Pre-engagement

Its own independence YES NO YES NO

4. 
   The purpose of having communication between the predecessor and successor auditor is
   

1. 
   to allow predecessor to disclose information which would otherwise be confidential
   
2. 
   to help the successor auditor evaluate whether to accept the engagement
   
3. 
   to help the client by facilitating the change of auditors
   
4. 
   to ensure that information which is provided to the SEC will be accurate
   

5. 
   Hill, CPA, has been retained to audit the financial statements of Monday Co. Monday's predecessor auditor was Post, CPA, who has been notified by Monday that Post's services have been terminated. Under these circumstances, which party should initiate the communication between Hill and Post?
   

1. 
   Hill, the successor auditor.
   
2. 
   Post, the predecessor auditor
   
3. 
   Monday's controller of CFO.
   
4. 
   The chairman of Monday's board of directors
   

6. 
   In an audit, communication between the predecessor and successor auditor should be
   

1. 
   authorized in an engagement letter
   
2. 
   acknowledged in a representation letter
   
3. 
   either written or oral
   
4. 
   written and included in the working papers
   

7. 
   Arnel, CPA, is succeeding Von, CPA, on the audit engagement of Almar Corporation. Arnel plans to consult Von and to review Von’s prior year working papers. Arnel may do so if
   

1. 
   Von and Almar consent
   
2. 
   Almar consents
   
3. 
   Von consents
   
4. 
   Von and Arnel consent
   

8. 
   Before accepting an audit engagement a successor auditor should make specific inquiries of the predecessor audit regarding
   

1. 
   Disagreements the predecessor had with the client concerning auditing procedures & accounting principles.
   
2. 
   The predecessor’s evaluation of matters of continuing accounting significance
   
3. 
   The degree of cooperation the predecessor received concerning the inquiry of the client’s lawyer.
   
4. 
   The predecessor‘s assessment of inherent risk and judgments about materiality.
   

9. 
   Which of the following factors most likely would influence an auditor’s determination of the auditability of the entity’s financial statements
   

1. 
   The complexity of the accounting system
   
2. 
   The existence of related party transactions
   
3. 
   The adequacy of the accounting records
   
4. 
   The operating effectiveness of control procedures
   

10. 
    Hawkins requested permission to communicate with the predecessor auditor and review certain portions of the predecessor auditor's work papers. The prospective client's refusal to permit this will bear directly on Hawkin's decision concerning the:
    

1. 
   Adequacy of the preplanned audit program
   
2. 
   Ability to establish consistency in application of accounting principles between years
   
3. 
   Apparent scope limitation
   
4. 
   Integrity of management
   

11. 
    The audit engagement letter should generally include a reference to each of the following except
    

1. 
   The expectation of receiving a written management representation letter
   
2. 
   A request for the client to confirm the terms of the engagement
   
3. 
   A description of the auditor’s method of sample selection
   
4. 
   The risk that material misstatements may remain undiscovered