Complete the following:
1 - Jones, CPA, examined the 2001 financial statements of Ray Corp. and issued an unqualified opinion on March 10, 2002. On April 2, 2002, Jones became aware of a 2001 transaction that may materially affect the 2001 financial statements. This transaction would have been investigated had it come to Jones' attention during the course of the examination. Jones should
A: Take no action because an auditor is not responsible for events subsequent to the issuance of the auditor's report.
B: Contact Ray's management and request their cooperation in investigating the matter.
C: Request that Ray's management disclose the possible effects of the newly discovered transaction by adding an unaudited footnote to the 2001 financial statements
D: Contact all parties who might rely upon the financial statements and advise them that the financial statements are misleading.
2 - With respect to issuance of an audit report which is dual dated for a subsequent event occurring after the completion of fieldwork but before issuance of the auditor's report, the auditor's responsibility for events occurring subsequent to the completion of fieldwork is
A: Extended to include all events occurring until the date of the last subsequent event referred to.
B: Limited to the specific event referred to.
C: Limited to all events occurring through the date of issuance of the report
D: Extended to include all events occurring through the date of submission of the report to the client.
3 -"Subsequent events" for reporting purposes are defined as events which occur subsequent to the
A: Balance sheet date.
B: Date of the auditor's report.
C: Balance sheet date but prior to the date of the auditor's report.
D: Date of the auditor's report and concern contingencies which are not reflected in the financial statements.
4 -A major customer of an audit client suffers a fire just prior to completion of year-end fieldwork. The audit client believes that this event could have a significant direct effect on the financial statements. The auditor should
A: Advise management to disclose the event in notes to the financial statements.
B: Disclose the event in the auditor's report.
C: Withhold submission of the auditor's report until the extent of the direct effect on the financial statements is known.
D: Advise management to adjust the financial statements
5 - When a contingency is resolved immediately subsequent to the issuance of a report which was qualified with respect to the contingency, the auditor should
A: Insist that the client issue revised financial statements.
B: Inform the audit committee that the report cannot be relied upon.
C: Take no action regarding the event.
D: Inform the appropriate authorities that the report cannot be relied upon.
6 - The Sarbanes-Oxley Act of 2003 authorized creation of the
A: Auditing Standards Board.
B: Public Company Accounting Oversight Board.
C: Financial Accounting Standards Center.