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Which of the following would more likely be included in the current file rather than the permanent file?

Question 34 options:

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Which of the following would more likely be included in the current file rather than the permanent file?
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A) General ledger trial balance and board of director meeting minutes.

 

 
B) Audit program and inventory account lead schedule.

 

 
C) Equity accounts analyses and long-term debt account information.

 

 
D) Control flowcharts and auditor reconciliations.

 

Question 35 (1.6 points)

 

When planning a review of an audit client’s interim financial statements, which of the following procedures should the accountant perform to update the accountant’s understanding of the entity and its environment?

Question 35 options:

 
A) Inquire of the entity’s outside legal counsel about the status of any previous pending litigation and any new litigation involving the entity.

 

 
B) Select a sample of material revenue transactions occurring during the interim period and examine supporting documentation.

 

 
C) Consider the results of audit procedures performed with respect to the current year’s financial statements.

 

 
D) Perform analytical procedures on selected accounts by comparing the interim amounts to the amounts for the previous audited fiscal year end.

 

Question 36 (1.6 points)

 

Which of the following is a suitable title for a financial statement prepared using a special purpose framework?

Question 36 options:

 
A) Statement of operations.

 

 
B) Statement of income – regulatory basis.

 

 
C) Statement of comprehensive income.

 

 
D) Income statement.

 

Question 37 (1.6 points)

 

According to the general standards in Government Auditing Standards,

Question 37 options:

 
A) Performing nonaudit services creates an inherent impairment of independence.

 

 
B) The audit organization, but not the auditor, may provide any nonaudit services.

 

 
C) An audit organization must be free of the appearance of an impairment to independence.

 

 
D) An audit organization performing audits under GAGAS must have an external peer review every 5 years.

 

Question 38 (1.6 points)

 

An entity has failed to provide documentation for a newly acquired material asset and informs its auditors that the documentation is lost.  According to generally accepted government auditing standards, what would this situation typically indicate to the auditors?

Question 38 options:

 
A) Fraudulent activity.

 

 
B) Abusive activity.

 

 
C) A heightened risk of fraud.

 

 
D) Misappropriation of assets.

 

Question 39 (1.6 points)

 

The auditor must obtain “sufficient, competent” evidential matter to support his opinion. “Competent” means:

Question 39 options:

 
A) enough

 

 
B) believable

 

 
C) written

 

 
D) relevant

 

Question 40 (1.6 points)

 

An enterprise engaged a CPA to audit its financial statements in accordance with Government Auditing Standards (the Yellow Book) because of the provisions of government grant funding agreements. Under these circumstances, the CPA is required to report on the enterprise’s internal control, either in the report on the financial statements or in

Question 40 options:

 
A) A separate report.

 

 
B) The report on the performance audit.

 

 
C) A letter to the government funding agency.

 

 
D) The notes to the financial statements.

 

Question 41 (1.6 points)

 

A CPA has been engaged to apply agreed-upon procedures in accordance with Statements on Standards for Attestation Engagements to prospective financial statements.  Which of the following conditions must be met for the CPA to perform the engagement?

The prospective financial statements must be prepared according to GAAP.

The client must agree to assume responsibility for the prospective financial statements.

The CPA must provide results of the engagement but may elect to do so either orally or in writing.

The client must agree to accept the CPA’s opinion regarding the prospective financial statements.

Question 41 options:

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