C. Reconciling the cash balance per books with the cut-off bank statement and the bank
confirmation.
D. Comparing the entity's depreciation and asset capitalization policies to other entities in the
industry.

Answer(s): B
Explanation:
Choice "b" is correct. Confirming with third parties the details of arrangements to provide or
"maintain (needed) financial support" is an audit procedure that may identify doubts about an
entity's ability to continue as a going concern. Choice "a" is incorrect. Inspecting title documents
provides evidence of ownership of assets but would not necessarily identify conditions affecting
an entity's ability to continue as a going concern. Choice "c" is incorrect. Reconciling the cash
balance per books with the cut-off bank statement and the bank confirmation provides evidence
of completeness and valuation, but would not necessarily identify conditions affecting an entity's
ability to continue as a going concern. Choice "d" is incorrect. Comparing an entity's policies to
other entities in the industry would not necessarily identify conditions affecting an entity's ability
to continue as a going concern.
QUESTION: 34
When an independent CPA assists in preparing the financial statements of a publicly held entity,
but has not audited or reviewed them, the CPA should issue a disclaimer of opinion. In such
situations, the CPA has no responsibility to apply any procedures beyond:

A. Documenting that internal control is not being relied on.
B. Reading the financial statements for obvious material misstatements.
C. Ascertaining whether the financial statements are in conformity with GAAP.
D. Determining whether management has elected to omit substantially all required disclosures.

Answer(s): B
Explanation:
Choice "b" is correct. The accountant is only required to read the financial statements for
obvious material misstatements. Choice "a" is incorrect. The accountant need not document
that internal control is not being relied on. Choices "c" and "d" are incorrect. The accountant is
not required to evaluate conformity with GAAP, but any known departures (including inadequate
disclosure) should be described in the disclaimer.
QUESTION: 35
When an auditor concludes there is substantial doubt about a continuing audit client's ability to
continue as a going concern for a reasonable period of time, the auditor's responsibility is to:

A. Issue a qualified or adverse opinion, depending upon materiality, due to the possible effects
on the financial statements.
B. Consider the adequacy of disclosure about the client's possible inability to continue as a
going concern.
C. Report to the client's audit committee that management's accounting estimates may need to
be adjusted.
D. Reissue the prior year's auditor's report and add an explanatory paragraph that specifically
refers to "substantial doubt" and "going concern."
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