5/24

Question 1

Would an auditor share responsibility with internal auditor for Materiality of Misstatements or evaluation of accounting estimates

Answer 1

No, the auditor has ultimate responsibility for opinion, judgements for risk, materiality of misstatements, sufficiency of tests, evaluation of estimates, any other matters affecting auditors report.

Question 2

What would be considered an attest engagement subject to attestation standards

Answer 2

SSAE excludes services performed in accordance with SSARS. Any review would not be considered.

Question 3

What auditing procedure most likely would assist an auditor identify conditions and events that may indicate substantial doubt about an entity’s ability to continue as a going concern?

Answer 3

Confirming with third parties the details of arrangements to maintain financial support.

Question 4

Misstatements discovered by the auditor were immaterial in aggregate in prior years. Such misstatements should be

Answer 4

Considered in the evaluation of audit findings in the current year.

They may become material.

Question 5

What is not a reason an auditor may apply audit data analytics (ADA) when concluding an audit?

Answer 5

Verify the assertions of accuracy and occurrence for all material transactions

Use ADA to assist when forming an overall conclusion, advanced or deeper knowledge of client, update existing analytics with numbers revised during audit.

Question 6

An accountant has a work program that consists entirely of the following

1. Obtain knowledge of accounting principles and industry
2. Obtain knowledge of the client
3. Make inquiries of management
4. Perform analytical procedures
5. Obtain rep letter

What type of engagement is this?

Answer 6

Review, reviews are based on inquiry and analytical procedures.

Question 7

For an integrated audit of a nonissuer, an auditor should issue an adverse opinion on the effectiveness of internal control when

Answer 7

A material weakness exists

Question 8

When would an auditor most likely modify the audit opinion

Answer 8

The financial statements as a whole are materially misstated.

Question 9

Statements on Standards for Attestation Engagements do not apply when

Answer 9

Testifying as an expert witness, Compiling hypothetical financial statements.

Question 10

Which paragraphs of a nonissuer audit report on financial statements under US standards should refer to GAAP

Answer 10

Opinion and Management responsibility

Question 11

According to PCAOB standards, what would not be considered management bias?

Answer 11

Management reporting all insurance purchases as expense then adjusting the unexpired into prepaid insurance at year end.

Question 12

What party should request inquiry of a client’s lawyer

Answer 12

Client Management

Question 13

What is not a procedure used to evaluate the reasonableness of an accounting estimates

Answer 13

Confirm via management rep letter that management has disclosed all significant estimates

Question 14

What would an auditor most likely us in determining preliminary judgement about materiality

Answer 14

PY Financial statements.

Question 15

What is the primary objective of probability proportional to sample size

Answer 15

Identify overstatement errors

Question 16

Samples to test internal control are intended to provide a basis for an auditor to conclude whether

Answer 16

control activities are operating effectively

Question 17

When an auditor does not receive positive replies to year end balances

Answer 17

Ask the client to contact the customer

Question 18

When an accountant compiles projected financial statements, the accountant report should include a statement that

Answer 18

Describes the limitations on the projection’s usefulness

Question 19

What is the auditors responsibility for supplemental financial information?

Answer 19

Perform limited procedures

Question 20

The report on a compilation of a projection should not include a statement that

Answer 20

Hypothetical assumptions used in the projection are reasonable in the circumstances

Question 21

Audit Objective
AR represents all amounts owed to the entity at the balance sheet date

Procedure

Answer 21

Perform sales cut-off test to ensure recorded in proper period

Question 22

Audit Objective
AR stated at net realizable value

Procedure?

Answer 22

Review the aged trial balance for significant past due accounts

Question 23

Audit objective
AR properly described and presented in the FS

Procedure?

Answer 23

Review the AR trial balance for amounts due from officers and employees

Question 24

Audit objective
Net property and equipment are properly valued at the balance sheet date

Procedure

Answer 24

Review provision for depreciation expense and determine that depreciable lives and methods used are consistent with prior year.

Question 25

Material weakness or significant deficiency communication required no later than

Answer 25

60 days following the report release date.

Question 26

Entity comparative FS include FS of prior year that were audited by a predecessor auditor who report is not present. If the predecessor’s report was qualified, the successor should

Answer 26

Indicate the substantive reasons for the qualification in the predecessor auditor’s opinion.

Question 27

What internal control procedure most likely would deter lapping of collections from customers

Answer 27

Segregation of duties between receiving cash and posting the accounts receivable ledger.

Question 28

What investment in a client is not considered to be a direct financial interest?

Answer 28

Investment held through a client regulated mutual fund.

Question 29

What statement from a lawyer concerning litigation would most likely cause the auditor to request clarification

Answer 29

“I believe that the action can be settled for less than damages claimed”

Request clarification before determining reduction was reasonable.

Question 30

What best describes the documentation completion date for issuers

Answer 30

45 days from the report release date for PCAOB standards

Question 31

Auditor assesses control risk as 2% and tolerable rate at 5%. A sample of 100 invoices is selected and only one is lacking appropriate control. One invoice selected cannot be located. What conclusion can the auditor draw?

Answer 31

There is not enough information given to determine whether the auditor should rely on this control.