A2

Question 1

CPA started an FS Audit ..client requested CPA to change to a review because of scope limitation… CPA RVW should include?

Answer 1

Statement that review is substantially less in scope than an audit

Question 2

MNGMT disregard of its responsibility to maintain an adequate IC environment… should auditor accept the new engagement?

Answer 2

NO!
IC environment is the foundation or all other components

Question 3

What date defines the date after which existing documentation must not be deleted, and additions to the documentation file must be documented as such?

Answer 3

Document Completion date (not report release date).

Question 4

Non-issuer changes from Audit to a review… should the report be modified?

Answer 4

NO, if acct agrees w/change acct should issue a rvw report without mentioning a change in engagement.

Question 5

which of the following inquiries is required before accepting new audit engagement:
1) regarding MGMT integrity
2)matters that may affect the conduct of the audit
3)Understanding prospective client’s business and industry which it operates

Answer 5

1) regarding MGMT integrity

all the others will be AFTER engagement acceptance

Question 6

Evaluating the adequacy of evidence gathered concerning unusual balances is an example of procedures used in Planning Analytics or Final Review Stage Analytics?

Answer 6

Final Review Stage Analytics

Question 7

Enhancing the auditor’s understanding of clients business is an example of procedures used in Planning Analytics or Final Review Stage Analytics?

Answer 7

Planning Analytics

Question 8

Proper segregation of duties reduces the opportunities of any individual to…

Answer 8

Record & conceal fraudulent transaction in the normal course of business

Question 9

An entity’s control environment includes participation of…

Answer 9

TCWG, MNGMT philosophy, and the organizational structure

Question 10

Do analytical procedures generally help an auditor to develop their preliminary judgement about materiality? YES/NO

Answer 10

NO
Analytical procedures performed during planning often use data aggregated at HL

Question 11

In designing a written audit plan, an auditor should establish specific audit objectives related primarily to the:

Answer 11

Financial statement assertions

Question 12

Audit engagement personnel requirements considered in planning:

Answer 12

1) engagement size & complexity
2) Personnel availability
3) Special expertise required
4) Timing of work performed
5) Continuity and periodic rotation
6) Opportunities for on-the-job-training.

Question 13

Analytical procedures used in planning an audit should focus on….

Answer 13

Enhancing the auditor’s understanding of client’s business

Question 14

Manual controls would most likely be suitable than automated controls for….

Answer 14

Large, unusual, or nonrecurring transactions.

Question 15

Automated controls would be more suitable to…

Answer 15

1) High-volume transactions w/additional calcs
2) Require High degree of accuracy
3) Situations w/ routine errors.

Question 16

FS Assertions

Answer 16

R&O- rights & obligations
V&A- valuation & allocation
P&C- presentation & classification

Question 17

Quality Control Standards = 6 interrelated elements of quality control HELP ME =

Answer 17

Human resource
E engagement client acceptance/continuance
L leadership
P performance engagement

M monitoring
E ethical requirements

Question 18

Auditors primary consideration in evaluation controls is whether specific controls

Answer 18

Affect FS Assertions

Question 19

Example of strong control environment

Answer 19

MNGMT adheres to IC policies

This is evidence of a strong tone at the TOP

Question 20

Public (PCAOB) deadline for completion of audit documentation

Answer 20

45 days after report release date

Question 21

Private (SAS) deadline for completion of audit documentation

Answer 21

60 days after report release date

Question 22

Best type of control that described procedures to ensure appropriate system software acquisition

Answer 22

General

Not application - no se refire a app aplications es individual transaction no me deje ir por APP mas bien general es proper operation del systema

Question 23

Proper segregation of duties reduces the opportunities to allow persons to be in position to both

Answer 23

Perpetrate and conceal errors and Fraud.

Question 24

Auditors usually communicate to MNGMT

Answer 24

Arrangements involving a predecessor auditor

Question 25

Ordinary request of success or to predecessor document review

Answer 25

Contingencies & Internal Control

Question 26

When companies use information technologies (IT) EXTENSIVELY

Answer 26

Auditor uses generalized audit software to extract evidence from client database

Question 27

Inherent limitation to IC

Answer 27

Fact that the controls can be circumvented (find a way around)
by management override

Question 28

what will the auditor consider in evaluating Control environment

Answer 28

MNGMT’s operating style

Question 29

Auditor must assess the competency of both the

Answer 29

IC & specialist

Question 30

Cost-benefit relationship is

Answer 30

a primary criterion that should be considered in designing IC

Question 31

Analytical rvw of long term debt relates to what assertion

Answer 31

Completeness of recorded investment income