Essay on Week 5 Extended Study Auditing Exam

Words: 3616
Pages: 15

1) If reported sales for 2010 erroneously include sales that occur in 2011, the assertion violated on the 2010 statements would be:
a. presentation and disclosure
b. valuation or allocation
c. existence or occurrence
d. completeness

2. The completeness assertion would be violated if
a. disclosure in the statements of pledged receivables was inadequate
b. unbilled shipments occurred during the period
c. fictitious sales transactions were included in accounts receivable
d. the allowance for doubtful accounts was understated 2) The rights and obligations assertion applies to:

A: Transactions on accounts

3) Which of the following assertions is NOT made by management in placing an item in the financial statements?

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d. a separate rule in the AICPA Code of Conduct.

22) In making preliminary judgments about materiality, the auditor initially determines the aggregate level of materiality for each statement. For planning purposes, the auditor should use the A: the auditor should use the smallest aggregate level of misstatements considered to be material to any one of the financial statements. 23) Professional standards recognize that a misstatement that is quantitatively immaterial may be qualitatively material. In regards to these items, professional standards require the auditor to
A: Auditors generally design the audit to provide reasonable assurance of detecting quantitatively material misstatements but are responsible throughout the audit for considering whether any misstatements that come to their attention are quantitatively or qualitatively material.
Given these factors it is evident that both preparers and auditors of state and local government financial statements need to clearly understand how to assess materiality. Considering the quality of the internal control, selecting the nature and extent of audit procedures and evaluating the significance of known financial statement misstatements all depend, in part, on materiality determinations.

24) When setting the level of materiality on a particular engagement, the auditor must consider
A: The minimum aggregate misstatement in a financial statement sufficient to prevent a statement from