3 Flashcards
Opinion on the effectiveness of I/C for nonissuers
Auditor’s responsibilities section
Specialist’s competence and objectivity
Competence-demonstrated by license, reputation and the quality of specialist’s working reports
Objectivity-specialist’s relationship
Specialist does not need to be independent of the auditor
What can ADA be applied in?
Control testing
Analytical procedures (risk assessments or substantive testing)
Tests of details
Five steps to ADA
- Plan ADA
- Access and prepare data for purpose of ADA
- Consider of relevance and reliability of data
- Perform ADA
- Evaluate results
What is negative confirmation?
Balance provided
Customer responds only if stated amount incorrect
Low risk, small balance
What is the first thing auditor should do when they deserves subsequent event?
Assess the importance of omitted procedures to audit opinion.
Determine whether there are persons currently rely on the FS.
What is the purpose of written management representation?
Written affirmation of information shared with auditor.
The date of representation letter should be the same as audit report.
Management has disclosed accountant all information relevant to the use of going concern assumption.
Other-matter paragraph when predecessor’s report is not reissued
-Statement that prior period was audited by another auditor
-Opinion of the predecessor auditor and basis for that opinion
-Summary of other-matter or emphasis-of-matter paragraphs in predecessor’s report
-Date of predecessor’s report
Emphasis-of-matter paragraph
Change in accounting principle
Use of special purpose framework
Related party transaction
Which engagement is prohibited on prospective FS?
Review
Attestation Engagements
Examination - opinion
Review- Conclusion
Agree-upon procedures - Findings
Processor auditor’s responsibilities when reissuing prior year report
Read current years FS
Compare prior period FS with current period FS
Obtain updated management representation letter on prior period
Obtain representation letter from successor on matters affecting prior FS
Quality Control Elements
HEAL-ME
Human Resources
Ethical requirements
Acceptance and continuance
Leadership responsibilities for quality
Monitoring
Engagement performance
IC documentation
-Required for audits, even if no internal control opinion will be issued.
-Auditor chooses the documentation method.
-IC questionnaire (yes or no)
-Flowchart
-Narrative
-Decision tree
Monetary policy tools
Expansionary
Open market operations(Trade securities, usually government securities)
——Buy securities
Discount rate (Interest rate charged to banks for short-term loans)
——Lower
Reserve requirements(Set percentage of bank deposits held in reserves)
——Decrease
Contractionary
Open market operations(Trade securities, usually government securities)
——Sell securities
Discount rate (Interest rate charged to banks for short-term loans)
——Raise
Reserve requirements(Set percentage of bank deposits held in reserves)
——Increase
