1. Engagement Responsibilities Flashcards
Controls stop CRIME.
Control activities, Risk assessment process, Information system, Monitoring of controls, and the control Environment
Preparation
No assurance and no report
Compilation
Disclaimer of any assurance
Review
Limited assurance
Examination or audit
Positive assurance or opinion expressed
Agreed-upon procedures
Results of procedures but no assurance
What do Statements on Standards for Accounting and Review (SSAR) apply to?
Preparations, compilations, and reviews of nonissuers’ financial statements.
What is the purpose of an audit?
To provide financial statement users with an opinion on whether the financial statements are presented fairly, in accordance with applicable reporting framework.
What does the auditor’s opinion enhance?
The degree of confidence that users can place in the financial statements.
What should a firm’s policies and procedures provide reasonable assurance on?
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.
According to AU-C 220 and QC 10, what needs to happen when there is a difference of opinion?
Document the details of the disagreement with the conclusion reached.
What is a CPA’s firm system of quality control reasonably assured to provide about the firm and its personnel?
(1) comply with professional standards, (2) comply with applicable legal and regulatory requirements, and (3) issue appropriate reports
What does a review consider according to AU-C 220 and AS 1201?
(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.
How should be disagreement be resolved?
By following the firm’s policies and procedures.
What could the policies and procedures include?
The resolution of disagreement, incorporating discussion, research, and consultation with other knowledgeable parties
Who can perform a peer review of a firm in the AICPA Peer Review program?
1) a firm engaged by the reviewed firm or 2) a state CPA society
What are the six elements of a system of quality control with a firm?
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
Are staff required to have previous experience to work on audits?
No
What do consulting services include?
1) Consultations, 2) Advisory services, 3) Implementation services, 4) Transaction services, 5) Staff and other support services, 6) Product services
Auditing can be best described as a
Discipline that attests to financial information presented by management.
Are assurance services included in consulting services?
No.
How do assurance services differ from consulting services?
Assurance services focus on improving information rather than providing advice and they usually involve one party monitoring another.
How do attestation standards and generally accepted auditing standards differ?
Attestation standards provide a framework for the attest function beyond historical financial statements.
What does the Statements on Standards for Accounting and Review Services apply to?
Preparations, compilations, and reviews.
What are the objectives of supervision?
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.
When should an auditor make specific and reasonable inquires of the predecessor auditor?
After getting permission from the client
