Expected misstatement is defined as

Question 8 options:

	the level of assurance that the account balance or class of transactions is not misstated
	the amount of misstatement, on the basis of the auditor's professional judgment, that should be present in the account balance or class of transactions
	the maximum misstatement in the account balance or class of transactions that the auditor is willing to accept
	the level of audit risk the auditor is willing to accept

The totals at the end of the year in the cash and investment process expense accounts reflect

Question 9 options:

	all the business conducted during the year
	only the transactions completed during the year
	all the transactions recorded during the year
	only the transactions initiated during the year

Corresponds to CLO 3(b) Which of the following are management assertions about the accounts in cash and investment process?

Question 10 options:

	existence or occurrence - for classes of transactions
	completeness - for both classes of transactions and account balances
	valuation and allocation - for both classes of transactions and account balances
	rights and obligations - for both classes of transactions and account balances
	accuracy - for both classes of transactions and account balances

Management asserts that

Question 11 options:

	the company has the right to the assets of cash and investments
	all balances related to the investment account have been accurately recorded
	all cash and investment transactions that should be presented in the financial statements are relevant
	transactions related to the investment process have been properly classified
	the investment accounts are reliable according to the rules of the applicable financial reporting framework at year-end
	both A and D
	both B and C
	both D and E

When using analytical procedures in the cash and investment process, the auditor might consider

Question 12 options:

	the type of investment securities purchased and sold in the current year and the prior year
	the number of investment securities purchased and sold in the current year and the prior year
	the average interest rate earned on the held-to-maturity securities
	the average interest rate earned on the available-for-sale securities
	the average interest rate earned on the trading securities
	both B and C
	both C and D
	both D and E

The tests used by an auditor to gather evidence relating to long-term debt and owner's equity balance sheet transactions are called

Question 13 options:

	tests of controls
	substantive tests of transactions
	substantive test of balances
	analytical procedure

Which of the following are management assertions about the accounts in long-term debt and owner's equity process?

Question 14 options:

	existence or occurrence - for account balances
	completeness - for both classes of transactions and account balances
	valuation and allocation - for both classes of transactions and account balances
	rights and obligations - for account balances
	accuracy - for account balances
	both A and C
	both B and D
	both D and E

When using analytical procedures in the long-term debt and owner's equity process, the auditor might consider

Question 15 options:

	the type of long-term debt purchased and sold in the current year and the prior year
	the average interest rate on long-term debt in the current year and the prior year
	the average interest rate earned on the owner's equity
	the current interest rate on long-term debt

The auditor uses substantive tests of transactions in the long-term debt and owner's equity business process to

Question 16 options:

	test the reliability of transactions during the year
	test the reliability of balances at the end of the year
	test the recording of balances at the end of the year
	test the recording of transactions during the year

The auditor is provided with the evidence needed to determine whether the contingent liability should be recorded, disclosed or ignored from

Question 17 options:

	attorneys hired by the auditor
	attorneys hired by the claimant
	professional judgment
	attorneys hired by the client

According to the U.S. accounting standards, estimated losses from loss contingencies should be recorded (by a charge to income and liabilities) if two conditions are met

Question 18 options:

	the loss must be probable
	the loss must be possible
	the amount of the loss can be reasonably documented
	the amount of the loss can be reasonably estimated
	the amount of the loss can be accurately estimated
	both A and B
	both A and D
	both C and E

The requirements for Type I and Type II subsequent events are

Question 19 options:

	Type I events are disclosed in the financial statements
	Type II events are disclosed in the financial statements
	neither Type I nor Type II events are recorded in the financial statements
	Type II events are recorded in the financial statements
	Type I events are recorded in the financial statements
	both A and B
	both B and E
	both C and D

From the auditor's point of view, the problem with related party transactions is that

Question 20 options:

	related party transactions may not have oversight in accordance with the applicable reporting framework
	related party transactions may not have been classified in accordance with the applicable reporting framework
	related party transactions may not have been occurred in accordance with the applicable reporting framework
	related party transactions may not have been recorded in accordance with the applicable reporting framework

If the management representation letter is not obtained,

Question 21 options:

	issue the audit report and request that management send the letter as soon as possible
	issue the report with an adverse opinion
	issue the report with an "except for" opinion
	the audit evidence should not be considered complete