ASSIGNMENT
The following questions deal with client acceptance, audit planning, and materiality. Choose the best response.
a. In which of the following circumstances would an auditor of an issuer be least likely to reevaluate established materiality levels?
(1) The materiality level was established based on preliminary financial statement amounts that differ significantly from actual amounts.
(2) The client disposed of a major portion of the client’s business.
(3) The client released third-quarter results before the SEC-prescribed deadline.
(4) Significant new contractual arrangements draw attention to a particular aspect of a client’s business that is separately disclosed in the financial statements.
b. Which of the following procedures would a CPA least likely perform during the planning stage of the audit?
(1) Determine the timing of testing
(2) Take a tour of the client’s facilities
(3) Perform inquiries of outside legal counsel regarding pending litigation
(4) Determine the effect of information technology on the audit
c. A successor auditor’s inquiries of the predecessor auditor should include questions
regarding
(1) the number of engagement personnel the predecessor assigned to the engagement.
(2) the assessment of the objectivity of the client’s internal audit function.
(3) communications to management and those charged with governance regarding
significant deficiencies in internal control.
(4) the response rate for confirmations of accounts receivable.
