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Audit > A1 > Flashcards

A1 Flashcards

1
Q

What is the main difference between US GAAS and US GAAP?

A

GAAS = measures quality of audit performance
GAAP = Rules, guidelines necessary to define U.S accepted accounting practice

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2
Q

What is management responsibility in an audit?

A
  1. Prepare the F/S
  2. DIM of internal control
  3. Inclusion of adequate disclosures
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3
Q

What is the Auditors responsibility in an audit?

A
  1. Opinion
  2. professional judgement/professional skeptisim
  3. Follow GAAS
  4. Independence
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4
Q

What are the steps in obtaining reasonable assurance in an audit?

A
  1. Plan the work and properly supervise any assistants
  2. Determine and apply appropriate materiality levels
  3. ID RMM
  4. Obtain appropriate audit evidence
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5
Q

What is the overall obj of an audit of a nonissuer?

A

To obtain reasonable assurance AND report opinion on F/S

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6
Q

What is the overall objective of ICFR?

A

1.Express opinion on effectiveness of company’s internal control
2. Plan and perform audit to obtain reasonable assurance about if MW exists

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7
Q

What is a Critical Audit Matter?

A
  1. Required in Issuer audits
  2. Relates to Accounting/Disclosures that are Material to FS
  3. Involves especially challenging, subjective, complex judgement for auditor
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8
Q

What are the 4 requirements of a CAM paragraph (IPAD)

A
  1. ID of CAM
  2. Description of Principal considerations that led to determine CAM
  3. Description of how CAM was addressed
  4. Referenced to relevant F/S account and Disclosure
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9
Q

What is the difference between CAM and KAM?

A

CAM = Critical Audit Matters (issuers ONLY, required in issuers, if no CAM is identified –> need to state so)
KAM - Key Audit Matters (noissuers ONLY), not required

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10
Q

What is Form AP?

A

Required for Public company for EACH Audit report - must be filed 35 days after audit

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11
Q

What are the most common GAAP Problems?

A
  1. GAAP consistency change (unjustified)
  2. Inadequate disclosures
  3. Unreasonable accounting estimate
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12
Q

What are the most common scope limitations?

A
  1. Time constraints
    2.Observe inventory/confirm receivables/obtain FS
  2. Refusal of mgmt to produce rep letter
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13
Q

What is the main difference between between Emphasis of Matter/Other Matter/Explanatory Matter?

A

EOM and Other matter = Nonissuer
Explanatory = Issuers

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14
Q

When is an Emphasis of Matter paragraph required?

A
  1. Justified accounting principles
  2. Subsequent facts that lead to other audit opinion
  3. F/S are prepared in special purpose framework
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15
Q

When is a contingency loss accrued for and disclosed?

A

IF loss is probable AND can estimate loss = Accrued AND Disclosed

IF loss is probable OR reasonably possible ==> Disclosed ONLY

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16
Q

What is an Other Matter paragraph and when is it required?

A

Refers to matter other than those presented or disclosed in the F/S

Required when : Auditor restricts use of report, sub events

17
Q

When is an explanatory paragraph required?

A

Going concern, material change in accounting princple

18
Q

When is an explanatory paragraph required?

A

Going concern, material change in accounting principle

19
Q

If issuing comparative FS on a first year client, the PY audit was unmodified opinion - how should the CY report be modified?

A

In an other-matter paragraph note the predecessor auditor expressed an unmodified opinion on the PY FS

20
Q

What term is used in the SAS indicate a presumptively mandatory requirement?

A

Should

21
Q

If F/S prepared in accordance with OCBOA and are not titled appropriately, how should the report be modified?

A

Required a qualified opinion with basis for modification paragraph

22
Q

What paragraphs in a nonissuers report refer to GAAP?

A

Opinion and Management’s Responsibility

23
Q

When disclaiming an opinion due to scope limitations - how is the opinion modified?

A

Opinion states that “no opinion is expressed”
Auditors responsibility is revised to mention the disclaim
Additional paragraphs are added to indicate reasons the auditor did not comply with GAAS

24
Q

What factor should most influence an auditor’s decision to modify the audit opinion?

A

The effect of misstatement on the financial statements as a whole

25
Q

What is Dual dating?

A

Used when there is a sub event occurring after the original date of the auditor’s report and the auditor wishes to extend responsibility only for one event

Not used for comparative statements

26
Q

If auditor is unable to determine whether managements estimate of effects of future events is reasonable and effect is material - what type of opinions could be issued?

A

Qualified or Disclaimer

27
Q

If auditor lacks independence with respect of audit client - what opinion is issued?

A

Be unable to express an opinion on the current year results of operations and cashflows

Audit (6 decks)

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