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Homework answers / question archive / University of Mindanao - Main Campus (Matina, Davao City) AUDIT 411 On-Line Quiz PSA 250 1)As used in PSA 250 (Consideration of Laws and Regulations in an Audit of Financial Statements), this term refers to acts of omission or commission by the entity being audited, either intentional or unintentional, which are contrary to prevailing laws or regulations

University of Mindanao - Main Campus (Matina, Davao City) AUDIT 411 On-Line Quiz PSA 250 1)As used in PSA 250 (Consideration of Laws and Regulations in an Audit of Financial Statements), this term refers to acts of omission or commission by the entity being audited, either intentional or unintentional, which are contrary to prevailing laws or regulations

Management

University of Mindanao - Main Campus (Matina, Davao City)

AUDIT 411

On-Line Quiz

PSA 250

1)As used in PSA 250 (Consideration of Laws and Regulations in an Audit of Financial Statements), this term refers to acts of omission or commission by the entity being audited, either intentional or unintentional, which are contrary to prevailing laws or regulations.

    1. Noncompliance                                                                                  C. Erotic acts
    2. Illegal acts                                                                               D. Unforgivable acts

 

  1. According to PSA 250, the term “noncompliance” as used in the standards refers to acts of omission or commission by the entity being audited, either intentional or unintentional, which are contrary to the prevailing laws or regulations. Such acts do not include
    1. Transactions entered into by the entity.
    2. Transaction entered into in the name of the entity.
    3. Transaction entered into on the entity’s behalf by its management or employees.
    4. Personal misconduct (unrelated to the entity’s business activities) by the entity’s management or employees.

 

  1. The responsibility for the prevention and detection of noncompliance rest with
    1. The auditor.                                                                        C. The auditor’s lawyer.
    2. Management                                                                    D. The client’s lawyer.

 

  1. PSA 250 states that in order to plan the audit, the auditor should obtain a general understanding of the legal and regulatory framework applicable to the entity and the industry and how the entity is complying with that framework. To obtain this understanding, the following procedures would ordinarily be considered by the auditor, except
    1. Use the existing understanding of the entity’s industry, regulatory, and other external factors.
    2. Inquire of management concerning the entity’s policies and procedures regarding compliance with laws and regulations.
    3. Inquire of management as to the laws and regulations that may be expected to have a fundamental effect on the operation of the entity.
    4. Inspect correspondence with relevant licensing or regulatory authorities.

 

  1. Which of the following statements is incorrect concerning reporting of noncompliance?
    1. The auditors, as soon as practicable, either communicate with those charged with governance, or obtain evidence that they are appropriately informed, regarding noncompliance that comes to the auditor’s attention.
    2. If the auditor suspects that members of senior management, including members of the board of directors, are involved in noncompliance, the auditor should report the matter to the next higher level of authority at the entity, if it exists, such as an audit committee or a supervisory board.
    3. The auditor should, as soon as practicable, communicate with those charged with governance regarding noncompliance, including matters that are clearly inconsequential or trivial.
    4. If in the auditor’s judgment, the noncompliance is believed to be intentional and material, the auditor should communicate the finding without delay.

 

  1. If the auditor concludes that the noncompliance has a material effect on the financial statements, and has not been properly reflected in the financial statements, the auditor should express
    1. A qualified or an adverse opinion.                                            C. A disclaimer of opinion.
    2. A qualified opinion or a disclaimer of opinion.     D. A qualified opinion.

 

  1. If the auditor is precluded by the entity from obtaining sufficient appropriate audit evidence to evaluate whether noncompliance that may be material to the financial statements, ha, or is likely to have, the auditor should express
    1. A qualified or an adverse opinion.                            C. An adverse opinion.
    2. A qualified opinion or a disclaimer of opinion.     D. An adverse opinion or a disclaimer of opinion.

 

PSA 260 -

 

  1. Under PSA 260, this term is used to describe the role of persons entrusted with the supervision, control, and direction of an entity.
    1. Oversight                                                                            C. Direction
    2. Governance                                                                       D. Control

 

  1. According to PSA 260, those matters that arise from the audit of financial statements and, in the opinion of the auditor, are both important and relevant to those charged with governance in overseeing the financial reporting and disclosure process are called
    1. Audit matters of governance interest. C. Auditor’s findings.
    2. Significant audit matters.                              D. Material misstatements in the financial statements.

 

  1. Which of the following statements relating to communication of audit matter of governance interest is incorrect?
    1. Audit matters of governance interest include only those matters that have come to the attention of the auditor as a result of the performance of the audit.
    2. In an audit in accordance with PSAs, the auditors should design audit procedures for the specific purpose of identifying matters of governance interest.
    3. The auditor should identify relevant persons who are charged with governance and with whom audit matters of governance interest are to be communicated.
    4. The auditor’s communications with those charged with governance may be made orally or in writing.

 

  1. Audit matters of governance interest to be communicated to those charged with governance ordinarily include
    1. Audit adjustments, whether or not recorded by the entity that have, or could have, a material effect on its financial statements.
    2. Expected modifications to the auditor’s report.
    3. Material uncertainties related to events and conditions that may cast significant doubt on the entity’s ability to continue as a going concern.
    4. All of the above.

 

  1. PSA 260 requires the auditors to determine the relevant persons who are charged with governance and with whom audit matters of governance interest are communicated. For corporations covered by the SEC Code of Corporate Governance, which of the following is primarily responsible for corporate governance?
    1. President.                                                                              C. Board of Directors.
    2. Controller.                                                                              D. Management

 

  1. Those matters that arise from the audit of financial statements and in the opinion of the auditor, are both important and relevant to those charged with governance in overseeing the financial reporting and disclosure process
  1. Fraud risk factors
  2. Audit matters of governance interest
  3. Risk of material misstatement
  4. Material weaknesses in internal controls

 

  1. An auditor has withdrawn from an audit engagement of a publicly-held company after finding irregularities which may materially affect the financial statements. The auditor should set forth the reasons and findings in corresponding to the
  1. Securities and Exchange Commission
  2. Client’s legal counsel
  3. Stock exchanges where the company’s stock is traded
  4. Board of Directors

 

  1. Describes the role of persons entrusted with the supervision, control and direction of an entity.
  1. Management                                                                    c. Audit committee
  2. Governance                                                                       d. Steward of company resource

 

 

 

 

 

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