A2

Question 1

What are the interelated quality controls

Answer 1

HELPME
Human resources
Engagement/Client acceptance and continuance
Leadership responsibilities
Performance of the engement
Monitoring
Ethical requirements

Question 2

What are the steps of the audit

Answer 2

Engagements acceptance
Assess risk and plan response
Perform procedures and obtain evidence
Form conclusion
Reporting

Question 3

What are the elements of audit and assurance engagement quality for CPA firms

Answer 3

Human resources
Engagement continuance
Leadership responsibilities
Performance of the engagement
Monitoring
Ethical requirements

Question 4

What is a system of quality control

Answer 4

A system of quality control establishes policies and procedures that provide reasonable assurance of conforming with professional standards.

Question 5

The primary purpose of establishing quality control policies and procedures for deciding whether to accept new clients is to:

Answer 5

Minimize the likelihood of association with clients whose management lacks integrity.

Question 6

How long do auditors keep work papers for issuers and non issuers

Answer 6

Issuers 7 years
Non-issuers 5 years

Question 7

How long do auditors have to finish assembling their files so basically wrapping up their engagements

Answer 7

Non issuers 60 day
Issuers 14 day

Question 8

Which of the following is a primary purpose of audit documentation?

Answer 8

To support that the audit was performed in accordance with GAAS.

Question 9

Management Vs. Those charged with governance

Answer 9

Management are those that are responsible for the day-to-day operation of the firm

Those charged with governance are those who bear the responsibility of overseeing the obligations and strategic direction of the entity including the FS reporting process

Question 10

What is the audit committee

Answer 10

A committee is generally made up of 3 to 5 outside directors or directors that are not employees and have to financial interest in the company

Question 11

Who provides the engagement letter

Answer 11

Auditor to audit committee

Question 12

An inadequate quality control system

Answer 12

This does not imply a lack of compliance with GAAS

Question 13

What does the audit plan contain

Answer 13

Nature extent and timing of the audit NET

Question 14

What doe the audit strategy cointain

Answer 14

Outline reporting objectives.
Provide the scope of the audit.
Provide a preliminary assessment of materiality and tolerable misstatement

Question 15

What does an audit strategy do

Answer 15

Sets up the basis for a more detailed audit plan.

Question 16

What accounts are more likely to be tested at year-end

Answer 16

Balance sheet accounts

Question 17

What accounts are to be tested before year-end

Answer 17

Income statement accounts

Question 18

What should an auditor consider when assessing the competence of a client’s internal auditor

Answer 18

Internal auditor’s compliance with professional internal auditing standards.

Question 19

What should an auditor consider when assessing the objectivity of a client’s internal auditor

Answer 19

Determine the organizational level to which the internal auditors report.

Question 20

What would an auditor most likely use in determining the auditor’s preliminary judgment about materiality

Answer 20

The entity’s financial statements of the prior year.
Should use the amount of preciously identified misstatements to develop tolerable misstatements threshold

Question 21

Formula for audit risk

Answer 21

AR=RMM(IRCR)DR

Question 22

Risk of material misstatement

Answer 22

Is assessed by the auditor and is independent from the audit.

Question 23

The existence of audit risk is recognized by the statement

Answer 23

Obtains reasonable assurance about whether the financial statements are free of material misstatement.

Question 24

For significant transaction calssess

Answer 24

Substantive procedures will always be necessary

Question 25

any indication of fraud including Immaterial fraud is reported to

Answer 25

The appropriate level of management