1. Engagement Responsibilities

Question 1

Controls stop CRIME.

Answer 1

Control activities, Risk assessment process, Information system, Monitoring of controls, and the control Environment

Question 2

Preparation

Answer 2

No assurance and no report

Question 3

Compilation

Answer 3

Disclaimer of any assurance

Question 4

Review

Answer 4

Limited assurance

Question 5

Examination or audit

Answer 5

Positive assurance or opinion expressed

Question 6

Agreed-upon procedures

Answer 6

Results of procedures but no assurance

Question 7

What do Statements on Standards for Accounting and Review (SSAR) apply to?

Answer 7

Preparations, compilations, and reviews of nonissuers’ financial statements.

Question 8

What is the purpose of an audit?

Answer 8

To provide financial statement users with an opinion on whether the financial statements are presented fairly, in accordance with applicable reporting framework.

Question 9

What does the auditor’s opinion enhance?

Answer 9

The degree of confidence that users can place in the financial statements.

Question 10

What should a firm’s policies and procedures provide reasonable assurance on?

Answer 10

That it (1) has considered the integrity of the client and the risks involved, (2) is competent, (3) has the necessary capabilities and resources, and (4) is able to comply with applicable requirements.

Question 11

According to AU-C 220 and QC 10, what needs to happen when there is a difference of opinion?

Answer 11

Document the details of the disagreement with the conclusion reached.

Question 12

What is a CPA’s firm system of quality control reasonably assured to provide about the firm and its personnel?

Answer 12

(1) comply with professional standards, (2) comply with applicable legal and regulatory requirements, and (3) issue appropriate reports

Question 13

What does a review consider according to AU-C 220 and AS 1201?

Answer 13

(1) the work supports the conclusions and is properly documented, (2) the evidence is sufficient and appropriate to support the auditor’s report, and (3) the objectives of the procedures have been achieved.

Question 14

How should be disagreement be resolved?

Answer 14

By following the firm’s policies and procedures.

Question 15

What could the policies and procedures include?

Answer 15

The resolution of disagreement, incorporating discussion, research, and consultation with other knowledgeable parties

Question 16

Who can perform a peer review of a firm in the AICPA Peer Review program?

Answer 16

1) a firm engaged by the reviewed firm or 2) a state CPA society

Question 17

What are the six elements of a system of quality control with a firm?

Answer 17

1) Leadership responsibilities for quality within the firm (the “tone at the top”), 2) Relevant ethical requirements, 3) Acceptance and continuance of client relationships and specific engagements, 4) Human resources, 5) Engagement performance, 6) Monitoring

Question 18

Are staff required to have previous experience to work on audits?

Answer 18

No

Question 19

What do consulting services include?

Answer 19

1) Consultations, 2) Advisory services, 3) Implementation services, 4) Transaction services, 5) Staff and other support services, 6) Product services

Question 20

Auditing can be best described as a

Answer 20

Discipline that attests to financial information presented by management.

Question 21

Are assurance services included in consulting services?

Answer 21

No.

Question 22

How do assurance services differ from consulting services?

Answer 22

Assurance services focus on improving information rather than providing advice and they usually involve one party monitoring another.

Question 23

How do attestation standards and generally accepted auditing standards differ?

Answer 23

Attestation standards provide a framework for the attest function beyond historical financial statements.

Question 24

What does the Statements on Standards for Accounting and Review Services apply to?

Answer 24

Preparations, compilations, and reviews.

Question 25

What are the objectives of supervision?

Answer 25

establishing procedures for (1) planning engagements, (2) maintaining the firm’s standards of quality, and (3) reviewing documentation of the work performed and reports issued.

Question 26

When should an auditor make specific and reasonable inquires of the predecessor auditor?

Answer 26

After getting permission from the client