1. Which portion of the audit is least likely to be completed before the balance sheet date?

• Tests of controls.
• Issuance of the engagement letter.
• Substantive procedures.
• Assessment of control risk.

2. Successor auditors should make inquiries to the predecessor auditors regarding:

• The integrity of management.
• Disagreements with management over accounting, auditing, or similarly significant matters.
• The predecessor auditors' understanding about the reasons for the change of auditors.
• All of the above.

3. Individuals who commit fraud are ordinarily able to rationalize the act and also have an:

• Incentive and opportunity.
• Incentive but no opportunity.
• Opportunity but no incentive.
• Neither opportunity nor incentive

4. If the economy is experiencing a recession, an auditor should focus increased attention on which of the following accounts?

• Purchase returns and allowances.
• Allowance for doubtful accounts.
• Common stock.
• Noncontrolling interest of a subsidiary purchased during the year.

5. Which one of the following risk factors is best described as opportunities:

• High vulnerability to rapid changes, such as changes in technology, product obsolescence, or interest rates.
• Operating losses making the threat of bankruptcy, foreclosure, or hostile takeover imminent.
• Significant related party transactions not in the ordinary course of business or with related entities not audited or audited by another firm.
• Rapid growth or unusual profitability especially compared to that of other companies in the same industry.