Able Corporation owns numerous businesses along the coast of Florida. The company's management has identified business interruption events as a potential risk resulting from storm damages caused by hurricanes. Management is so fearful of the possibility of storm damage that they elect to divest the company of virtually all properties on the Florida coast. Able's response to potential risks is known as:
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1 .An examination of a financial forecast is a professional service that involves:
A Assuming responsibility to update management on key events for one year after the report's date. B Evaluating the preparation of a financial forecast and the support underlying management's assumptions. C Compiling or assembling a financial forecast that is based on management's assumptions. D Lim...
2 .An accountant has been engaged to examine pro forma adjustments that show the effects on previously audited historical financial statements due to a proposed disposition of a significant portion of an entity's business. Other than the procedures previously applied to the historical financial statements, the accountant is required to:Reevaluate the entity'sinternal control overfinancial reportingDetermine that the computationsof the pro forma adjustmentsare mathematically correct
A Yes........No B No.........Yes C Yes........Yes D No.........No
3 .Which of the following procedures should an accountant perform during an engagement to compile prospective financial statements?
A Make inquiries prior to the date of the report about possible future transactions that may impact the forecast once the report is issued. B Test the entity's internal controls to determine if adequate controls exist so that financial projections can be reasonably achieved. C Compare the prospectiv...
4 .According to the Committee of Sponsoring Organizations (COSO) of the Treadway Commission, which of the following components of enterprise risk management addresses an entity's assignment of authority and responsibility?
A Monitoring. B Control activities. C Information and communication. D Internal environment.
5 .Accepting an engagement to compile a financial projection for a publicly held company most likely would be inappropriate if the projection were to be distributed to:
A A labor union with which the entity is negotiating a contract. B A bank with which the entity is negotiating for a loan. C The principal stockholder, to the exclusion of the other stockholders. D All stockholders of record as of the report date.
7 .Which of the following is true about the auditor's use of an internal auditor and a specialist?
A The auditor must assess the competency of both the internal auditor and the specialist. B A specialist may be related to the client, but an internal auditor may not. C The auditor may share responsibility for the audit report with a specialist who is deemed to be both objective and competent, but ...
8 .A manufacturing firm identified that it would have difficulty sourcing raw materials locally, so it decided to relocate its production facilities. According to COSO, this decision represents which of the following responses to the risk?
A Risk reduction. B Prospect theory. C Risk sharing. D Risk acceptance.
9 .Inherent risk and control risk differ from detection risk in which of the following ways?
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10 .According to COSO, the position or internal entity that is best suited, as part of the enterprise risk management process, to devise and execute risk procedures for a particular department is:
A A manager within the department. B The audit committee. C The chief executive officer. D The internal audit department.
