued strictly because of a scope limitation ?

a. unqualified

b. qualified

c. adverse

d. disclaimer

3. The use of negative assurance in a report by a CPA associated with a set of financial statements would be appropriate only in:

a. examinations

b. reviews

c. Agreed-upon procedures

d. audits

4. Unrecorded liabilities are most likely to be found during the review of which of the following ?

a. Disbursements subsequent to year-end.

b. Shipping records.

c. December cash disbursements journal.

d. Unmatched sales invoices.

5. Of the following,which best explains why accounts payable confirmation procedures are not always used by auditors?

a. Inclusion of accounts payable balances in the liability certificate completed by the client allows the auditor to refrain from using confirmation procedures.

b. Accounts payable usually are insignificant and can be audited by using confirmation procedures.

c. The auditor may believe that the confirmation request will cause certain creditors to press for payment.

d. Confirmations are better at identifying overstatements as compared to understatements.

6. Ordinarily audit procedures for liabilities should have which if the following as the most important objective?

a. Completeness

b. Occurrence

c. Presentation

d. Classification or accuracy or cutoff

7. The most difficult type of irregularity to detect is fraud based on:

a. the over recording of transactions.

b. the nonrecording of transactions.

c. recorded transactions in subsidiaries.

d. related party receivables.

8. Which of the following is a standard control for cash disbursements?

a. Checks should be signed by the controller and at least one other employee of the company.

b. Checks should be sequentially numbered and the numerical sequence should be accounted for by the person preparing bank reconciliations.

c. Checks and supporting documents should be marked “Paid” immediately after the check is returned with the bank statement .

d. Checks should be sent directly to the payee by the employee who prepares documents that authorize check preparation.