IC MOCK EXAM 1 / INSURANCE COMMISSION TRADITIONAL LIFE
MOCK EXAMS_ 2025 LATEST UPDATED
Dante CPA is auditing the financial statements of Crest computing. During the previous year,
Kratzke CPAs audited the financial statements. Crest has decided to present comparative
financial statements for the current year. which of the following statements is true about Kratke's
report?
a. Kratzke should not reissue their report, since they may be unaware of recent circumstances
that might have affected the previous years FS
b. Kratzke should not reissue their report unless dante agrees to cosign that report
c. Kratzke should reissue the report on the previous statements without performing any
additional procedures as long as no changes have been made to those statements
d. Kratzke may issue their report on the previous statements only after performing limited
procedures to evaluate the continuing appropriateness of the report - (answers)D. should preform
limited procedures like reading the current statements, comparing current and prior statements,
and obtaining a rep letter from crest and dante
auditing standards require that the independent auditors report shall contain either an expression
of opinion regarding the financial statements, taken as a whole or an assertion to the effect that
an opinion cannot be expressed. which of the following would be prohibited by auditing
standards?
a. none of the other actions are prohibited
b. the auditor disclaims an opinion on the entire set of FS
c. an auditor is hired to render an opinion on the balance sheet only
d. the auditor disclaims an opinion on the income statement and on the statement of cash flows,
but renders an unmodified opinion on the balance sheet - (answers)a. one objective of the auditor
is issuing a report is to prevent misinterpretation of the degree of responsibility assumed by the
auditor. Disclaiming an opinion on one or all of the statements is acceptable, as is a limited
reporting engagement in which not all of the financial statements are audited
as the acceptable level of detection risk decreases, and auditor may change the:
a. assessed level of inherent risk
b. assessed level of control risk from low to high
,c. nature of substantive tests from a less effective to a more effective procedure
d. timing of substantive tests from year end to interim - (answers)c. better evidence must be
obtained to achieve a lower level of detection risk
which is true about accounts receivable confirmations?
a. confirmations may be based on a single transaction rather that entire customer balances
b. confirmations provide evidence about existence rights and valuation
c. the client may mail the confirmations, but they should be returned directly to the auditor
d. blank confirmations provide improved response rates but may be less reliable - (answers)a. the
auditor should consider the types of information respondents will be readily able to confirm. for
example, it may be easier for certain respondents to confirm individual transactions rather than
entire balances.
Kent industries anticipates that its sales revenue will grow by 5% during the coming year based
on historical returns, but also believes there is a slight chance for 20% growth if a new product
that is currently being developed is launched during the year. Kents management has prepared
two sets of financial statements, one based on 5% growth and the other based on 10% growth, in
an effort to plan for the future. Giacomo, CPA has been hired to examine both sets of financial
statements. which of the following is true regarding the two reports?
a. the report on the 10% growth FS would include a statement that the results may not be
achieved whereas the 5% growth FS would not require such comment
b. neither the report on the 10% growth FS nor the report on the 5% growth should provide
positive assurance
c. Both the report on the 10% growth FS and the report on the 5% growth FS are appropriate for
limited use
d. the 5% - (answers)c. both financial forecasts and financial projections are appropriate for
limited use
an auditor provides positive assurance in all of the following reports except:
a. a report on a specified account in a FS
b. a report on a finanical presentation to comply with contractual agreements or regulatory
requirements
c. a report on other comprehensive basis of accounting financial statements
, d. a report on compliance with contractual or regulatory requirements related to audited FS -
(answers)d. negative assurance is provided on compliance with contractual or regulatory
requirements related to audited financial statements
which of the following types of audit evidence is the least reliable?
a. canceled check
b. bank statement obtained from the client
c. vendors invoice
d. purchase order - (answers)d. a purchase order is internal documentation and as such, it is more
easily manipulated by the client
managements written representation to the auditor in connection with a governmental audit
would most likely include:
a. representation that all known noncompliance had been reported or negative assurance that
other noncompliance likely does not exist
b. a statement that management has disclosed any communications from grantors concerning
possible noncompliance
c. a statement that management had identified and disclosed all material government programs to
the auditor
d. negative assurance that the government ha complied with compliance requirements -
(answers)b. the management letter will include a statement that management has disclosed any
communications from grantors concerning possible noncompliance
Confidential client information may be disclosed by the accountant without the clients
permission in all of the following circumstances except:
a. as part of a quality review of the members professional practices
b. if necessary to comply with a validly issued subpoena
c. in response to an inquiry by a successor auditor
d. in response to an inquiry made by the ethics division of the AICPA - (answers)c. confidential
client info may not be disclosed to a successor auditor without the clients permission
which of the following is not true about those charged with governance of an organization?
MOCK EXAMS_ 2025 LATEST UPDATED
Dante CPA is auditing the financial statements of Crest computing. During the previous year,
Kratzke CPAs audited the financial statements. Crest has decided to present comparative
financial statements for the current year. which of the following statements is true about Kratke's
report?
a. Kratzke should not reissue their report, since they may be unaware of recent circumstances
that might have affected the previous years FS
b. Kratzke should not reissue their report unless dante agrees to cosign that report
c. Kratzke should reissue the report on the previous statements without performing any
additional procedures as long as no changes have been made to those statements
d. Kratzke may issue their report on the previous statements only after performing limited
procedures to evaluate the continuing appropriateness of the report - (answers)D. should preform
limited procedures like reading the current statements, comparing current and prior statements,
and obtaining a rep letter from crest and dante
auditing standards require that the independent auditors report shall contain either an expression
of opinion regarding the financial statements, taken as a whole or an assertion to the effect that
an opinion cannot be expressed. which of the following would be prohibited by auditing
standards?
a. none of the other actions are prohibited
b. the auditor disclaims an opinion on the entire set of FS
c. an auditor is hired to render an opinion on the balance sheet only
d. the auditor disclaims an opinion on the income statement and on the statement of cash flows,
but renders an unmodified opinion on the balance sheet - (answers)a. one objective of the auditor
is issuing a report is to prevent misinterpretation of the degree of responsibility assumed by the
auditor. Disclaiming an opinion on one or all of the statements is acceptable, as is a limited
reporting engagement in which not all of the financial statements are audited
as the acceptable level of detection risk decreases, and auditor may change the:
a. assessed level of inherent risk
b. assessed level of control risk from low to high
,c. nature of substantive tests from a less effective to a more effective procedure
d. timing of substantive tests from year end to interim - (answers)c. better evidence must be
obtained to achieve a lower level of detection risk
which is true about accounts receivable confirmations?
a. confirmations may be based on a single transaction rather that entire customer balances
b. confirmations provide evidence about existence rights and valuation
c. the client may mail the confirmations, but they should be returned directly to the auditor
d. blank confirmations provide improved response rates but may be less reliable - (answers)a. the
auditor should consider the types of information respondents will be readily able to confirm. for
example, it may be easier for certain respondents to confirm individual transactions rather than
entire balances.
Kent industries anticipates that its sales revenue will grow by 5% during the coming year based
on historical returns, but also believes there is a slight chance for 20% growth if a new product
that is currently being developed is launched during the year. Kents management has prepared
two sets of financial statements, one based on 5% growth and the other based on 10% growth, in
an effort to plan for the future. Giacomo, CPA has been hired to examine both sets of financial
statements. which of the following is true regarding the two reports?
a. the report on the 10% growth FS would include a statement that the results may not be
achieved whereas the 5% growth FS would not require such comment
b. neither the report on the 10% growth FS nor the report on the 5% growth should provide
positive assurance
c. Both the report on the 10% growth FS and the report on the 5% growth FS are appropriate for
limited use
d. the 5% - (answers)c. both financial forecasts and financial projections are appropriate for
limited use
an auditor provides positive assurance in all of the following reports except:
a. a report on a specified account in a FS
b. a report on a finanical presentation to comply with contractual agreements or regulatory
requirements
c. a report on other comprehensive basis of accounting financial statements
, d. a report on compliance with contractual or regulatory requirements related to audited FS -
(answers)d. negative assurance is provided on compliance with contractual or regulatory
requirements related to audited financial statements
which of the following types of audit evidence is the least reliable?
a. canceled check
b. bank statement obtained from the client
c. vendors invoice
d. purchase order - (answers)d. a purchase order is internal documentation and as such, it is more
easily manipulated by the client
managements written representation to the auditor in connection with a governmental audit
would most likely include:
a. representation that all known noncompliance had been reported or negative assurance that
other noncompliance likely does not exist
b. a statement that management has disclosed any communications from grantors concerning
possible noncompliance
c. a statement that management had identified and disclosed all material government programs to
the auditor
d. negative assurance that the government ha complied with compliance requirements -
(answers)b. the management letter will include a statement that management has disclosed any
communications from grantors concerning possible noncompliance
Confidential client information may be disclosed by the accountant without the clients
permission in all of the following circumstances except:
a. as part of a quality review of the members professional practices
b. if necessary to comply with a validly issued subpoena
c. in response to an inquiry by a successor auditor
d. in response to an inquiry made by the ethics division of the AICPA - (answers)c. confidential
client info may not be disclosed to a successor auditor without the clients permission
which of the following is not true about those charged with governance of an organization?
