A2 Quality Control, Engagement Acceptance, Planning, and Internal Control

Question 1

What are the different computer assisted audit techniques? CAATs

Answer 1

• Transaction Tagging - tag a specific transaction and follow it through system
• Embedded Audit Module - Collect transaction data for auditor. EX: All transactions over $10K
• Test Data - use offline version of client system to test invalid data input IE: excessive hours is a week, phone number with letters Integrated
• Test Facility - test data ran commingled with live data Parallel simulation - auditor reprocesses some of client’s live data and compares the results

Question 2

How long do audit records need to be retained?

Answer 2

Issuer - 7 years

Non Issuer - 5 years

Question 3

How long after release of an audit report do audit work papers need to be completed?

Answer 3

Issuer - 45 days

Non Issuer - 60 days

Question 4

What does an auditor do to obtain knowledge about internal controls?

Answer 4

• Obtain knowledge about the Design of controls
• Also detemine if they have been implemented by performing procedures in additional to inquiry (inquiry alone is not sufficient)
• Does NOT need to obtain knowledge about effectiveness of controls
  
  • (unless they assess control risk below the maximum and plan to rely on controls, in which case they have to do testing of controls)

Question 5

When should discussions of indepence take place when performing an inital audit?

Answer 5

• Prior to accepting the engagement, the firm should describe in writing all relationships that, as of the date of the communication, may reasonably be thought to bear on independence.
• To an issuers audit committee
• Remember, if it’s not documented, it means it wasn’t done!

Question 6

What are some examples of independence NOT impaired for DOL audits ?

Answer 6

• An actuary associated with the accountants firm provided services to the plan
• The accountants firm was engaged by the plan sponsor duirng the period of professional engagement
• A former officer of the plan sponsor is employed by the firm, but has disassociated from the plan,and does not participate in any audit period covering any eriod when they were employed (by the plan)
• Think these are referring to employee benefit plans

Question 7

What are the elements of AICPA required Quality Controls?

Answer 7

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

Question 8

What are the 5 elements of COSO internal framework and 3 objectives?

Answer 8

Elements :

• Control Environment
• Risk Assessment
• Control Activities
• Information and Communication
• Monitoring Activities

Objectives:

• Operations
• Reporting
• Compliance

Question 9

What are the steps for using Audit Data Analytics ?

Answer 9

1. Plan the ADA
2. Access and prepare the data
3. Consider the relevance and reliability of data
4. Perform the ADA
5. Evaluate the results and conclude