3rd times the charm

Question 1

What are the 6 elements of developing a firms quality control?

Answer 1

H- HR- hiring, developing and maintaining the right people
E- Ethical Requirements- Ensure firm is following standards and regulations- think independence
A- Accepting/maintaining audit engagements
L- Leadership- tone at the top
M- Monitoring to ensure the QC still make sense
E- Engagement Performance- ensuring we’re following regulations. think Supervision and review

Question 2

What should QC documentation include

Answer 2

1. Date QC review happened
2. Evidence QC review occurred
3. Reasonable assurance for judgements and conclusions

Question 3

What are the QC requirements from the PCAOB?

Answer 3

Public company audits require a QC review and subsequent approval prior to FS issuance for Audits, interim statement Reviews and Attest compliance reports for brokers and dealers

Question 4

What planning documentation should be presented in the working papers?

Answer 4

1. Overall Audit Strategy
2. Audit plan
3. Significant changes to the plan as things develop, and why

Question 5

What are analytic procedures and when are they required during an audit?

Answer 5

Comparison between an auditors calculated estimations and actual financial info from client to know if things are operating in a way that makes sense.

Required during planning and at closing at audit.

Can be done as substantive testing as well

Question 6

How to you find RMM

Answer 6

Risk of material misstatement is an integration of inherent and control risk to assessed risk of issues prone to occur

Can decrease CR by conducting test of controls

Question 7

What are the audit assertions we use to figure out our objective for each area we are reviewing during an audit?

Answer 7

Assertions are the assurance the client is providing in relation to the FS. They are:

1. Accuracy- that info in the FS are correct
2. Completeness- that all relevant info for proper decision making is presented in FS and footnote
   3.Cut-off- that information is reflected in the right reporting period
   4.Existence- that the transactions, etc actually happened.
3. Rights & Obligations- that we have rights to reported assets and reflect all liabilities
4. Understandability- info clearly presented for understanding
5. Valuation- info presented at correct valuation

Question 8

What is performance materiality

Answer 8

a number lower than overall materiality that we use to ensure the aggregate of misstatements don’t total to the overall materiality.