A1

Question 1

Generally accepted auditing standards (“GAAS”)

Answer 1

measures of the quality of the auditor’s performance this what they look at so they can figure out how to perform an audit.

Question 2

Hierarchy

Answer 2

SAS(Private) and PCAOB(Public)
Interpretive Publication
Other auditing publications

Question 3

An auditor of a nonissuer must conduct the audit in accordance with:

Answer 3

ASB standards.

Question 4

U.S. generally accepted accounting principles is an accounting term that

Answer 4

Encompasses the conventions, rules, and procedures necessary to define U.S. accepted accounting practice at a particular time.

Question 5

The term should

Answer 5

indicates a presumptively mandatory requirement, which must be followed in all cases in which the requirement is relevant, except in rare circumstances when departure from the requirement is permitted if there is appropriate justification, performance of sufficient alternative procedures, and thorough documentation.

Question 6

The term must

Answer 6

indicates an unconditional requirement, which must be followed in all cases in which the requirement is relevant.

Question 7

The term may/might/could

Answer 7

indicates explanatory material that does not impose a professional requirement for performance.

responsibility to consider but not execute

Question 8

Steps in the audit cycle

Answer 8

Engagement acceptance
Assess risk and plan response
Perform procedures and obtain evidence
Form conclusion
Report

Question 9

What is not a practice of professional skepticism

Answer 9

Asking prior year auditors on whether or not the client was open and “fraud-free”

Question 10

What is not a requirements of an auditor

Answer 10

To have experience with the industry

Question 11

In order to obtain reasonable assurance, the auditor must

Answer 11

(a) plan the work and properly supervise any assistants;
(b) determine and apply appropriate materiality levels;
(c) identify and assess risks of material misstatement, whether due to error or fraud; and
(d) obtain sufficient appropriate audit evidence.

Question 12

Requirement for audit evidence

Answer 12

Appropriate

Question 13

Types of opinions

Answer 13

Unmodified (Nonissuers)
Unqualified (Issuers)

For Audit issues
Qualified
Disclaimer

For FS issues
Qualified
Adverse

Question 14

GAAP

Answer 14

Auditors use this to see if the transactions in the FS are reported fairly and squarely

Question 15

The auditor modifies an opinion when

Answer 15

FS as a whole is materially misstated
or
when the auditor doesn’t receive enough information to conclude that they FS is free form error.

Question 16

Unmodified audit opinion Sections

Answer 16

OBRA
Opinion
Basis of opinion
KAM’s (if requested)
Responsibility of management for the FS
Auditors responsibility for the audit of the FS

Question 17

Unqualified opinion Sections

Answer 17

Opinion
Basis of opinion
Critical audit matters

Question 18

Problems with the scope of an audit

Answer 18

Scope problems occur when
the timing of the work,
the inability to obtain sufficient appropriate audit evidence,
or
an inadequacy in the accounting records

Question 19

An auditor uses an emphasis of matter when

Answer 19

CAP
Consistency (Lack of)
Audit opinion change
Purpose - Special purpose framework

We do not use emphasis of matter to address a lawsuits unless otherwise stated an unusually large one.

Question 20

Other-matter paragraphs refer to

Answer 20

matters other than those disclosed in the financial statements.

Question 21

Updating a change in the prior year opinion

Answer 21

DORCS
Date of the auditor’s previous report
Opinion previously issued
Reason for prior year opinion
Changes that have occurred
Statement that the opinion is different

Question 22

Before reissuing the prior year’s auditor’s report on the financial statements of a former client, the auditor should

Answer 22

1) read the financial statements of the current period,
2) compare the prior-period information that the auditor reported with the financial statements to be presented for comparative purposes,
3) obtain a letter of representation from the successor auditor, and
4) obtain a letter of representation from the former client’s management.

Question 23

When a predecessor auditor’s report is not presented, the successor auditor should indicate the following items:

Answer 23

That the statements were audited by a predecessor auditor. The predecessor auditors should not be named unless the practice of the predecessors was acquired by or merged with that of the successor.

The type of opinion expressed by the predecessor auditor and, if the opinion was modified, the reason for the modification.

The nature of any emphasis-of-matter, other-matter, or explanatory paragraph included in the predecessor auditor’s report.

The date of the predecessor auditor’s report.

Question 24

Auditors responsibility for Subsequent Events

Answer 24

PRIME
Post Balance sheet transactions (Changes in stock or long term debt)
Representation letter (Management states changes occurring after year-end here)
Inquiry (Ask management)
Minutes
Examine (the latest interim FS)