After you complete the quiz, please email it to the TA for this course, Alice Xu.

You MUST write AC432 Quiz and your class time (i.e. 3:30-4:45 or 6:30-7:45) in the subject line of your email or you will receive a score of zero. This is out of respect for Alices time. Her email address is: xualice1990@gmail.com

INSTRUCTIONS: Please answer the following questions. You may use your book or any other sources that you deem necessary. However, the work should be your own and not that of someone elses. No audit teams are allowed for this quiz. For the multiple choice questions, please highlight the answer you believe is appropriate. For the short answer questions, please type your answers next to the blank answer letter provided and highlight the answer once completed.

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(2 points) What type of a risk is someone describing when they make the following statement: Geez, even though this client had really effective internal controls in place, it was REALLY difficult to audit accounts receivable because the allowance for doubtful accounts calculations were so complex. a. Detection risk b. Control risk c. Risk of material misstatement d. Inherent risk (2 points) When should a PBC letter typically be sent to the client? a. 2-3 months before audit fieldwork begins b. The day that audit fieldwork begins c. At the conclusion of audit fieldwork d. After the audit report is issued (2 points) Which of the following is not an appropriate inquiry of a predecessor auditor? a. Asking about fraud b. Asking about audit fees c. Asking about disagreements with management d. Asking about internal control deficiencies (3 points) Describe one reason why an auditor might utilize a specialist during audit procedures. a. If the Auditor has issues with IT technology and it would be beneficial to bring in a specialist to teach the auditor about the system. (3 points) Read Exhibit 3-1 in the book and provide at least three details designated by MJ Willis in the signed engagement letter that is specific to the audit of EarthWear Clothiers. (I have provided a copy of this letter below, for those of you who have not yet purchased your book yet. Make sure you read BOTH pages.) a. The fee of $950,000, exclusive of out-of-pocket expense b. Filing Documents with the SECs Electronic Data Gathering, Analysis, and Retrieval system (EDGAR) c. Reviewing of the Companys unaudited quarterly financial statements and related data for the 1st 3 quarters