Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

AA > 8. Professional Standards > Flashcards

8. Professional Standards Flashcards

1
Q

Are professional standards in the public interest?

A

Yes
As they add to the quality of assurance services

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Does audit regulation promote comparability of FS?

A

Yes
All audited to the same standards and therefore improves public confidence

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Professional standards: What are all UK assurance engagements governed by?

A
  1. CA
  2. ISAs
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Professional standard issuer that is sub of IFAC?

A

IAASB

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

IAASB acronym?

A

The international auditing and assurance standards board

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Professional standards used by IAASB?

A
  1. ISAs
  2. ISAEs
  3. ISREs
  4. ISRSs
  5. ISQMs
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

ISAE: Acronym

A

International standards on assurance engagements

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

ISRE: Acronym

A

International standards on review engagements

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

ISRS: Acronym

A

International standards on related services

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

ISQM: Acronym

A

International standards on quality management

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

ISA: Appliies to what?

A

All Audits

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

ISAE: Application

A

Assurance engagements
Other than those on historic financial information

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

ISRE: Application

A

Assurance engagements to review historic financial information

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

ISRS: Application

A

Non-assurance engagements

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

ISQM: Application

A

All assurance engagements

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is the professional standard setting process?

A
  1. Subcommittee established to work on a particular area
  2. Subcommittee issues an exposure draft for consideration
    Where appropriate, the exposure draft is revised as a result of feedback from interested parties
  3. Once amendments are finalised/approved, the definitive international standard is published
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Who supervises accountancy related issues and issues auditing standards in the UK

A

FRC

(It is continuing to rebrand publications previously issued by the Auditing
practices board (APB). Some APB pronouncements are still in force so
you may see reference to this body)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

FRC: Structure:

A

Has a board

Which is supported by:
1. Governance committees
(the audit and risk committee and people committee)
2. Business committees
(conduct committee, regulatory standards and codes committee and supervision committee).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What does the FRC issue?

A
  1. ISAs (UK) (Revised ISAs for UK)
  2. Ethical standards for auditors
  3. Practice notes – guidance on applying ISAs to particular circumstances and industries
  4. Bulletins – guidance on new or emerging issues
  5. Standards for reviews of interim financial statements performed by the auditor of the entity
  6. Audit quality – thematic reviews
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

FRC: Are Practice notes and Bulletins prescriptive?

A

No: Persuasive

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Some current issues affecting audit

A
  1. Harmonization
  2. Professional skepticism
  3. Big Data
  4. Future of audit
  5. Joint audits
  6. Climate change and sustainability
  7. Technological advances
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Current Issues affecting audit: Harmonization: Definition

A

Aligning global standards so that companies are audited in a comparable way

23
Q

Current Issues affecting audit: Harmonisatoin: Causes

A

Globalisatoin

EU

24
Q

When were International accounting standards were adopted by all EU listed companies? And generally adopt ISAs

A

2005

25
Q

Harmoniation: What did EU Directive and Regulation of April 2014 introduce with regard to audit?

A
  1. Improving the quality of audit and reporting
  2. Mandatory re-tendering after 10 years
  3. Change of auditor at least every 20 years
  4. Ban on providing non-audit services (including tax advice) to public interest
    entities
  5. Cap on fees for non-audit services.
26
Q

Professional skepticism definition

A

An attitude that includes a questioning mind, being alert to conditions which may indicate possible misstatement due to error or fraud, and a critical assessment of audit evidence

27
Q

FRC professional scepticism problem areas

A
  1. Year-on-year audits adopting the same approach despite changes to the client’s business or circumstances
  2. Accepting management explanations rather than forming own view
  3. Acceptance of unrealistic deadlines.
28
Q

Big Data definition

A

Data sets that are large or complex

29
Q

How are auditors responding to big data?

A

Increasing use of tech
In audit approach

30
Q

FRC view on data analytics

A

Will assist but won’r replace an experienced auditor’s skillset

31
Q

Future of audit: Recent activities

A
  1. The Kingman review
  2. Competition and market authority (CMA) review
  3. Brydon report – Independent review into the quality and effectiveness of audit
  4. Restoring trust in audit and corporate governance
32
Q

The Kingman review

A

This led to the government announcing the abolition of the FRC, replacing it with a new Audit, Reporting and Governance Authority (ARGA)

33
Q

The new ARGA is expected to: (operational by 2025)

A
  1. regulate big firms
    2.impose larger sanctions for corporate failure
  2. require fast explanations from companies,
  3. issue report publications regarding conduct and management
34
Q

Competition and market authority (CMA) review: Recommendations

A
  1. robust regulatory oversight of committees to ensure quality is prioritized
  2. mandatory joint audit (see joint audits section later in this chapter)
  3. an operational split between the Big four’s audit and non-audit businesses to ensure quality
  4. a five year progress review by the regulator.
35
Q

Brydon report – Independent review into the quality and effectiveness of audit : Key reccomendations

A

Redefine audit’s purpose
Create a corporate audit profession governed by principles
Replace ‘true and fair’ with ‘present fairly, in all material respects’ opinion
Rolling audit and assurance policy
Resilience and public interest statements
Shareholders to propose matters for the audit
Stakeholders to be covered by ‘public interest’
Forensic accounting/fraud awareness training for auditors
Internal control effectiveness reporting to the Board
Improve clarity on capital maintenance
Improved auditor communication/transparency
Extension of audit to new areas (including alternative performance measures)
Extend audit concepts beyond financial statements
Increased use of technology.

36
Q

How will Brydon report be implemented?

A

Yet to be seen.

A further review is recommended in 2025 to consider how the above has been implemented.

37
Q

Restoring trust in audit and corporate governance (2021) proposals:
(Feedback still being analysed)

A
  1. Directors – take action against those neglecting their responsibilities
  2. Audit, auditors and audit firms – to encourage further development and competition in the audit market
  3. Shareholders – publication of an audit and assurance policy on which an advisory shareholder vote would be taken
  4. The audit regulator – ARGA to replace the FRC.
38
Q

Joint audits definition

A

More than one audit firm responsible for the audit opinion

The audit will be performed on a joint basis and a joint audit report will be issued. In the event of litigation, firms will be jointly liable.

39
Q

Who has proposed mandatory joint audits to increase audit competition and deliver higher quality services

A

CMA

40
Q

Joint audits: Benefit

A

May benefit smaller firms in allowing them to perform or become involved in higher level audit services.

41
Q

Joint audits: Issue

A

Services may become more expensive for clients

42
Q

FRC findings on audit and company climate change

A
  1. Little evidence of business models/company strategy being influenced by integrating climate considerations
  2. Users are requesting additional climate-related disclosures
  3. Climate change disclosures/financial statement considerations lag behind narrative reporting
  4. Firms need to take action to ensure climate change is factored into its internal quality monitoring processes
  5. Climate related risks need to be further considered when planning/conducting audits.
43
Q

Are better climate disclosures being sought?

A

Yes

In order to aid climate risk assessment and encourage better reporting

44
Q

What has been amended to require certain entity sustainability/climate-related risks and opportunities to be disclosed?

A

CA

45
Q

Sustainability: Task Force on Climate-related Financial Disclosures (TCFD): Areas

A
  1. Governance
  2. Strategy
  3. Risk management
  4. Metrics/targets.
46
Q

3 technological advances in relation to audit?

A
  1. Robotic process automation (RPA)
  2. Artificial intelligence (AI) & Cognitive computing
  3. Blockchain
47
Q

Robotic process automation (RPA)

A

Software used to capture/interpret existing applications with the aim of automating activities across systems

Simple actions e.g. opening emails, copy/pasting files

Complex actions e.g. data extraction, calculations

Cannot mimic human judgement

48
Q

Factors to decide whether to use RPA

A

Volume of manual work
Number of systems
How standardised the process is

49
Q

AI definition

A

When a computer program is able to complete a task which we consider to be intelligent in humans

The meaning of AI is continually evolving and as this has happened, the term cognitive computing has also been introduced to represent smart technology.

50
Q

Common AI applications

A
  1. cognitive automation
    (e.g. automate a matching up process for cash)
  2. cognitive engagement
    (e.g. using a live chat assistant to resolve FAQs)
  3. cognitive insight
    (e.g. allowing full visibility of a system/process, allowing staff to be proactive and responsive).
51
Q

What behavior does AI look to copy?

A

– learning
– understanding
– interacting
– perceiving
– reasoning

52
Q

Blockchain definition

A

A digital set of records/transactions where individual digital items (blocks) are linked together in a public database (the chain). The information is stored across multiple computers and is made public.

53
Q

Blockchain real life example

A

Businesses using blockchain to complete ‘know your client’ procedures.

AA (16 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions