Gleim Study Unit 4 Multiple Choice
After identifying a significant related party transaction outside the entity’s normal course of business, an auditor should
Evaluate the business purpose of the transaction.
In auditing related party transactions, an auditor ordinarily places primary emphasis on
The adequacy of the disclosure of the related party transactions.
Subsequent to issuing a report on audited financial statements, a CPA discovers that the accounts receivable confirmation process omitted a number of accounts that are material, in the aggregate. Which of the following actions should the CPA take immediately?
Perform alternative procedures to verify account balances.
An auditor might consider the procedures performed by the internal auditors because
They are employees whose work may affect the nature, timing, and extent of audit procedures. For a reporting entity that has participated in related party transactions that are material, disclosure in the GAAP-based financial statements should include
The nature of the relationship and the terms and manner of settlement.
In which of the following instances would it be appropriate for the auditor to refer to the work of an appraiser in the auditor’s report?
An adverse opinion is expressed based on a difference of opinion between the client and the auditor’s external specialist about the value of certain assets.
Ajax Company’s auditor concludes that the omission of an audit procedure considered necessary at the time of the prior audit impairs the auditor’s ability to support the previously expressed unmodified opinion. If the auditor believes shareholders are currently relying on the opinion, the auditor should promptly
Undertake to apply the omitted procedure or alternate procedures that would provide a satisfactory basis for the opinion. Auditors should obtain and evaluate sufficient appropriate evidence to support significant accounting estimates. Differences between the estimates best supported by the evidence and
Evaluate the business purpose of the transaction.
In auditing related party transactions, an auditor ordinarily places primary emphasis on
The adequacy of the disclosure of the related party transactions.
Subsequent to issuing a report on audited financial statements, a CPA discovers that the accounts receivable confirmation process omitted a number of accounts that are material, in the aggregate. Which of the following actions should the CPA take immediately?
Perform alternative procedures to verify account balances.
An auditor might consider the procedures performed by the internal auditors because
They are employees whose work may affect the nature, timing, and extent of audit procedures. For a reporting entity that has participated in related party transactions that are material, disclosure in the GAAP-based financial statements should include
The nature of the relationship and the terms and manner of settlement.
In which of the following instances would it be appropriate for the auditor to refer to the work of an appraiser in the auditor’s report?
An adverse opinion is expressed based on a difference of opinion between the client and the auditor’s external specialist about the value of certain assets.
Ajax Company’s auditor concludes that the omission of an audit procedure considered necessary at the time of the prior audit impairs the auditor’s ability to support the previously expressed unmodified opinion. If the auditor believes shareholders are currently relying on the opinion, the auditor should promptly
Undertake to apply the omitted procedure or alternate procedures that would provide a satisfactory basis for the opinion. Auditors should obtain and evaluate sufficient appropriate evidence to support significant accounting estimates. Differences between the estimates best supported by the evidence and