A1,3,4 practice quizzes Flashcards
restriction on report on supplementary information?
nope no requirement to restrict supplementary info required by GAAP
most authoritative guidance for nonissuer
SAS
primary objective of PPS sampling?
estimate overstatement errors
negative confirms, when to use?
(small, small)
small # of customers with small balances
what are the GAAS designed to do
measure an auditor’s performance
inventory turnover?
COGS/Average Inventory
COGS = Beg Inv + Purchases - Ending Inventory
what is the most authoritative guidance for an audit of an issuer
SAS
does an auditor report the absence of significant def to governance or managment?
nope dont
if auditor qualifies due to a scope limitation, how to word the opinion paragraph? what to refer to?
qualification pertains to the possible effects on the Financial Statements
don’t say the qualification pertains to the scope limitation itself
what is attribute sampling?
this is a yes or no question answered by a rate: ex: will these entries be posted to a correct account? yes they will x % of the time
this is good for test of controls
variable sampling?
to estimate a numerical quantity. ex: calculating a reasonable amount for depreciation expense
hint: ‘reasonable’ is a key word
Mitigating factors in a going concern situation
plans to dispose of assets,
plans to borrow money or restructure debt,
plans to reduce or delay expenditures,
or plans to increase ownership equity.
in what circumstance can auditor observe inventory after the period under audit
if perpetual inventory records are well kept and checked periodically by the client and compared to physical inventory counts
what is the expected deviation rate?
auditors best estimate of the population’s deviation rate before the sampling plan is executed
