Question

Part One: True/False Questions (2.5 marks / question) 1. An aged trial balance of accounts receivable may provide evidence on the adequacy of th allowance for uncollectible accounts 2. Confirmation of accounts receivable by direct communication with the debtor tests the existence of accounts receivable. 3. The examination of warehouse receipts is sufficient verification of a material amount of goods stored in public warehouses. 4. The receiving department should accept only goods for which there is an approved purchase order on hand. 5. A major control procedure related to plant and equipment is a budget for acquisitions and disposition. 6. The primary purpose of internal control over plant and equipment is to safeguard the assets from theft. 7. Confirmation of accounts payable is a required generally accepted auditing procedure. 8. The assertion most directly addressed when performing the search for unrecorded liabilities is completeness. 9. Existence is of principle concern to the auditors in the examination of accounts payable. 10. Audit reports should be dated as the date on which sufficient appropriate audit evidence has been collected. 11. If financial statements of a public company fail to disclose a material fact, the auditors may disclose the information in an additional paragraph added to the report and, depending upon materiality, issue either a qualified opinion or adverse opinion on the statements. 2. The Sarbanes-Oxley Act shifted a majority of the responsibility for maintaining internal control from management to the auditors. Independence is required for the performance for some, but not all assurance services Deficiencies in internal control identified by the auditor that are lesser than significant deficiencies must be communicated to management, and the audit committee need only be formed of the communication to management. audited financial statements include a balance sheet and an income statement, but do not ude a statement of cash flows, the auditors should issue a qualified report for the arture from generally accepted accounting principles. Ruditors' search for unrecorded liabilities is completed subsequent to the balance she ating whether there is a sufficiently low probability of material misstatement in 1 statements, the auditors accumulate factual, judgmental and proje ents and an allowance for undetected misstatements in the financial stateme auditors cannot observe ending inventory nor confirm accounts receivab ain sufficient evidence using alternative procedures, the auditors should do ent events might require an adjustment to the client's financial statemex mer declares bankruptcy causing a material receivable to be uncolle cubstantial doubt about a company's ability to remain a going con arly disclosed in the financial statements, the report issued is -of-matter paragraph or a disclaimer of opinion.

Answer 1

1. true. An aged trial balance of accounts receivable gives a base for auditor to understand the adequacy of the allowance for uncollectible accounts.

2. Confirmation of accounts receivable by direct communication with the debtor tests the existence of accounts receivable. - True

3. The examination of warehouse receipts is sufficient verification of a material amount of goods stored in public warehouses. - False

4.The receiving department should accept only goods for which there is an approved purchase order on hand. - False

5. A major control procedure related to plant and equipment is a budget for acqusition and disposal. This is true

6. The primary purpose of internal control over plant and equipment is to safeguard the assets from theft. - False. there are much more reasons.

7. Confirmation of accounts payable is a required generally accepted auditing procedure. - False. It is not required.

8. The assertion most directly addressed when performing the search for unrecorded liabilities is Completeness. Hence true.

9. False. Completeness is the primary concern to auditor and not existence.

10. The auditor should date the audit report not earlier than the date on which he has obtained sufficient appropriate evidence to support the his opinion. So its True.

11. True. It is duty to report the relevant material information missed out from the financial statement to the public by the auditor. He can also issue a qualified or adverse opinion too.

12. False. Sarbane oxley put major responsibility on the management than internal auditor.