Which of the following procedures would an auditor ordinarily perform during an audit planning

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Audit Planning

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11. When auditing contingent liabilities, which of the following procedures would be least effective?
A. Reading the minutes of the board of directors.
B. Reviewing the bank confirmation letter.
C. Examining customer confirmation replies.
D. Examining invoices for legal services.

C. Examining customer confirmation replies.

12. When obtaining evidence regarding litigation against a client, the CPA would be least interested in determining
A. An estimate of when the matter will be resolved.
B. The period in which the underlying cause of the litigation occurred.
C. The probability of an unfavorable outcome.
D. An estimate of the potential loss.

A. An estimate of when the matter will be resolved.

13. The auditor's primary means of obtaining corroboration of management's information concerning litigation is a
A. Letter of audit inquiry to the client's lawyer.
B. Letter of corroboration from the auditor's lawyer upon review of the legal documentation.
C. Confirmation of claims and assessments from the other parties to the litigation.
D. Confirmation of claims and assessments from an officer of the court presiding over the litigation.

A. Letter of audit inquiry to the client's lawyer.

14. An auditor should obtain evidential matter relevant to all the following factors concerning third-party litigation against a client except the:
A. Period in which the underlying cause for legal action occurred.
B. Probability of an unfavorable outcome.
C. Jurisdiction in which the matter will be resolved.
D. Existence of a situation indicating an uncertainty as to the possible loss.

C. Jurisdiction in which the matter will be resolved.

15. An auditor will ordinarily examine invoices from lawyers primarily in order to
A. Substantiate accruals.
B. Assess the legal ramifications of litigation in progress.
C. Estimate the dollar amount of contingent liabilities.
D. Identify possible unasserted litigation, claims, and assessments.

D. Identify possible unasserted litigation, claims, and assessments

16. If a lawyer refuses to furnish corroborating information regarding litigation, claims, and assessments, the auditor should
A. Honor the confidentiality of the client-lawyer relationship.
B. Consider the refusal to be a scope limitation.
C. Seek to obtain the corroborating information from management.
D. Disclose this fact in a footnote to the financial statements.

B. Consider the refusal to be a scope limitation.

17. The refusal of a client's attorney to provide a representation on the legality of a particular act committed by the client is generally
A. Sufficient reason to issue a "subject to" qualified opinion.
B. Considered to be a scope limitation.
C. Insufficient reason to modify the auditor's report because of the attorney's obligation of confidentiality.
D. Proper grounds to withdraw from the engagement without further consideration.

B. Considered to be a scope limitation.

18. Which of the following material events occurring subsequent to the balance sheet date would require an adjustment to the financial statements before they could be issued?
A. Sale of long-term debt or capital stock.
B. Loss of a plant as a result of a flood.
C. Major purchase of a business that is expected to double sales volume.
D. Settlement of litigation, in excess of the previously recorded liability.

D. Settlement of litigation, in excess of the previously recorded liability.

19. Which of the following situations would require adjustment to or disclosure in the financial statements?
A. A merger discussion.
B. The application for a patent on a new production process.
C. Discussions with a customer that could lead to a 40 percent increase in the client's sales if agreement is successful.
D. The bankruptcy of a customer who regularly purchased 30 percent of the company's output.

D. The bankruptcy of a customer who regularly purchased 30 percent of the company's output.

20. An example of a Type I subsequent event is
A. A tornado that destroys a client's factory after the balance sheet date.
B. An event after the balance sheet date that confirms the auditor's belief (documented prior to the end of the client's fiscal year) that a large portion of the client's inventory is obsolete.
C. Notification of an IRS audit after the balance sheet date.
D. The client's Board of Directors unexpectedly resigns after the balance sheet date.

B. An event after the balance sheet date that confirms the auditor's belief (documented prior to the end of the client's fiscal year) that a large portion of the client's inventory is obsolete.

21. An auditor issued an audit report that was dual dated for a subsequent event that occurred after the completion of field work but before issuance of the auditor's report. The auditor's responsibility for events occurring subsequent to the completion of field work was
A. Limited to the specific event referenced.
B. Limited to include only events occurring before the date of the last subsequent event referenced.
C. Extended to subsequent events occurring through the date of issuance of the report.
D. Extended to include all events occurring since the completion of field work.

A. Limited to the specific event referenced.

22. Which of the following procedures should an auditor generally perform regarding subsequent events?
A. Compare the latest available interim financial statements issued after year-end with the financial statements being audited.
B. Send second requests to the client's customers who failed to respond to initial accounts receivable confirmation requests.
C. Communicate material weaknesses in internal controls to those charged with governance.
D. Review the cutoff bank statements for several months after year-end.

A. Compare the latest available interim financial statements issued after year-end with the financial statements being audited.

23. The purpose of analytical procedures at the completion of the audit includes all of the following except:
A. Revising the audit plan.
B. Considering overall reasonableness of the financial statements.
C. Reviewing adequacy of evidence gathered to investigate unusual fluctuations.
D. Recalculating some of the ratios examined during audit planning.

A. Revising the audit plan

24. Which of the following auditing procedures is ordinarily performed last?
A. Confirming accounts payable.
B. Testing the purchasing function.
C. Reading the minutes of directors' meetings.
D. Obtaining a management representation letter.

D. Obtaining a management representation letter.

25. The date of the management representation letter should coincide with the
A. Date of the latest subsequent event referred to in the notes to the financial statements.
B. Balance sheet date.
C. Date of the auditor's report.
D. Date of the engagement agreement.

C. Date of the auditor's report.

26. Which of the following items should an auditor communicate to those charged with governance in a publicly traded company?
A. Significant audit adjustments recorded by the company & management's consultation with other accountants about significant accounting matters.
B. Significant audit adjustments recorded by company but not management's consultation w/ other accountants @ significant accounting matters.
C. Management's consultation w other accountants about significant accounting matters but not significant audit adjustments recorded by the company.
D. Neither significant audit adjustments recorded by the company nor management's consultation with other accountants about significant accounting matters.

A. Significant audit adjustments recorded by the company and management's consultation with other accountants about significant accounting matters.

27. The management letter is used
A. To allow management to corroborate oral representations to the auditor.
B. To confirm the terms of the audit engagement.
C. To list all reportable conditions with respect to internal controls.
D. To make recommendations to the client based on observations made during the audit.

D. To make recommendations to the client based on observations made during the audit.

28. Ajax, Inc., is an affiliate of the audit client and is audited by another audit firm. Which of the following is most likely to be used by the auditor to obtain assurance that all guarantees by the client of the affiliate's indebtedness have been detected?
A. Send the standard bank confirmation request to all the client's lender banks.
B. Review client minutes and obtain a representation letter.
C. Examine supporting documents for all entries in intercompany accounts.
D. Obtain written confirmation of indebtedness from the auditor of the affiliate

B. Review client minutes and obtain a representation letter.

29. Generally, loss contingencies that are judged to be remote
A. Should be disclosed in the footnotes.
B. Should be recorded in the financial statements.
C. Should not be disclosed in the footnotes.
D. Should be recorded in the financial statements and the footnotes

C. Should not be disclosed in the footnotes.

30. Which of the following procedures would an auditor most likely perform to obtain evidence about an entity's subsequent events?
A. Reconcile bank activity for the month after the balance sheet date with cash activity reflected in the accounting records.
B. Obtain a letter from the entity's attorney describing any pending litigation, unasserted claims, and loss contingencies.
C. Review the treasurer's monthly reports on temporary investments owned, purchased, & sold.
D. Examine on a test basis the purchase invoices and receiving reports for several days after the inventory date.

B. Obtain a letter from the entity's attorney describing any pending litigation, unasserted claims, and loss contingencies.

31. Which of the following procedures would an auditor ordinarily perform during the review of subsequent events?
A. An analysis of related party transactions for the discovery of possible irregularities.
B. A review of the cut-off bank statements for the period after the year-end.
C. An inquiry of the client's legal counsel concerning litigation.
D. An investigation of material weaknesses in internal control previously communicated to the client.

C. An inquiry of the client's legal counsel concerning litigation.

32. Which of the following is not an audit procedure that the independent auditor would perform with respect to litigation, claims, and assessments?
A. Inquire of and discuss with management the policies and procedures adopted for identifying, evaluating, and accounting for litigation, claims, and assessments.
B. Obtain from management a description and evaluation of litigation, claims, and assessments that existed at the balance sheet date.
C. Obtain assurance from management that it has disclosed all unasserted claims that the lawyer has advised are likely to be asserted and must be disclosed.
D. Confirm directly with the client's lawyer that all claims have been recorded in the financial statements.

D. Confirm directly with the client's lawyer that all claims have been recorded in the financial statements.

33. An attorney is responding to an independent auditor as a result of the audit client's letter of inquiry. The attorney may appropriately limit the response to
A. Asserted claims and litigation.
B. Matters to which the attorney has given substantive attention in the form of legal consultation or representation.
C. Asserted, overtly threatened, or pending claims and litigation.
D. Items that have an extremely high probability of being resolved to the client's detriment.

B. Matters to which the attorney has given substantive attention in the form of legal consultation or representation.

34. Which of the following is generally requested in a legal letter?
A. A request that the attorney comment on unasserted claims where his or her views differ from management's evaluation.
B. A list of all attorneys that performed any work for the entity during the year.
C. A statement indicating that the attorney is responsible for the fair presentation of unasserted claims in the entity's financial statements.
D. A request that the attorney provide a copy of all invoices given to the client during the year.

A. A request that the attorney comment on unasserted claims where his or her views differ from management's evaluation

35. Which of the following subsequent events will be least likely to result in an adjustment to the financial statements?
A. Culmination of events affecting the realization of accounts receivable owned as of the balance sheet date.
B. Culmination of events affecting the realization of inventories owned as of the balance sheet date.
C. Material changes in the settlement of liabilities that were estimated as of the balance sheet date.
D. Material changes in the quoted market prices of listed investment securities since the balance sheet date.

D. Material changes in the quoted market prices of listed investment securities since the balance sheet date.

36. Subsequent events for which the auditor has a responsibility to actively search are defined as events that occur subsequent to the
A. Balance sheet date.
B. Date of the auditor's report.
C. Balance sheet date but prior to the date of the auditor's report.
D. Date of the auditor's report and concern contingencies that are not reflected in the financial statements.

C. Balance sheet date but prior to the date of the auditor's report.

37. An auditor is concerned with completing various phases of the examination after the balance sheet date. This "subsequent period" involving formal audit procedures extends to the date of the
A. Auditor's report.
B. Final review of the audit working papers.
C. Public issuance of the financial statements.
D. Delivery of the auditor's report to the client.

38. A major customer of an audit client suffers a fire after year-end, but just prior to completion of audit field work. The audit client believes that this event could have a significant direct effect on the financial statements. The auditor should
A. Advise management to disclose the event in the notes to the financial statements.
B. Disclose the event in the auditor's report.
C. Withhold submission of the auditor's report until the extent of the direct effect on the financial statements is known.
D. Advise management to adjust the financial statements.

A. Advise management to disclose the event in the notes to the financial statements.

39. If an auditor dates the auditor's report on financial statements for the year ended December 31, 2011, as of February 10, 2012, except for Note J, as to which the date is March 3, 2012, the auditor is acknowledging responsibility to actively search for and ensure proper handling by management of
A. All subsequent events occurring through March 3, 2012.
B. All subsequent events occurring through February 10, 2012.
C. All subsequent events occurring through February 10, 2012 and the specific subsequent event referred to in Note J through March 3, 2012.
D. Only the specific subsequent event referred to in Note J as of March 3, 2012.

C. All subsequent events occurring through February 10, 2012 and the specific subsequent event referred to in Note J through March 3, 2012.

40. Harvey, CPA is preparing an audit program for the purpose of ascertaining the occurrence of subsequent events that may require adjustment or disclosure essential to a fair presentation of the financial statements in conformity with generally accepted accounting principles. Which one of the following procedures would be least appropriate for this purpose?
A. Confirm, as of the completion of field work, accounts receivable that have increased significantly from the year-end date.
B. Read the minutes of the board of directors.
C. Inquire of management concerning events that may have occurred.
D. Obtain a lawyer's letter as of the completion of field work.

A. Confirm, as of the completion of field work, accounts receivable that have increased significantly from the year-end date.

41. A Type II subsequent event usually requires
A. An adjustment to the financial statements and the footnotes.
B. An adjustment to the financial statements but no special disclosure is required.
C. Disclosure in the footnotes.
D. Neither an adjustment to the financial statements nor disclosure in the footnotes.

C. Disclosure in the footnotes.

42. After field work audit procedures are completed, a partner of the CPA firm who has not been involved in the audit performs a second or wrap-up review of the working papers. This second review usually focuses on
A. The audit report, financial statements, and footnotes for consistency.
B. Irregularities involving the client's management and its employees.
C. The materiality of the adjusting entries proposed by the audit staff.
D. The communication of internal control weaknesses to those charged with governance.

A. The audit report, financial statements, and footnotes for consistency.

43. In the examination of financial statements for the purpose of expressing an opinion, the auditor normally prepares a schedule of unadjusted differences for which the auditor did not propose adjustments when they were discovered. What is the primary purpose of this schedule?
A. To point out to the responsible client officials the errors made by various company personnel.
B. To summarize the adjustments that must be made before the company can prepare and submit its federal tax return.
C. To identify the potential financial statement effects of errors or disputed items that were considered immaterial when discovered.
D. To summarize the errors made by the company so that corrections can be made after the audited financial statements are released.

C. To identify the potential financial statement effects of errors or disputed items that were considered immaterial when discovered.

44. Which of the following ratios is least likely to assist the auditor in determining whether the client is experiencing financial difficulties?
A. Net worth/total liabilities.
B. Cash/total assets.
C. Total liabilities/total assets.
D. Net income before taxes/net sales.

45. As part of an audit, a CPA often requests a representation letter from the client. Which one of the following is not valid purpose of such a letter?
A. To provide audit evidence.
B. To emphasize to the client their responsibility for the fairness of the financial statements.
C. To satisfy himself or herself that a certain account balance is fairly stated when certain customary auditing procedures are not performed.
D. To provide possible protection to the CPA against a charge of knowledge in cases where fraud is subsequently discovered to have existed in the accounts.

C. To satisfy himself or herself that a certain account balance is fairly stated when certain customary auditing procedures are not performed.

46. Which of the following expressions is least likely to be included in a client's representation letter?
A. No events have occurred subsequent to the balance sheet date that require adjustment to or disclosure in, the financial statements.
B. The company has complied with all aspects of contractual agreements that would have a material effect on the financial statements in the event of noncompliance.
C. Management acknowledges responsibility for illegal actions committed by its employees.
D. Management has made available all financial statements and related data.

C. Management acknowledges responsibility for illegal actions committed by its employees.

47. "There are no violations or possible violations of laws or regulations whose effects should be considered for disclosure in the financial statements or as a basis for recording a loss contingency." The foregoing passage most likely is from a(an)
A. Client engagement letter.
B. Report on compliance with laws and regulations.
C. Management representation letter.
D. Attestation report on internal controls.

C. Management representation letter.

48. Which of the following matters is an auditor required to communicate to those charged with governance?
A. The basis for assessing control risk below the maximum.
B. The process used by management in formulating sensitive accounting estimates.
C. The auditor's preliminary judgments about materiality levels.
D. The justification for performing substantive procedures at interim dates.

B. The process used by management in formulating sensitive accounting estimates.

49. "There have been no communications from regulatory agencies concerning noncompliance with or deficiencies in, financial reporting practices that could have a material effect on the financial statements." The foregoing passage is most likely from a
A. Report on internal control.
B. Special report.
C. Management representation letter.
D. Letter for underwriters.

C. Management representation letter.

50. When considering the use of management's written representations as audit evidence about the completeness assertion, an auditor should understand that such representations
A. Complement, but do not replace, substantive procedures designed to support the assertion.
B. Constitute sufficient evidence to support the assertion when considered in combination with reliance on internal controls.
C. Are not part of the evidential matter considered to support the assertion.
D. Replace reliance on internal controls as evidence to support the assertion.

A. Complement, but do not replace, substantive procedures designed to support the assertion.

51. A written representation from a client's management that, among other matters, acknowledges responsibility for the fair presentation of financial statements should normally be signed by the
A. Chief executive officer and the chief financial officer.
B. Chief financial officer and the chairman of the board of directors.
C. Chairman of the audit committee of the board of directors.
D. Chief executive officer, the chairman of the board of directors and the client's lawyer

A. Chief executive officer and the chief financial officer.

52. Communications between the auditor and those charged with governance should include all of the following except:
A. A summary of specific audit procedures used.
B. Significant audit adjustments.
C. Consultations with other accountants.
D. Major issues discussed with management before the auditor was retained.

A. A summary of specific audit procedures used.

53. Which of the following events occurring after the issuance of a client's financial statements and the auditor's report most likely would cause the auditor to make further inquiries about the previously issued financial statements?
A. An uninsured natural disaster occurs that may affect the entity's ability to continue as a going concern.
B. A contingency is resolved that had been disclosed in the audited financial statements.
C. New information is discovered concerning undisclosed lease transactions in the audited period.
D. A subsidiary that accounts for 25 percent of the entity's consolidated net income is sold.

C. New information is discovered concerning undisclosed lease transactions in the audited period

54. On February 25, a CPA issued an auditor's report expressing an unqualified opinion on financial statements for the year ended January 31. On March 2, the CPA learned that, on February 11, the entity incurred a material loss on an uncollectible trade receivable as a result of the ongoing deterioration of the financial condition of the entity's principal customer, which finally led to the customer's bankruptcy. Management then refused to adjust the financial statements for this subsequent event. The CPA determined that the information is reliable and that there are creditors currently relying on the financial statements. The CPA's next course of action most likely would be to
A. Notify the entity's creditors that the financial statements and the related auditor's report should no longer be relied upon.
B. Notify each member of the entity's board of directors about management's refusal to adjust the financial statements.
C. Issue revised financial statements and distribute them to each creditor known to be relying on the financial statements.
D. Issue a revised auditor's report and distribute it to each creditor known to be relying on the financial statements.

B. Notify each member of the entity's board of directors about management's refusal to adjust the financial statements.

55. After an audit report containing an unqualified opinion on a nonpublic client's financial statements is issued, the auditor learns that the client has decided to sell the shares of a subsidiary that accounts for 30 percent of its revenue and 25 percent of its net income. The auditor should
A. Determine whether the information is reliable and, if it is determined to be reliable, request that revised financial statements be issued.
B. Notify the entity that the auditor's report may no longer be associated with the financial statements.
C. Describe the effects of this subsequently discovered information in communications with persons known to be relying on the financial statements.
D. Take no action because the auditor has no obligation to make any further inquiries.

D. Take no action because the auditor has no obligation to make any further inquiries.

56. An auditor's client has violated a minor requirement of its bond indenture that could result in the trustee requiring immediate payment of the principal amount due. The client refuses to seek a waiver from the bond trustee. Request for immediate payment is not considered likely. Under these circumstances, the auditor must
A. Require classification of bonds payable as a current liability.
B. Contact the bond trustee directly.
C. Disclose the situation in the auditor's report.
D. Obtain an opinion from the company's attorney as to the likelihood of the trustee's enforcement of the requirement.

C. Disclose the situation in the auditor's report.

57. Auditors often request that the audit client send a letter of inquiry to those attorneys who have been consulted with respect to litigation, claims, and/or assessments. The primary reason for this request is to provide the auditor with
A. An estimate of the dollar amount of the probable loss.
B. An expert opinion as to whether a loss is possible, probable, or remote.
C. Information concerning the progress of cases to date.
D. Corroborative inquiries made of the client by the auditor.

D. Corroborative inquiries made of the client by the auditor.

58. The primary reason an auditor requests letters of inquiry be sent to a client's attorneys is to provide the auditor with
A. A description and evaluation of litigation, claims, and assessments that existed at the date of the balance sheet.
B. An expert opinion as to whether a loss is possible, probable, or remote.
C. The opportunity to examine the documentation concerning litigation, claims, and assessments.
D. Corroboration of the information furnished by management concerning litigation, claims, and assessments.

D. Corroboration of the information furnished by management concerning litigation, claims, and assessments

59. Which of the following statements extracted from a client's lawyer's letter concerning litigation, claims, and assessments most likely would cause the auditor to request clarification?
A. "I believe that the possible liability to the company is nominal in amount."
B. "I believe that the action can be settled for less than the damages claimed."
C. "I believe that the plaintiff's case against the company is without merit."
D. "I believe that the company will be able to defend this action successfully."

B. "I believe that the action can be settled for less than the damages claimed."

60. An auditor's decision concerning whether or not to "dual date" the audit report is based upon the auditor's willingness to
A. Extend auditing procedures.
B. Accept responsibility for all events between year-end and the audit report date.
C. Permit inclusion of a footnote captioned: event (unaudited) subsequent to the date of the auditor's report.
D. Assume responsibility for events subsequent to the issuance of the auditor's report.

A. Extend auditing procedures.

61. A Type I subsequent event usually requires
A. An adjustment to the financial statements.
B. No adjustment to the financial statements.
C. Withdrawal from the engagement.
D. None of the above.

A. An adjustment to the financial statements.

62. A disclosure of a contingent liability in the footnotes is made rather than adjusting the financial statement accounts when
A. The outcome of the event is judged to be reasonably possible and the loss can be reasonably estimated.
B. The loss can be reasonably estimated, but the outcome is unknown.
C. The outcome of the event is judged to be reasonably possible but the loss cannot be reasonably estimated.
D. The outcome is unknown and the loss is reasonably estimable but the client does not want to book the loss.

C. The outcome of the event is judged to be reasonably possible but the loss cannot be reasonably estimated.

63. Which of the following statements ordinarily is included among the written client representations obtained by the auditor?
A. Compensating balances and other arrangements involving restrictions on cash balances have been disclosed.
B. Management acknowledges responsibility for illegal actions committed by employees.
C. Sufficient evidential matter has been made available to permit the issuance of an unqualified opinion.
D. Management acknowledges that there are no material weaknesses in the account balances.

A. Compensating balances and other arrangements involving restrictions on cash balances have been disclosed.

64. Which of the following statements is correct about an auditor's required communication with management and those charged with governance?
A. Any matters communicated to those charged with governance are also required to be communicated to the entity's management.
B. The auditor is required to inform those charged with governance about significant errors discovered by the auditor and subsequently corrected by management.
C. The auditor does not have any requirement to communicate with anyone outside of management.
D. Weaknesses in internal control previously reported to those charged with governance are required to be communicated to those charged with governance after each subsequent audit until the weaknesses are corrected.

B. The auditor is required to inform those charged with governance about significant errors discovered by the auditor and subsequently corrected by management

65. Which of the following statements is correct concerning an auditor's required communication with those charged with governance?
A. This communication is required to occur before the auditor's report on the financial statements is issued.
B. This communication should include management changes in the application of significant accounting policies.
C. Any significant matter communicated to those charged with governance also should be communicated to management.
D. Significant audit adjustments proposed by the auditor and recorded by management need not be communicated to those charged with governance.

B. This communication should include management changes in the application of significant accounting policies.

66. For which of the following matters should an auditor obtain written management representations?
A. Management's cost-benefit justifications for not correcting internal control weaknesses.
B. Management's knowledge of future plans that may affect the price of the entity's stock.
C. Management's compliance with contractual agreements that may affect the financial statements.
D. Management's acknowledgment of its responsibility for employees' violations of laws.

C. Management's compliance with contractual agreements that may affect the financial statements.

67. Key Co. plans to present comparative financial statements for the years ended December 31, 2010 and 2011, respectively. Smith, CPA, audited Key's financial statements for both years and plans to report on the comparative financial statements on May 1, 2012. Key's current management team was not present until January 1, 2011. What period of time should be covered by Key's management representation letter?
A. January 1, 2010 through December 31, 2011.
B. January 1, 2010 through May 1, 2012.
C. January 1, 2011 through December 31, 2011.
D. January 1, 2011 through May 1, 2012.

B. January 1, 2010 through May 1, 2012.

68. After issuance of the auditor's report, the auditor has no obligation to make any further inquiries with respect to audited financial statements covered by an auditor's report unless
A. A lawsuit in which risk of loss was considered remote is resolved in the company's favor.
B. A development occurs that may affect the client's ability to continue as a going concern.
C. A material fraud is initiated by an employee after the report is issued.
D. Evidence of significant, non-arms-length, related party transactions that happened prior to year-end is discovered.

D. Evidence of significant, non-arms-length, related party transactions that happened prior to year-end is discovered.

69. After an auditor has issued an audit report on a nonpublic entity, there is no obligation to make any further audit tests or inquiries with respect to the audited financial statements covered by that report unless
A. New information comes to the auditor's attention concerning an event that occurred prior to the date of the auditor's report that may have affected the auditor's report.
B. Material adverse events occur after the date of the auditor's report.
C. Final determination or resolution was made on matters that had resulted in a qualification in the auditor's report.
D. Final determination or resolution was made of a contingency that had been disclosed in the financial statements and no liability arose from the resolution.

A. New information comes to the auditor's attention concerning an event that occurred prior to the date of the auditor's report that may have affected the auditor's report.

70. After issuance of the auditor's report, the auditor has no obligation to make any further inquiries with respect to audited financial statements covered by that report unless
A. A final resolution of a contingency that had resulted in a qualification of the auditor's report is made.
B. A development occurs that may affect the client's ability to continue as a going concern.
C. An investigation of the auditor's practice by a peer review committee ensues.
D. New information is discovered concerning undisclosed related party transactions of the previously audited period.

D. New information is discovered concerning undisclosed related party transactions of the previously audited period.

71. Who generally signs the legal letter?
A. The board of directors.
B. The audit partner.
C. The CEO of the entity being audited.
D. The entity's attorneys.

C. The CEO of the entity being audite

Which of the following procedures would an auditor ordinarily perform?

What the auditor should do during the audit planning?

Which of the following procedures would an auditor most likely perform when planning an audit?

Which of the following is one of the procedures in the planning phase of an audit?