WGU D251 ADVANCED AUDITING
OBJECTIVE ASSESSMENT CLOSING SCRIPT
UPDATED QUESTIONS AND ANSWERS
VIEW AHEAD PREP MATERIAL SOLVED
⩥ Which of the following statements is NOT true regarding the auditor's
responsibility for subsequent events?
A) The auditor has an active responsibility to make continuing inquiries
between the date of the auditor's report and the date on which the report
is submitted.
B) The auditor has an active responsibility to make continuing inquiries
between the date of the financial statements and the date of the auditor's
report.
C) The auditor has an active responsibility to make continuing inquiries
between the date of the financial statements and the date on which
sufficient appropriate audit evidence has been obtained.
D) The auditor has no active responsibility to make continuing inquiries
after the date of the auditor's report..
Answer: A
⩥ Which of the following procedures would an auditor most likely
perform in obtaining evidence about subsequent events?
,A) Determine that changes in employee pay rates after year-end were
properly authorized.
B) Recompute depreciation charges for plant assets sold after year-end.
C) Inquire about payroll checks that were recorded before year-end but
cashed after year-end.
D) Investigate changes in long-term debt occurring after year-end.
Answer: D
⩥ Which of the following events occurring after the issuance of an
auditor's report most likely would cause the auditor to make further
inquiries about the previously issued financial statements?
A) A technological development that could affect the entity's future
ability to continue as a going concern.
B) The discovery of information regarding a contingency that existed
before the financial statements were issued.
C) The entity's sale of a subsidiary that accounts for 30% of the entity's
consolidated sales.
D) The final resolution of a lawsuit explained in a separate paragraph of
the auditor's report..
Answer: B
⩥ After considering an entity's negative trends and financial difficulties,
an auditor has substantial doubt about the entity's ability to continue as a
going concern. The auditor's considerations relating to management's
,plans for dealing with the adverse effects of these conditions most likely
would include management's plans to:
A) Increase current dividend distributions.
B) Reduce existing lines of credit.
C) Increase ownership equity.
D) Purchase assets formerly leased..
Answer: C
⩥ A client's lawyer is unable to form a conclusion about the likelihood
of an unfavorable outcome of pending litigation because of inherent
uncertainties. If the litigation's effect on the client's financial statements
could be material but it is properly disclosed in the financial statements,
the auditor most likely would:
A) Issue a qualified opinion in the auditor's report because of the
lawyer's scope limitation.
B) Withdraw from the engagement because of the lack of information
furnished by the lawyer.
C) Disclaim an opinion on the financial statements because of the
materiality of the litigation's effect.
D) Issue an unmodified opinion..
Answer: D
, ⩥ Which of the following procedures should an auditor perform
concerning litigation, claims, and assessments?
A) Inspect legal documents in the possession of the client's lawyer that
are relevant to pending litigation and unasserted claims and assessments.
B) Discuss with the client's lawyer its philosophy of defending litigation,
claims, and assessments that have a high probability of being resolved
unfavorably.
C) Confirm directly with the client's lawyer that all litigation, claims,
and assessments have been properly recorded in the financial statements.
D) Obtain assurance from management that is has disclosed all
unasserted claims that its lawyer has advised are probably of assertion..
Answer: D
⩥ Which of the following procedures would an auditor most likely
perform to assist in the evaluation of loss contingencies?
A) Checking arithmetic accuracy of the accounting records.
B) Performing appropriate analytical procedures.
C) Obtaining a letter of audit inquiry from the client's lawyer.
D) Reading the financial statements, including footnotes..
Answer: C
OBJECTIVE ASSESSMENT CLOSING SCRIPT
UPDATED QUESTIONS AND ANSWERS
VIEW AHEAD PREP MATERIAL SOLVED
⩥ Which of the following statements is NOT true regarding the auditor's
responsibility for subsequent events?
A) The auditor has an active responsibility to make continuing inquiries
between the date of the auditor's report and the date on which the report
is submitted.
B) The auditor has an active responsibility to make continuing inquiries
between the date of the financial statements and the date of the auditor's
report.
C) The auditor has an active responsibility to make continuing inquiries
between the date of the financial statements and the date on which
sufficient appropriate audit evidence has been obtained.
D) The auditor has no active responsibility to make continuing inquiries
after the date of the auditor's report..
Answer: A
⩥ Which of the following procedures would an auditor most likely
perform in obtaining evidence about subsequent events?
,A) Determine that changes in employee pay rates after year-end were
properly authorized.
B) Recompute depreciation charges for plant assets sold after year-end.
C) Inquire about payroll checks that were recorded before year-end but
cashed after year-end.
D) Investigate changes in long-term debt occurring after year-end.
Answer: D
⩥ Which of the following events occurring after the issuance of an
auditor's report most likely would cause the auditor to make further
inquiries about the previously issued financial statements?
A) A technological development that could affect the entity's future
ability to continue as a going concern.
B) The discovery of information regarding a contingency that existed
before the financial statements were issued.
C) The entity's sale of a subsidiary that accounts for 30% of the entity's
consolidated sales.
D) The final resolution of a lawsuit explained in a separate paragraph of
the auditor's report..
Answer: B
⩥ After considering an entity's negative trends and financial difficulties,
an auditor has substantial doubt about the entity's ability to continue as a
going concern. The auditor's considerations relating to management's
,plans for dealing with the adverse effects of these conditions most likely
would include management's plans to:
A) Increase current dividend distributions.
B) Reduce existing lines of credit.
C) Increase ownership equity.
D) Purchase assets formerly leased..
Answer: C
⩥ A client's lawyer is unable to form a conclusion about the likelihood
of an unfavorable outcome of pending litigation because of inherent
uncertainties. If the litigation's effect on the client's financial statements
could be material but it is properly disclosed in the financial statements,
the auditor most likely would:
A) Issue a qualified opinion in the auditor's report because of the
lawyer's scope limitation.
B) Withdraw from the engagement because of the lack of information
furnished by the lawyer.
C) Disclaim an opinion on the financial statements because of the
materiality of the litigation's effect.
D) Issue an unmodified opinion..
Answer: D
, ⩥ Which of the following procedures should an auditor perform
concerning litigation, claims, and assessments?
A) Inspect legal documents in the possession of the client's lawyer that
are relevant to pending litigation and unasserted claims and assessments.
B) Discuss with the client's lawyer its philosophy of defending litigation,
claims, and assessments that have a high probability of being resolved
unfavorably.
C) Confirm directly with the client's lawyer that all litigation, claims,
and assessments have been properly recorded in the financial statements.
D) Obtain assurance from management that is has disclosed all
unasserted claims that its lawyer has advised are probably of assertion..
Answer: D
⩥ Which of the following procedures would an auditor most likely
perform to assist in the evaluation of loss contingencies?
A) Checking arithmetic accuracy of the accounting records.
B) Performing appropriate analytical procedures.
C) Obtaining a letter of audit inquiry from the client's lawyer.
D) Reading the financial statements, including footnotes..
Answer: C
