A2

Question 1

what is done in the pre-acceptance phase

Answer 1

asses ability to meet reporting deadlines, staff engagement, independence, integrity of client management, group audits

Question 2

management responsibilities

Answer 2

fair presentation of framework, design of internal control free from material misstatement, provide auditor with access to info.

Question 3

engagement letter contents

Answer 3

objective, responsibilities, financial reporting framework, inherent limitations of audit, reference tp expected form

Question 4

what should be communicated with predecessor auditor

Answer 4

suspected fraud, noncompliance of laws, bear management integrity, disagreement, reason for change, internal control matter, understanding of entity’s relationships

Question 5

reasons to change auditor

Answer 5

-change in client requirements
-misunderstanding of nature or service

Question 6

reasons for revisions

Answer 6

-change in management/ ownership
-misunderstandings regarding engagement

Question 7

Elements of Quality Control

Answer 7

Human Resources
Engagement/Client acceptance
Leadership responsibility
performance of engagement
Monitoring
Ethical Requirement

Question 8

issuance rules for issuers

Answer 8

45 days to complete following release date, 7 years to retain

Question 9

issuance rules for non-issuers

Answer 9

60 days to complete following release date, 5 years to retain

Question 10

has continuing interest from year to year

Answer 10

permanent file

Question 11

all audit documentation that is applicable to the year

Answer 11

current file

Question 12

evidence of basis of auditor’s report/ conclusion

Answer 12

audit documentation

Question 13

Components of Internal Control

Answer 13

-Control Environment
-Risk Assessment, Management assessment
-Information and communication systems
-Monitoring
-Existing Control activities

Question 14

Objectives of internal control

Answer 14

-reliability of financial reporting
-effectiveness of operation
-compliance with laws and regulations

Question 15

established to study factors that lead to fraudulent reporting

Answer 15

COSO

Question 16

asses quality of control performance overtime

Answer 16

Monitoring

Question 17

used to classify and report transaction

Answer 17

information systems

Question 18

segregation of duties functions

Answer 18

authorization, record keeping, custody of related assets

Question 18

Existing control activities functions

Answer 18

-Prenumbering of documents
-authorization and approval of transactions
-independent checks to maintain asset accountability
-documentation
-timely and appropriate finance reviews
-information processing controls
-physical or logical controls
-segregation of duties

Question 19

auditors specialist

Answer 19

used to obtain sufficient evidence from professionals other than the accounting field

Question 20

management specialist

Answer 20

specialist used to assist entity in preparing Financial statements

Question 21

component auditor

Answer 21

performs work on financial information that will be used as audit evidence for group audits

Question 22

inherent risk

Answer 22

failure other than control

Question 23

control risk

Answer 23

not prevented or detected in timely basis

Question 24

detection risk

Answer 24

acceptable levels

Question 25

to ensure low levels of detection risk

Answer 25

1. change nature of substantive tests from less effective to more
   2.change extent (sample size)
2. Change timing