A2 FINAL

Question 1

What is a concern that could be so serious that the auditor cannot perform a FS audit?

Answer 1

Substantial risk of intentional misapplication of accounting principles

Question 2

Define parallel simulation

Answer 2

The client’s input data is processed through both the auditor’s version of the client program and the client’s program and the output is compared.

Question 3

Define Test data (What are some examples)

Answer 3

Data (with predetermined result) that is run through the clients computer system. The auditor creates on transaction of each type of valid and invalid conditions.

Ex = Missing employee numbers, time ticket with invalid jobs, agreement of hours per clock card with hours on time tickets

Question 4

What are the 4 things that audit documentation provides?

Answer 4

1. Principal support for auditors report
2. Assistance in the planning, conduct, and supervision of the audit
3. accountability
4. useful information.

Question 5

Define embedded audit module

Answer 5

sections of an application program code that collect transaction data for the auditor

Question 6

Why do auditors hesitate to use embedded audit modules?

Answer 6

Requires auditors to be involved in the system of the application to be monitored

Question 7

According to PCAOB: what is the rule for documentation completion date?

Answer 7

45 days from the report release date

Question 8

What responsibilities may the independent auditor share with the internal auditor involving the judgement and assessment of both inherent and control risk?

Answer 8

NONE

Question 9

When would an auditor refer to the work of a specialist in the audit report?

Answer 9

IF the difference between the client’s and specialist valuations of an asset

Question 10

Define a specialist

Answer 10

A person or firm with special skill in field other than accounting or auditing (Actuaries, appraisers, attorneys, or engineers)

Question 11

In terms of materiality, how would the auditor reduce the risk the aggregated undetected misstatement in the group FS of a nonissuer exceeds materiality for group FS as whole?

Answer 11

Make the component materiality lower than overall materiality

Question 12

in planning stage of an audit, what would the auditor consider the results of analytical procedures?

Answer 12

ID the RMM due to fraud

Question 13

What are the 6 elements in quality control?

Answer 13

Human Resources
Engagement/client acceptance
Leadership responsibilities
Performance of engagement
Monitoring
Ethical requirements