1. (TCO F) If the auditor believes that the financial statements are not fairly stated or is unable to reach an conclusion because of insufficient evidence, the auditor (Points : 5) should withdraw from the engagement.should request an increase in audit fees so that more resources can be used to conduct the audit.has the resonsibility of notifying financial statement users through the auditor!s reort.should notify regulators of the circumstances.Question 2. 2. (TCO F) The auditor!s best defense when material misstatements are not uncovered is tohave conducted the audit (Points : 5) in accordance with auditing standards.as effectively and as reasonably ossible.in a timely manner.only after an adequate investigation of the management team.Question 3. 3. (TCO F) "hich statement is true of a ublic comany!s financial statements# (Points : 5) $arbanes%O&ley requires only the C'O to certify the financial statements.$arbanes%O&ley requires only the CFO to certify the financial statements.$arbanes%O&ley requires the C'O and CFO to certify the financial statements.$arbanes%O&ley requires neither the C'O nor the CFO to certify the financial statements. Question 4. 4. (TCO F) "hen the auditor (nows that a material illegal act has occurred, he or she must (Points : 5) reort it to the roer governmental authorities.issue a qualified audit reort.consider the effects on the financial statements, including the adequacy of disclosure.issue an adverse oinion.Question 5. 5. (TCO F) "hich form of evidence is most reliable# (Points : 5) )eneral ledger account balancesConfirmation of accounts receivable balance received from a customer*n internal memo e&laining the issuance of a credit memoCoy of month%end ad+usting entries Question 6. 6. (TCO F) *n e&amle of an e&ternal document is (Points : 5) emloyee time reorts.ban( statements.urchase order for comany urchases.carbon coies of chec(s.Question 7. 7. (TCO F) ,The accumulation and evaluation of evidence about information to determine and reort on the degree of corresondence between the information and established criteria by a cometent, indeendent erson, is a definition of (Points : 5) analytical rocedures.tests of transactions.tests of balances.auditing.Question 8. 8. (TCO F) To be considered reliable evidence, confirmations must be controlled by (Points: 5) a client emloyee resonsible for accounts receivable.a financial statement auditor.a client!s internal audit deartment.a client!s controller or CFO.Question 9. 9. (TCO F) The rimary urose of erforming analytical rocedures in the lanning hase of an audit is to (Points : 5) hel the auditor obtain an understanding of the client!s industry and business.assess the going concern assumtion.indicate ossible misstatements.reduce detailed tests.Question 10. 10. (TCO )) "hich statement is not correct with resect to analytical rocedures# (Points: 5) *uditing standards emhasi-e the need for auditors to develo and use e&ectations.*nalytical rocedures must be erformed throughout the audit.*nalytical rocedures may be erformed at any time during the audit.*nalytical rocedures use comarisons and relationshis to assess whether account balances aear reasonable.Question 11. 11. (TCO )) "hich ratio is best used to assess a comany!s ability to meet its long%term debt obligations# (Points : 5) .uic( ratio/eturn on common equity0ebt to equityCurrent ratio 1. (TCO *) 1atch the following definitions to the aroriate terms.(Points : 5) Potential Matches: 1 : 2ronouncements roviding secific guidance on auditing matters for all entities e&cet ublic comanies 2 : $tandards used by nonublic comanies and for interim audits for ublic comanies as initially adoted by the 2C*O3 3 : The standards used for ublic comany audits Answe : 2ublic Comany *ccounting Oversight 3oard auditing standards: )enerally acceted auditing standards: $tatements on auditing standardsQuestion 2. 2. (TCO 3) The following is a ortion of a qualified scoe and oinion reort due to a scoe restriction. (4ote5 * searate reort was issued on the effectiveness of internal control over financial reorting.) To the shareholders of Fast Times Cororation, "e have audited the accomanying balance sheet of Fast Times Cororation as of $etember 67, 8779, and the related statements of income, retained earnings, and cash flows for the ast year. These financialstatements are the resonsibility of the comany!s management. Our resonsibility is to e&ress an oinion on these financial statements based on our audit. '&cet as discussed in the following aragrah, we conducted our audit in accordance with the standardsof the 2ublic Comany *ccounting Oversight 3oard (:nited $tates). Those standards require that we lan and erform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. *n audit includes e&amining, on a test basis, evidence suorting the amounts and disclosures in the financial statements. *n audit also includes assessing the accounting rinciles used and significant estimates made by management, as well as evaluating the overall financial statement resentation. "e believe that our audit rovides a reasonable basis for our oinion. "e were unable to obtain audited financial statements suorting the comany!s investment in a foreign affiliate stated at ;7