When auditing Vandalay Jewelry, Costanza CPA was not familiar with the quality and cut of the company's precious jewel inventory. To address this shortcoming, Costanza hired Benes, an expert in jewel valuation, to assist in the inventory valuation. Should Costanza refer to Benes's work in the audit report?
a. the auditors' report should mention that use of a specialist only when the specialist's findings affect the auditors' conclusion
b. the use of a specialist need not be mentioned if the auditors decide to take responsibility for the specialist's findings
c. yes, the auditors' report should mention that fact that a specialist was used
d. the auditors' report should mention the specialist only if Vandalay agrees with specialist's findings
Answer: a. the auditors' report should mention that use of a specialist only when the specialist's findings affect the auditors' conclusion
An audit engagement letter should normally include which of the following matters of agreement between the auditor and the client?
a. methods of statistical sampling the auditor will use
b. schedules and analyses to be prepared by the client's employees
c. client representations about availability of all minutes of meetings of the board of directors
d. specification of litigation in progress against the client
Answer: b. schedules and analyses to be prepared by the client's employees
Which of the following is not a benefit claimed for the practice of determining materiality in the initial planning stage of an audit?
a. avoiding the problem of doing too little work (under-auditing)
b. being able to fine-tune the audit work for effectiveness and efficiency
c. being able to decide early what type of audit opinion to issue
d. avoiding the problem of doing more work than necessary (over-auditing)
Answer: c. being able to decide early what type of audit opinion to issue
