A3 Performing procedures

Question 1

Management assertion accrymns

Answer 1

Review of Relevant Assertions:

Account balances;

CVER

Completeness

Valuation, allocation and accuracy

Existence and occurance

Rights and obligation

Asset balance testing existence/support for overstatement. Testing for completeness assertion (coverage) of liability for understatements.

Transaction and events COVEU

Completeness

Cutoff

Valuation, allocation and accuracy

Existence and occurrence

Understandability and classification

Revenue transactions; existence and occurance / supports for overstatement and completeness/coverage for expense understatements

Presentation of disclose

CVRU

Completeness

Valuation, allocation and accuracy

Understandability and classification

Question 2

mangagment assertion in the presentation and disclosure of f/s

when he wants f/ls clearly is ti

Answer 2

Accroymn: CVRU

completeness

Valuation

Rights, obligations, and occurance

Understanding and classification.

this is the U in understanding and classification. because f/s are present and discloed in f/s.

The C in completness would not be used because the auditor didn’t determine disclosure

the V valuation would be if financial and othe info were disclosed at the correct amount.

Question 3

The testing of PPE balances, audit may inspect (existance) new additions on the analysis of PPE. the proecedure is design to obtain evidence on assertion of

Answer 3

Existence; ppe was inspected

evidence on if amounts were correct were not included in he assertions so Understanding and classificaton is not used.

Question 4

A3 M1 mcqs

Answer 4

8667-what is the best characterization of an auditors excersize of professional sketicism; have an attidute of a questioning mind., which is critical for an auditor.

2986- what statement describes why a properly designed and executed audit may not detect a material misstatement due to fraud; audit porcedure that are effective for unintentional or errors may not be effective for misstatemen of collusion.

8156-What is the primary objective of auditors brainstorming session; assess the potential for material misstatements due to fraud.

4960- an auditor has prepared and gave an unmodified opinion on fs that are material misstated due to fraud. what is true; audit has met his responsibility provided the audit was planned and performed appropriately, including specific assessment of the RMM.

2828-what statement is true regarding the 3 fraud risk factors (incentive/presssure, opportuniting, rationale/attidue) the 3 fraud factors should be discussed by engagement team during planning.

4709-what statement is correct concering an auditors responsibility to report fraud; auditor is not respsonsible to report fraud activities committed senior management and governance to third party. Could be reported to SEC if audit include regulatory.

2830-what is not an inquiry the auditor should make to id the RMM due to fraud; whether operating personnel have communiicated to management regarding ic and how to prevent fraud, deter or detect material misstatement due to fraud. it is management communicate to governace.

11027-what would most likely heighton an auditors concern about rRMM arising from fraudulent financial reporting. management display a significant disregard for regulatory authorites. this would increase auditor assessemt of RMM.

8669-if a enity fails to provide documenttion for new aquired assets and informs auditors that documentatio is lost the auditor would.; heighton risk of fraud testing to determine intentional fraud or unintentional error.

2863- an auditor has id a RMM due to fraud related to inventory. what is his least likely approach; requesting managment monitor = could be management override.

2838-what is least likely to aid the audior in evaluating the risk of improper revenue recognition due to fraud. analyis of commission over the most recent 5 yr period. commisssion can changed due to restructure.

7147- what situation most likely represents the highest RMM arising from missappropriation of assets; a large number of bearer bonds on hand = these are unregistered bonds with no record keeping of owner or transaction involving ownership.

Question 5

A3-m3 id, assess and respond to risk mcqs

Answer 5

2945-after obtaining an understanding of ic and performing risk assessment. auditor decided not to perfom test of controls due to; the additional work in ic was not cost beneficial. the additional work to support low level of control risk is not worth it. you do assess of risk of ic to perform low level to do less subtantivie testing.

2386-when audit risk assessment is based on effective operation of controls. he will’ he will id specific ic relevant to specific assertions that will prevent and detect material misstatements

2463-after obtaining understanding of clients and its environment. , including ic. and auditor decides to perform test of controls because; the operating ic is effective.

2898-as of part of understanding ic, an auditor is not required to obtain knowledge of operating effectiveness of ic. this is done later.

he would want to understand;

• ic have been implemented
• factors that effect RMM
• types of misstatement that can occur

2763-what documentation is not require. remember documentation is formal and informal; decision the basis of not performing test of controls with obtaining understanding of ic. no need to document.

do document; engagment letter and rep letter.

2492-what is the objective to do test of detail of transations is perform of test of controls; to evaluate if ic is operating effectively.

5373-what factors would least likely affect the extent of the auditors consideration of clients ic; the amount of time budgeted to complete the engagement; due to has to get it done most accurate cost not a factor.

8183-providing more supervision during the audit on nonissurer in respond to assess RMM at fs leve is an example of; an overall audit response.

5822-what procedure would an auditor most likely perform prior to the balance sheet date(interim); review detail and test significant expenses that are reasonable predictable. test to budget.

3037- before applying principal substantive test of test of acccounts at an interim date prior to bs ; consider whether amounts of the y-e balances selected for interim testing are REASONABLE PREDICTABLE with respect to amounts relative significant and compostion.

8672-in performing interview and examining documents related to preliminary work on fs. auditor id business risk related to plans for new product line. what should auditor do as results; analyze the new line to known business lines risks determine whether there is an immediate consequense for the RMM at various level.

2400-when there are numerous property and equipment transactions during the year, and auditor plans to assess controls risk at a low level would perform; test of controls and limited test of detail such as PPE.

2938-what is considered correct with control risk; assses control risk and understanding of an entitys ic may be performed.

7952-when performing assessment of risk at the assertion level and fs level. what is accurate of the id risk; fs risk have a direcrt impact on fs as a whole and on relevant assertions.

7562-what is least likely to be considered a significant risk that would lead the auditor to access inherent risk at a high level; conversion from fifo to lifo in inventory costing methods it is not subject to audit judgement;

what is company contracted with a subsidiary to provide key components that company use in their manuafacturing.

7588-what is an inaccurate statement as it pertain to the auditor consideration of significant risk; the impact of clients controls related to the perceived risk is a determinant for deciding the levels of significance, audit would ignore clients perceived risk.

Question 6

a3-m4

A3 M4 Mcqs

Answer 6

2905-what direct effect assurance does auditor audit of noncompliance with laws and regs that are material to the fs. and what noncompliance the are material the are indirect.

Direct; resonalble assurance

Indirect - none ( just fs focus for auditor)

2991-what is the explanation that auditors examination cannot reasonablely be expected to bring all noncompliance with laws and regs by client to auditors attentions: because they relate to operation aspect and not accounting aspect. tp broad for auditor to audit.

2872-audit discovered that a client employee paid a small bribe to government officer most likely would withdraw for audit if; management fails to take appropriate actions .if not hard to rely on rep letter and would withdraw.

4720-what procedures would least likely results in the discovery of possible nocomplance; reviewing a ic questionairre. does not provide actual transactions or events that have occured.

3018-what information discovered during an audit most likely would raise a question concerning noncompliance; entity prepared several large checks payable to cash during the year.

would not be if management failure to correct ic weakness.

2504-what procedure most likely would assist an auditor in determining whether management has id all accounting est. that could be material to the fs. review of lawyers letter for information about litigation. may have to estimated or accrue liab.

would not be if accounting est. deviate from historical; if it is reasonable than it is fine.

Question 7

A3-M5 Sufficient Evidence

Answer 7

5480-what factor would most likely influence an auditors consideration of the reliability of data when performing analytical procedures; whether the data was developed under a system of adequte controls. Strong, good quality, effectiveness ic improves the reliability of data.

2670-what statement is generally correct about the reliability of audit evidence’; the reliability of data when performing analytical procedures or examining fs; whether the data was developed under a system of adequte controls. Strong, good quality, effectiveness ic improves the reliability of fs.

2365-what presumption is correct about the reliability of audit evidence; an effective ic provides the more assurance aobut the reliability of audit evidence..

corraborative evdidence = sufficiency evidence.

5880-what document is an example of audit evidence by client. this is evidence generated by client internally: shipping documents and receiving reports.

2661-what statement concerning audit evidence is correct=; clients accounting data cannot be considered sufficient audit evidence to support the fs. should consist of accounting data and corroborating evidence=sufficiant evidence.

6814-pcaob standards state that the relevance of audit evidence depends does not depend on: risk assessment; which is the NET of audit procedures

does consist of =

=whether the audit procedure is designed to test for under and overstatments

• timing of the audit procedure
• whether the audit procedure is designed to directly test an audit procedure.

7666-what would not represent audit evidence obtained through the auditors direct personal knowledge; acccounts payable confirmations sent out to client customers.

personal knowledge = observe, recompute/recalculate, examine.

7665-according to pcaob standards; relevance of audit evidence depends does not depend on; circumstances under which audit evidence is gathered.

Question 8

A3 m7 ratios mcqs

Answer 8

2640-what is the ratio formula for return of assets; these are performance ratios and would uses NI/ average assets( remember all return ratios that use b/s are average assets)

2383-auditor discoved that a/r turnover ratio is substantial lower for the current year than for the prior year. this would indicate. 1st what is the a/r turnover ratio; net sales/average a/r/. 2nd sales is involve if a/r turnove down this mean numbers sales down in current year and a/r denominator is up. could have been ficticous sales in current year. because a/r when up but no change in sales.

Question 9

A3-m6 Risk, Procedures to obtain evidence

Answer 9

4446-what is not true about the auditors use of relevant assertions; each relevant assertion should have one audit procedures associated with it. could have existence and obligation, or completness and valuation, accuracy and existance.

Also, what is true; a single procedures ; Nature of event, can provide evidence relatiing to one relevant assertion.

2373-auditor id predictable relationships when using analytical procedures. what transaction would provide the highest level of evidence between Travel and entertainment and interest exp.

Interest exp. more predictable where as T&E would be at management discretion.

2375- under GAAS standards the use of analytical procedures is required to some extent :

In the final stage of reveiw or beginnig plan.

Subtantial test not required may be used.

2350-what would not be a consideration of analytical procedures; project error rate on statistical sampling to actual population

are considerations:

estimated expense

developing expect revenue based on trends

comparing are all analytical procedures.

6233-when would auditor factor the assessing effeciency and effectiveness of analytical procedures as compared to test of details to determine whether analytical procedures should be used. nature of assertions to determine the plausible and predictabilty of data along with the availability and reliability of data used in to develop the expectation.

4418-what is not a analytical procedure in the final review stage; enhancing understanding of clients business. this is done in the planning.

7687-If an auditor completes certain ycleprocedures that were previously done by teh client as part of ic over given cycle. this would be call; Reproformance

Recalc = recomputing clients infor.

reconcile= comparing of financial amounts between two independent sources GL and bank statements.

Examine = physical inspection of documents, records and tangible assets= existence and understanding and classification.

7708-auditors inspects several leases pertaining to operating leases transactions. what audit procedures is he testing; understanding and classification assertions to make sure the classification is indeed correct= classification and treatment in finanical reporting = understanding

evaluating the going concern is an final review of analytical procedures.

4976-what best explains why an analytical procedure might be used as a substantive test; to determine the effective and effeciency of using analytical procedures is best approach for some assertions.

2311-what is a true statement regarding documentation requirements for analytical procedures; when analytical procedure is used as the principal substantive test of a signicant finanical statement assertion, the auditor is requried to document the expectation and factors considered in developing that expectation. not the reason for performing test of detail.

8176-what is a management assertion regarding account balance at the period end; CVER; Rights and Obligation; the entiy holds the rights to asset, and liabilities are obligations of the entity.

8858-what is an advantage of regression analysis compared to other analytical procedures;although it provide one of the highiest level precision with other another method, it is unique becasue it provides direct and quantative measure of the precision of expectation.

Low level assurance; ratios, trend analysis

High level’ regression analysis and nonstatistical predictive modeling.

2358-what pair of accounts would be analyzed in the audit documentation; note recieveable DR and interest income CR.

2319-if analytical procedure in the final stages resulted in several accounts having unexpected relationships. the results of these procedures would indicate that ; additional testing of details are requred.

2627-what ratio would an engagement partner perform in the overall final review; ratio of total debt to total asset. this is a high level ratio that would determin how mucj assets is being financed through debt.

6711- analytical procedure are important when testing what types of transactions; operating expense due to they i/s relationship and predictability as compared to b/s account.

5500-what procedure would an auditor most likely perform when auditing the statement. he would reconcile the statement of cf to the fs.

confirm the cash bal. the entity financial institutution is a audit procedure to audit cash balance.

3167-what procedure would an auditor most likely perform to test control related to managment assertion about completeness of cr for cash sales at a retail outlet.

completeness = looking for unrecorded transaction. would observe the consistency of employee use of cash register and tapes to verify and record entries.

any inquires, tracing deposits and comparng are not completeness.

7702-auditor initially determine that TS account had minimal activity (or transactions) during the year. what procedure is design ; substantive procedure under test of detail. not analytica procedure. due to not ratio, or comparison mentioned

7696-if auditor is doing an inspection of clients account balance he is and is not doing what assertion;

is valuation= inspections, cross foot, recalc, reconciling, reperform

is understanding and classification; inspect, review, perform inquire for related disclosures.

is rights and obligation; inspecting right to assets and obligation to liab.

not doing completeness= observe, trace source doc to accounting records, and perform analytical procedures

7681-when testing completeness audit is and is not perrom what procedure; OTA = observe, trace and perform analytical procedures;

is not ; inspecting

7675-if an audit sent out confirmation and recieved back confirmation with exception, he would assess; a deficiency in ar ic reported in client reporting errors. which would lead to material misstatement, ic weakness over reporting, and fraud occured.

a difference in client and customer respon would not be ic weakness or a conrcern or a material weakness.

7686-pcaob established risk assessment standard. what are the assertions; CEO Approved

Completeness

Existence and Occurence

Rights and Obligation

Allocation

Presentation

Rights

Valuation

E

Disclosure

no Cutoff

Question 10

A3-m8 sampling1 mcqs

Answer 10

2620 when performing test of detail during an audit, auditon conclusion of account bal. was material mistated but in fact it was not. this is the risk of; Incorrection in the rejection.; auditor say variable results bad, when they are not.

2885-sample test on internal controls are intented to provide a asis for an auditor to conclude that; control activities are operating effectively.

2597- are expected deviation rate and tolerable deviation rate considered in the determining of sample of the test of controls. Yes. test of control considered by tolerable rate of deviation, likely rate of deviation ( exected ) and allowable risk of assessing control risk too low.

2870- to determine sample size of test of contorl, auditor shold consider the tolerable deviation rate, allowable risk of assessing control risk to low and the; expected rate of deviations : which is the auditors’s best estimate of deviation rate in the population befor the sampling plan is executed.

2600: An advantage of statistical sampling over nonstat sampling is the stat sampling; helps the auditor to measure the sufficiency of the audit evidence and quantify the audit risk there by assisting in limiting it to an acceptable level
2851: an avantage of stat methods of attributed sampling over nonstat method is that; it provides a scientific basis for the planning for sample.

Statistical sample size factors arel tolerable rate, expected population deviation rate and risk of overreliance.

5812-what would be a consideration in planning an auditors sample of test of controls; auditor’ s allowable risk of assessing controls risk too low. it has an inverse relation with planning control risk to low. Expected has a directed relation.

8181:what is true about audit sampling risk for nonissurer:

non sampling can arise because an auditor failed to recognize misstatements. since nonsample can not be mseasured, audit must have the following with nonsampling, adaquate planning and supervision, quality control from the audit firm. Good audit procedures.

Substantive test is restricted to sample that may draw different conclusion = sample risk.

2611; what statement is correct concerning statistical sampling of test of contols;Deviation must be from a pertinent of relative to a control activity at a gvien rate would ordinarily be expected to result in a misstatement at a lower rate. not just a control activity.

2623; why would an audit assess contol risk low when it was actually this. because he thought that the deviation rate was lower than the tolerable rate. = control risk too low.

5498-what audit test would a cpa most likely use in attributed sample; these yes, no, approval, authorization questions and not $$. identifying entries posted to gl is a yes /no questions.

where as evaluating the reasonableness of depreciation expense = is trying to estimate .

4716-when would an auditor examining inventory use variable sampling rather than attributed sampling; estimating whether the dollar amounts of is reasonable.

2892-what is the auditors evaluation of statistical sample for atttributes when a test of 50 documents result in 3 deviations. tolerable rate s 7% Expected population deviation rate is 5% and allow for sampling is 2%.

modify the plan because sample deviation plus allow for sampling exceeds tolerance rate

3/50 = 6%= sample deviation + 2% allow = 8% upper deviation - 7% tolerance.

2877-if 7% is tolerance rate. Upper deviation = 8%

sample size = 200 invoice and 7 invoice lacked approvals what is allowance

7/200=3.5% sample deviation - 8% upper deviation = 4.5% allw

11048- in assesing the tolerate rate of deviation of test of controls that was performed using stat sampling , auditor should consider that; deviation from a pertinent or relative control at a given rate ordinarily results in misstatement at a lower rate.

2896-in determining the number of documents to select for a test to obtain assurance that all sales return have been properly authorized, auditor should consider the tolerable rate of deviation form control activity and likely rate of deviations the high the rate the greater number of items selected.

not assessing risk.

5004;if auditor willing to accept a 2% risk of assessing contro risk to low, a 5% tolerable rate. sample of 100 invoices and 1 found that did not have approval and on could not be located by client. what is true. the one invoice missing should be counted as a deviation. resulting in the 2% sample deviation 2/100= 2%. but still not sufficient enough infor for upper deviation.

3700-what would not be used by auditor to limit sampling risk;

what is used is

evaluate the samp;e through random sample selection

• ensure that sample itmess have the equal probability of being selected
• evaluate the sample results
• select a representative sample from the population

not used; select a nonrepresentative from the sample.

Question 11

A3-m9 sampling 2 mcqs

Answer 11

5496-what characteristic most likely would be an advantage of using classical varible sampling than probability proportionnal size PPS sampling= selection of negative bal, zero bal require no special design consideration as opposed to PPS

5724-what is the primary objective of PPS to sample size; PPS is a substantial/varible sampling its objective is design to id estimates overstatement errors. zero, negative and understatement balances require special design considerations

2587- when using classical sampling and in specific mean per unit est to calc required sample size. what must audit use to determine sample siz calc; 1. varibility of dollar amt ( is affected by population which generally represent standard deviation; auditor guess on error), 2. risk of incorrect acceptance ( accept level of risk, tolerable rate and expected misstatement,)

2880-when using the classical sampling for est. auditor would calc the possible error in direction +/-. this is known as; precision

other calcs for error

• standard deviation; the measure of variability of frequency in the mean
• reliability; how frequent the procedure is used will yield the difference btwn the est. value and the population value.
• Projected error; auditor best estimate of the error in population based on evaluation actual error rate to sample results. then adds allw for sampling risk to develop precision = +/- in error

2894- Decr acceptable level of risk to low = incr sample size= auditor would decide to decr the acceptable risk when ; the cost and effort of selecting additional sample items is low

Also = Incr level risk = decr sample size ( 95% sure you are right.

8891- what is the projected sample misstatement when auditor randomly samples 50 out of 1000 population. discovers an overstatement of $3000. 50/ 1000= .05

$3,000 overstatement /.05 = $60,000 projected misstatment

2583;would a tolerable misstatement that is equal to a lower risk of incorrect acceptance should results in a higher sample size because large tolerable rate = smaller incorrect acceptance. ( key words tolerance equal lower incorrect accepatance and but not vice versa . yes. population size plays no factor if it is big enough

6224- if test of purchase has the auditor randomly selecting 60 out of 1200 po’s. There was a $4000 discovered overstatement in the sample. Audit set a materiality rate of $65,000. the tolerable misstatement amount was $50,000. what the auditor to do next. Once the Id the misstatement ($4000) the next step is to project the dedected error to the entire population then add it to the allw of risk to the precision +/- error.

8935-when testing bank rec. audit notice several nonmaterial DIT that did not clear bank in a timely manner. auditor suspects there maybe fraud. what responds is most appropriate. should consider the implication for the integrity of management or employees and the possible effects on other aspects of the audit.

no procedure to be evaluate, this is fraud.

2581- if tolerance rate low then sample size is increase and incorrect is high then sample decrease. inclusive more work required to get risk assessment. should be eithe tolerance and incorrect should have inverse on sample size.

2580- larger tolerable rate equal a incorrect acceptance then more work it is indeterminent

Question 12

a2 m8 risk assessment 2

Answer 12

8396-what would an auditor consider in evaluating control evironment; ,managements’s operating style and philosphy taken to in managing risk, attitudes and actions toward financial reporting, information, and processing and accounting functions and personnel. not management review of fs. this would be a evaluating control activiites.

4381-what most accurately describes the process of a walkthrough; follow a transactions from its origination until it is reflected in the fs.

walkthrough procedures include all ; observation, inspecting inquiry recalculation, reperformance. must be in the answer together and not independent of each other in a mcq.

not a walkthrough; testing and documenting the results of tests of selected controls. auditor wants to obtain evidence about the design and implementation of ic whether geting evidence on if ic are operating effectively

2344-what procedures most likely would provide an auditor evidence on suitable to prevent or detect material misstatements; ic control activity procedures : this is looking the design of controls :oberserve, and inspect, inquire. where as recalcu and reperform evidence about operating effectiveness of specific control activity and not design.

2936-in obtaining an understanding of entity ic, an auditor is required to obtain the knowledge about; the design of ic and not the operating effectiveness

8684- what represents a limitaion of ic rather than a failure. remember Inherent limitation are management override, collusion between two or more people, human error. for example, a purchasing empolyee and an outside vendor participate in a kickback scheme. circumvention of control collusion.

3201-in understanding entity ic on inventory balances auditor would; ic procedures observe, inspect, review.

8933-what statement indicate that the auditor has gained a sufficient understanting of clients ic related to sales orders process. a statement that auditor has gained understanding of ic process would be in the narrative noted by the auditor. note any statement that discusses $ amounts is substantive testing

3250-what services performed by another entity would not be considered to be part of the clients IT system; in other not be considred part of the entity staff; sales (specifically authorized by the client) of investment securities by an external broker.

3010-what control is least likely to be relevant to a fs audit; procedures that prevent excess use of materials production. this is a operational objective for effeciency and is least relavant to fs audit. where as use of computer passwords to limit access to data files is because; could impact fs.

5729-what factor is most relevant when an auditor considers the clients organizational structure inthe context of control risk; the suitability of clients line of reporting. it is part of control environment which has the greatest impact on the ic components

where as managements attitude towards information processing and accounting department does have impact on control risk via management override but does not relevent to organization structure.

7586-by obtaining an understanding of client internal control environment, the auditor is directly assessing the clients. inherent risk and control risk to get understanding of the RMM so he effectively assessing both IR and CR.

Question 13

A2- m1 QC

Answer 13

3058-What is a CPA firms basic objecitve to provides professional services that conform wiht professional standards; a system of QC of P&P that provided reasonable assurance of conforming with professional standards

3055-what are the elements of CPA firms QC:HELP ME

Human Resources

Engageement/client acceptance and continuance

Leadership responsibility

Performance of the engagement

Monitoring

relevant Ethical requirements

Question 14

A2-m2 mcqs

Answer 14

2643-Audit documentation should; show that the accounting records agree or reconcile with the fs.

2367-auditor uses a working trial balance resembling teh fs without footnotes, but containing columns for; workpapers to reclassifications and adjustments

tickmarks and reconciliation are found in other parts of the documentation of things like bank recs.

5395-what best descirbes the documentation completion date: 45 days from the report release date based on PCAOB standards. issuer

60 days from report release date ASA non issuer

7 year retention of workpapers for PCAOB issuer

5 years retention of work papers for ASA non issuer.

6201-what statements is correct about actions taken after the documentation completation date; can not make any deletion to audit documentation before the end of specified retention period. can make changes such as add or modification, amendments.

4417-what is not required documentation is an audit in accordance with GAAS. there is no requirement to document a narrative description of ic. it can be documented but not required.

Required documentation: assessment of risk of material misstatement, engagement letter, written audit program describing audit procedures to be performed.

6231-what statement is most accurate regarding audit documentation requirements: auditor should document findings that could result in a modification of the audit report. work paper = evidence to support opinion.

5394- what is not true about the report release date; is is define as the date documented information can be deleted. can not be deleted until after retention period.

2313; what is not true regarding audit documentation for specific audit; audit documentation should demonstrate compliance with qc standards not true, this is for the firm as a whole and not a documentation requirement.

Documentation requirements;

Supervisor review be partner of client account or not on client account

who is performed and reviewed the audit

document how standard filedwork was domonstrated in compliance with standards

2312-what would not be considered a significant audit finding that should be included in audit documenation: changes in staff.

documentation: material misstatement recorded transactions

substantial doubt on going concerns

implementation of new accounting standard to account for a complex and unusual transactions.

Question 15

A2-m4 mcqs

Answer 15

6831-what factor would generally not be taken into account when determining the extent of supervision needed of staff; fee paid by staff

things taken into account are; size of company, KSAof each team member and RMM of audit

6830-Under Pcaob standards what factor would indicate that a company has less complex operations; a centralized accounting functions

more complex; several levels of management,

lack of involvement by senior management in day-to-day ops

and multiple business lines

5361-an auditor plans to apply test of details of b/s accounts as of interim date. what should auditor be aware of ; by using interim testing the auditor is saying there is strong ic. he should be aware that ther could be a potential increase risk in error at b/s date will be dedected since interim. So audit should only exam predictable accounts (= analytical procedure) and id procedures sufficient to extend interim conclusion to year end

3064-what procedure would an auditor most likely include in the planning phase= should have a sufficient understanding of the 5 components of ic; CRIME; Control Environment, Risk Assessment, Information and Communication, Monitoring, Existence of Control Activities.

2816-what procedure would an auditor least likely perform in the planning stage; selecting sample of vendors invoices for comparisons happen after the audit planning;

Audit planning procedures;

read current interim fs

discuss matter that may affect audit personel responsible for non audit services

coordinate the assistance of entity personnel in data preparation

3041- before apply substantive test of detail of b/s account at interim, audit should assess; the difficulty in controlling the incremental audit risk; because substantive test at interim could have a risk that misstatement are happen at b/s date.

in order to test at interim date, inherent risk must be low.

Control risk too low would not impact interim test decision because auditor would look at if it cost effective to test substantial test than control test.

6829- what factor is not included in PCAOB that should influence the nature and extent to plan audit activities; size if the audit firm. remember for pcaob standards, its all about the client. audit experience with company, size and complexity of company, changes in circumstances that occur during the client audit.

2750-what would the audit use to obtain understanding of client busieness; review prior yr audit documentation and the permanent files.

not the industry information.

7579-what characteristic would not have an impact in determining the scope (extent) of an existing client audit; materiality and audit risk , these will impact the audit. not the scope which is assess in the audit planning.

thing that would impact; knowledge gained of client audit and previous experience,

the effect of IT of audit, this data processing in client co.,current regulatory and statutoru reporting requirment.

7604; what would not be a primary function of an audit strategy; outline teh NET audit procedures. Audit strategy first which inclue high level of outline report objectives, provide a preliminary assessment of materiality and tolerable rate, provide the scope of audit/ 2nd is Audit planning - to outline the NET of the audit procedures.

7567-what actions can’t a dissenting auditor take when does not agree with the conclusion. accept the engagement team conclusion despite reservation after orally discusing with audit supervisor. Not true. should consult with engagement partner if not resolved, auditor can disassociate for resolution and document their dissolutions this goes in the audit documented work paper.

Question 16

A2-m3 terms of engagement

Answer 16

6235-what matter does an auditor usually communicate to management; arrangememt involving the predesssor auditor needs managements permission first

6863-cpa firm was first doing an audit of a clients fs and then the client wanted it change to a review with justifiable reasons. under these circumstances the review reports should ; when there is a justifiable reason, there is non additional requirements due to the changes. the new review engagement, it is required that a statement be made that a review is less substantial in scope that an audit.

4440-what is true about the timing of predecessor/sucessor communications; they can occur before or after the auditor acceptance of the engagement; before; management itegrity, after; accounting or adudit financial sigificance.

2671;what would cause a cpa firm not to accept a new audit enagement; management disregard of its responsibilty to maintain an adequate ic environment. management is responsible for fs and ic.

4957-what is not a required part of the understanding between the client and the auditor; due to cost prehibitance management may correct deficiency in ic id by the auditors

what are required understanding; management responsible to adjust fs from material misstatements

auditor responsibe for reasonaable assurance about fs free from material misstatement caused by intential or unintential erros or fraud.

4961- what is required before accepting a new audit engagement; making inqires of predecessor auditors on management integrity.

not required; inqiures of predessor regarding matters that may affect conduct of the audit. after engagement

understanding clients business and industry. after engagment.

2656-what auditor concerns most likely could be so serious that the auditor concludes that a fs audit cannot be performed; there is a substantial risk of intentional missapplication of accounting principles. might conclue that fs cannot be performed

5718-what statement most likely would be included in an enagement letter from an auditor to the client. cpa firm will involve a IT specialists in the performance of the audit.

4357- an auditor is an auditor of the parent and the parent component entity; what factors would not influence the decison to obtain a separate engement letter; whether there has been a turnover in components BD members.

2698-what element of audit planning is mst likely ageed upon wiht manangement before implementing the audit strategy; timing of information need and access to staff, when y-e inventory and other y-e process are done for audit to observe and exam and inspect.

Question 17

A2 M6 materiality

Answer 17

6272-If new information becomes available that could be a revaluation of the quantitative level of materiality applied during an audit of an issuer, then the auditor should; should raise or lower the materiality level as appropriate to the situation.

6832-what statement best describes the concept of materiality; information that is likely to be view by a reasonable investor as altering the mix of available information.

6833-According to PCAOB standards, when would a company be least likely to reevaluate established materiality levels or tolerable levels. a client requesting an extention to get information would not impact materiality set by auditor.

what would. estimate or prelim materiality, changes occured after materiality was set, substantial likelihood that misstatement of amt less than materiality level establshfor the fs as a whole would influence reasonable investor.

4703- is performance materiality calc the same as tolerence materiality; Yes.

Question 18

a2-m5 using the work of others

Answer 18

11035-when assessing the ia objectivity, an auditor should; prohibit auditors from auditing areas where relative work and where the normally audit

2774-In assessing the competence, objectivity and application of a sytematic and dicipline approach by the entitys auditor ia functions and independent auditor would least likely consider info contained from; analytical procedures, these are used to get an understanding of the clients business or evaluate fs assertion. but not be helpful in assessing the competence, objectivity and application of a systematic and discipline.

2660- in assessing the objectivity of ia, the indenpent auditor would consider; previous experience, discussion with management from external quality review, and from professional standards such as the inst of IA

2736-During an audit an ia may provide direct assistance to an independent auditor in;

Obtaining an understanding of ic, performing test of controls and performing substantive tests.

2691-the work of ia may affect an independent auditor in; the IA work affect the NET of audit including procedures

procedures involved n obtaining an understanding of ic

procedures performed in assessing the risk of material misstatements

substantive procedures performed in gathering direct evidence

7574-what thing can and cannot a ia do in a audit

can

provide their assessment of risk to the auditors to facilitate the auditors undstanding

perform substantive audit procedures

assisting in the external audito understanding of ic

can not assess the adequency of accounting est. used by client. this is a judgment.

Question 19

a2 m7 Risk 1

Answer 19

6191-if an auditor performs analytical procedures on currrent and prior net income with results of signiifcant income what you be an unreasnable recorded amount; a decrease in earnings or RE.

2679- what nonfinancial information would an auditor most likely consider in performing analytical procedure during the planning phase; nonfinancial information that is related to finiancial information. for example what is the relationship between sqaure footage of selling speace and the levels of sales.

management consideration of a plan to repurchase stock would be a assessment of control risk and appropriate disclosure.

8934-when performing procedures in planning the audit, the audit comparison of expectatation with recorded amounts yield unusual and unexpected relationships. The auditor should consider wht results of the analytical procedures as the; id of RMM due to fraud. the purpose of analytical procedure is to get RMM in the planning statage.

Id of signifcant account is not a analytical procedure function but when ID signifcant accounts must look at size an d composition of account, exposure to losses on account, accounting and reporting complexity associated with account or disclosure, existence of related party transactions, and changes from prior period in the account.

7590 a-an audit need to gain an understanding of client and environment what are the thing he want to do:

accounting policies are appropriate for client business, obtain and understanding of client industry and reg. environment, review clients corporate objectives and strategies that re used to achieve these objectives.

would not ; observe management performance.

7591- what is not a risk assessment procedure recommended by PCAOB; performing preliminary test of controls over selected transcation cycle. this is done after risk assessment

would do analytical procedures, inquire with management and audit comm about RMM, development understanding of ic.

Question 20

a2-m9 IT

Answer 20

3065- what are the two requirements critical to achieving audit effieciency and effectiveness with a computer; getting the appropriate audit task for computer application and the appropriation software to perform the selecte audit task. getting a specific industry software would not nessarily to efficient or effective.

3062- what characteristic distinguish computer processing from manual processing; computer processing will virtually eliminate computation errors. as long as the data in enter in correctly.

2931-using computers in auditing may affect the methods used to review reh work of staff assistant because: audit documentation may not contain readily available observation details of calculation. i,e pv calc supervisor may have to examine the formula for accuracy.

4712- parrell simulation uses and reprocess actual client data on auditor software. what is an advantage of parrell instead of performing test of controls. the size of sample can be greatly expanded at little additional cost. manually looking at several samples which could lead to more cost.

5493-when client company uses IT extensively.. evidence may be available only in electronic form. what is auditor best options: use a GASPs to extract evidence from clients data base more effecient and can extraxt large amount of data and do statistical analysis.

would not assess control risk high. auditor would need to evaluate controls to make that determination.

Question 21

A1 M4 MCQs Unmod Unqual opinion

Answer 21

3351- MR and AR represented in the Audit report explicity or implicity; Both are Explicit paragraphs in the audit report

2370-where in the audit report should the reference to the US as country of origin’; 1. the accounting principle used to prepare the fs and 2. the auditing standards the auditor followed in performing and planning the audit

4415- what is a basic statement in the audit report: an audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fs. there are adequate disclosure made not specific such as accounting principle generally accepted in the US

2438-what statement is a basic element of the auditor report.: An audit includes the evaluating significant est. made by management. R

Remmember the other statement goes: standards require that we plan and perform the audit to obtain reasonable assurance that the fs are free from material misstatements due to fraud and error

and not disclosure provide reaonable assurance

2923-is the following sentences in the audit report explicit or implicit: Obtaining evidence that is sufficienct and appropriate: explicit. part of AR paragraph on opinion.

Consistent application of accounting principles: implicit. Consitency is implied in the audit report

4405-what item is explicity included in an audit report expressing in unmodified opinion: Explicit statement are in the AR paragraph: An audit involves the performing procedures to obtain audit evidence about the amounts and disclosures in the fs.

Remember; also in the AR explicit statement: we conducted our audit in accordanct to auditing standards generally accepted in the US. and not in accordance to GAAP.

Question 22

A1: M6 Modified Opinion GAAS MCQ

Answer 22

7123-When an auditor is unable to form an opinion on client opening bal. of inventory may issue an unmodified opinion on the current years

B/S only closing or ye entries only and disclaim the rest of the I/S, RE, CF

2854- do an auditor omit the AR and opinion paragraphs when there are imposed restriction GAAS issues; NO to both; AR is revised to mention the Disclaimer and Opinion is not omitted, just states no opinion is expressed.

3230-what phrase should be included in the opinion paragraph when an auditor expresses a qualified opinion: “when read in conjunction with notes and “with the foregoing explanation”.

NO to both; the phrase for qualified opinion ; “ Except for (explanation of problem) as discussed in the preceeding ( Basisi of Opinion Non issuer ) and following after the Opinion issuer paragpraph.

3309-when a auditor is not able to confirm a/r by direct communication, what wording would be used in qualified opinion paragraph audit report: possible effects on the FS.

Wording such as limitation on the auditor scope, lack of sufficient an apporpriate evidence and departure from GAAS would all be in the basise of opinion non issure section or second paragraph issuer.

2376-scope limitation sufficient to preclude (stop) an unmodified opinion alwayst will result when managment: refusal to aknowledge it responsbility for the fair presentation of fs in conformity of GAAP.

4912-during an audit, the auditor notes that the leases recorded do not conform with GAAP, what is auditor lease likely opinion: Disclaimer:signifiicant scope limitation, FS are not audited, auditor is not independent. None of the happen here>

5820-if there is a significate scope limitation due to lease recording and managment refusal to accept CPA suggestion. CPA should issue scope limitaiton in disclaimer opinion and descrip nature of departuer fron GAAP in the CPA report and state the effect on the FA if practical.

00160-when auditor disclaiming opinion due to not independent what auditor report should state in the disclaimer audit report that: “the Auditor is Not Independent.

not requiered and can give reasons of lack of independents.

00025:- subsequent facts that lead to change in an audit opinion maybe presented in the EOM and OM paragraphs.

Question 23

A1; M7 EOM OM and Explanation paragraphs.

Answer 23

3362-for a entity be in conformance with a with framwork the entity does not have to be consistent with the fs of the prior year.

It does have to be: reflect transaction in a manner that present fs within a acceptable range. Present summarize and classify fs within a reasonable manner. and be appropriate for particular user.

2448-would an auditor add EOM to unadjusted accounting changes and ic material weaknessess

No, unadjusted accounting changes would be qualified or adverses opinion. ic material weakness would be reported to manamgement and governance and not EOM

2919-there is an lack of consistenc in depr method in a otherwise unmod opinion. Where should the paragraph be place to discuss. In the EOM paragraph that is right after the Opinion paragraph

3336: how would an auditor discuss an unmod opinion that mamagement has departed from GAAP due to unusaul cirmcumstance the could be missleading, Unmod opinion and in the following EOM

EOM are GAASP

G: subtantial doubt of Going Concern

A: describe a justifed Accounting principle cheange that has a material effect on fs

A:Subsquently discovered facts that lead to change in Audit opinion: (this could in OM as well)

SP: FS prepared with Special Purpose Framework (cash basis, tax basis, contract bases : OCBOA)

2444- an auditor would express an unmod opinion and not express a EOM or OM; when Loss contingency is adequetly disclose and or accrued if neccessary.

00003-an auditor would add an OM paragrah :

Subsquently discovered facts that lead to change in Audit opinion: (this could in EOM as well)

Supplemental information is reported

Required to report Supplemental information

Restrict the use of the auditor report whe Special Purpose FA are prepared (contractual)

Restict the use of the audit report

FS of the prior pd were audited be predessor and the predecessor report is not reissued

Current Audited FS are presented with comparative form with compiled or reviewed fs for prior pd. unaudited fs, reviwed or compiled statementt.

material inconsistency of Other information

Question 24

A1 M8 Reporting with different opinions and other auditors

Answer 24

3338: what date should be used when the predecessor reissure report that are not restated or revised; the date of the prior report. no work was done
3097: if comparative fs includes the fs of the prior year that were audited by the predecessor, whose reports are not presentive and predessor opinion report is qualified. the sucessor report should:

indicate in the OM the following substantive reasons

that the fs of prior pd were audited by predecessor

the type of opinion express by predecessor

nature of any EOM or OM included in predecessor report

date of predecessor report.

3383-when unaudited fs for nonissure are in comparative form with audits in subsequent years; the unaudited should be clearly marked;

Either: the report on the unaudited fs should be reissued

or the report on the audited fs should include a separate paragraph describing the responsibility assumed for the unaudited fs:

2395-if in the first year of client audit, the auditor was not able to gather sufficient evidence about consistent applications of accounting principles between current year and prior, as well as amts of assets or liabs. at the beg of year. auditor would ;

would be unable to express an opinion on CF, I/S RE. but could on B/S due to ye bal.

3226-is divide responsibility in the AR of a group audit a statement such as “We did not audit the fs of JKCo. a subsidiary, which statments reflect the total assets and rev. consisting of 17% and 19% respectively of the related consolidated totals. those statements were audited by others auditors whose report had been furnished to us and our opinion, insofar as it relates to the amounts included for JKco. in based on the report of the other auditors. Yes. describe percentage of rev and assets properly dived and responsibilty

Question 25

A1-M9 mcqs

Answer 25

2719-in a single audit, can a auditor audit a/r and give opinion yet disclaim opinion on fs as a whole:

Yes. provided that ther AR report is presented separartely form the disclaimer of opinion on the fs. AR does not have to a reason for the disclaimer, just refer to the fs disclaimer

2781-can an auditor give an favorabel opinion on the current assest and a disclaimer on fs as a whole. NO. the is called Piecemealing or overshadowing fs as a whole; auditor can not express an opinion on a major portion of the fs as a whole. i.e. Current Assest portion yet the fs is disclaimer of adverse.

But auditor can express an opinion on a specif element i.e. AR that does not constitute Piecemeal. would have to provide separate report and defrer to disclaimer report fs as a whole

00172-when an auditor is engage to express an opinion on historical summary of gross income and direct ops, which is considered single fs. It excluded certain rev and exp but are in accordacne with GAAP. My the auditor do this.

Yes. this is called incomplete presentation that is otherwise in accordance with GAAP and considered a single fs. It should be included the EOM paragraph that states the purpose which presentation is prepared and refers to notes thats in basic presentation and not intended to complete set of assets , liab reve and exps.

Question 26

A1-m10 mcqs

Answer 26

5758-when does an auditor have obligation to continuos inquires after the audit report:

If there was information that existed at the report date 2-11–01 and may effect the reports comes to the auditors attention then he has to do inquires. Other than that no obligatation after audit report to due PRIME

Post Balance Sheet Transactions

Management Representation Letter

Inquires;

review board Minutes

Examine latest interim fs to/compare to fs audit.

2356-what procedure would an auditor mostly likely perform in obtaining evidence abouts subsequent events; PRIME

Investigate changes in LT debt occuring after y-e = Post Balance sheet trans. LT debt maturing in one year is CL on B/s check the entry.

Exam Trick: Inquiry about payroll or ap check were record befor ye but paid after ye. normal transactions

3104-what is not true regarding the auditors responsibilty for subsequent events;

the auditor has active responsibity to make continuos inqiuries between the date of the audit report and date submitted. Not true no inquire required after report dates; Submitted is a distractor;

Issurer; evaluate subsequent events and inquires through date of FS (audit reprt) are issued

Non Issuer: evaluate subsequent events and inquires through date FS (audit report) is available.

3143-if auditor becomes aware the a subsequent event has come to is attention the happen during date of audit report and could have affected his decision and he determine the reliability, he should: determine whether the person who relying on inform would attache importance of information.

Before requesting management disclose or reissue fs, he must confirm relying infor.

4916- a report is dated 2-1-y2 what type of event that happen on 2-12-y2 is most likely to cause the auditor to request thea the fs be revised; a material receviable in y1 fs was related to a sale in y2. Strange JE.

Remember a AP or payroll process 12-31-y1 and paid 1-5-y2 is not a valid reason

6216-what type of subsequent event would not require Je but a disclosure: A new contible bond are issued to expand the company’s product line.

Level 2 discloure. No JE or recognition; looking fwd after 12/31 putting signifigant to footnotes

Sales on bond or capital stocks

Business combination

Settlement of litigation, if arise after b/s date

Loss of plant or inventory due to fire or natural disaster

Change in the FV of assets of Liab or foreigh ex rate

Entering into siginifcant committments or contigent liabilites.

Level1 Recognition: Settlement of Litigation, Loss on an Uncollected RE.

Lookkng back to see if adjustment needed

00041- if auditor review annual report that has audit fs the was unmodified and fiancial information, the auditor notice revenue does not tie to audit. management refuse to make the change. what is the least likely thing an auditor would do ;

give an qualified or adverse opinion. audit report is true.

Audit has the right to withdraw from engagement, include inconsistency in OM paragraph, withhold use of auditor report.

Question 27

A1-m11 other info and supplementary infor. mcqs

Answer 27

4615-auditor audit is in a clients annual report with other information. The audit was a unmodified opinion. Auditor was not engagaed to reivew the other infor. what is the auditor responsibility.

Is required of should read the other infor to make sure it does not contain material misstatement or inconsistency with audit.

Audit could add an OM paragraph disclaiming other infor but is not required.

Question 28

a1 m12-Special Purpose framework (OCBOA) mcqs

Answer 28

3759-what should include the following in an OCBOA prepared FS:

Opinion on whether fs are presented fairly in conformity with OCBOA

Reference in notes to the fs the describe basis of presentation

Statement that the basis of presentation is a comprehensive basis other than GAAP

Should not include an opinion whether the basis of accounting used is appropriate under the circumstances.

7136-what information should be included in an auditor reports of fs prepared with OCBOA;

In the title section, the word: Independent Auditor’s Report.

No statement on audited conducted in accordance to OCBOA. audit conducted in accordance with auditing standards generrally accepted. AR

2797- if OCBOA prepared fs are not suitably tilted, what opinion is expressed and how disclosed,

Disclosure the reseveration in a basis on modification paragraph and express a qualified opinion.

Question 29

A1 Practice Test 5-20-20

Answer 29

5491- an auditor reviewed the state govt. financial report and notice inconsistency with the audit. His assessment was the audit was fine. what would he do.

Request the client review the report. no other thing is necessary such as EOM paragraph on withdrawal at this point.

2370- would the auditor reference the US A in the auditing standards perform and accounting principles prepared; Yes

2708-what is not true regarding an engagement to provid a report on the application of the requirments of an applicable financial reporting framework

that an accountant is prohibited from providing applicable financial reporting framework to a proposed future transaction involved the facts and circumstance. Accountant can do this along with ID specific entity involved and can restrict the use of the report.

What is prohibuted is transactions not involving the facts and circumstances of a specified entity.

0027-when is a EOM paragraph required:

Think GAASP

G: subtantial doubt of Going Concern

A: describe a justifed Accounting principle change that has a material effect on fs; A enity change in accounting fro investment from Cost method to equity method that had a material effect on fs is an example of EOM disclosure for accounting principle.

Loss contigency, major catastrophy and related party transactions are judgement calls

A:Subsquently discovered facts that lead to change in Audit opinion: (this could in OM as well)

SP: FS prepared with Special Purpose Framework (cash basis, tax basis, contract bases : OCBOA)

2860- if a public co. issuere issues fs that purport(they think appear to be true) to present its financial position and results of ops but omits SCF. The auditor would express what opinion: is it a GAAP or GAAS issure

GAAP issue; either Qualified; material or Adverse ; very material and pervasive; In this case Qualified

Question 30

A3 -Practice Test

Answer 30

7592-what is an accurate statement of an auditor performing assessment of risk at the assertion level and financial statement level; fs risks have a direct impact on the fs taken as a whole and they could also affect many relevant assertions.

2681-what procedure would provide the most reliable audit evidence; remember the hiarchey of evidence; AEIO

External evidence trumps internal evidence

6870-what is a definition of control risk; a control risk is the risk that a material misstatement will not be prevented or detected on a timely basis by the client’s ic.

risk that audit will not detect material misstatement is detection risk

Question 31

A3 Practice test 5-2-20

Answer 31

6227-what objective is achieved when an auditor decides to employee classical sampling; used by an auditor to determine the reasonableness of an account and often used during an inventory count. Classical sampling; mean per unit, ration, and difference.

7594-what is not a primary characteristic associated with audit risk. think all audit risk. anything else is not audit risk.

Auditor failed to detect a client deceptive practices would be fraud and not audit risk

Audit risk are; reduce to a lower risk before opinion is made, there is risk that audit failed to give correct opinion, due to audit risk, auditor give reasonable assurance.

7655-According to PCAOB standards, depends on : the timing of audit procedures, audit procedures test for overstatement or understatments, whether the design of the audit procedures directly test the assertions.

This is the audit cycle; strategy, planning, NET, procedure to test management assertions, documentation to support evidence of opinion and report, management letter.

Not the circumstances under which the audit evidence is gathered

2400-when there are numerous ppe transactions during the year, an auditor who plan to assess control risk at low level usually performs; low risk = less work; there would be limted testing of controls of current years ppe. low risk requires to evaluate the effectiveness of the low ic. However, substance tests of transactions is never eliminated.

Question 32

Practice Test A2 and A3 5-19-20

A2 M3, M5

A3: M2

Answer 32

11037-what procedures would a CPA most likely include in plann a fs audit. Not a written rep letter (management letter done at the end of audit)

Determine the extent of involvement of the clients IA during the planning statge.

6232-in a audit of fs the auditor assess risk is judgemental (subjective) and may not be sufficiently precise to ID RMM ( due to fruad or error) what action should the auditor take:

Perform substantive procedures($) = due to judgement is subjective than objective, substantive test of detail or analytical procedures will always be necessary for all relevant managerment assertions related to transaction classes. No objective testing i,e. material and tolerable misstatement& not required to determine the effective of ic in a fs auditl

6852-what task may an independent auditor assign to the IA’

Test of control and Test of detail ( non judgement)

Can not assign: Judgement such as: procedures analytical procedures, auditing, examining,

Question 33

A2 practice test - 5-9-20

Answer 33

7591-what is not a risk assessment procedure recommended by pcaob standards when performing an issure audit; performing test of controls. this done after completeness of risk assessment because test of control are evaluating clients operation effectiveness.

Pcaob risk assessement recommendations; developing and understanding of ic fr, performing analytical procedure, inquiry of management and audit committee about RMM

3058-what is a cpa firms basic objective to provide service that conform with profession standards. resonalble assurance that this is achived by ; setting up a system of qc and establishing p&p that conform to professional standards. No such organization as Generally Accepted Reporting Standards

Where as a Peer review is the process of being reviewed by another cpa firm. it is part on monitoring in qc HELP ME.

7608-what decision would a cpa likely make during the planning stage of the audit; auditor is determining the NET of audit procedures Timing would be performing test at interim or ye, Also must determine whether to use special and/or ia

Question 34

Practice Test A2 and A3 5-12-20

A2; m1, m2, m4,

A3; m2, m6

Answer 34

7571-under pcaob standard NET proceduers planning waht will influence the auditors planning’ should be specific factors for the client

changes in circumstances because things could changes and procedures would have to change

Size and complexity of client

auditors previous experience.

Would not pcaob standard on planning; number of auditor to assist with audit. not a specific client factor but an auditor factor

4301-what would be considered in a nonissurer fs audit judgemental misstatement by the auditor

Judgement misstatement by auditors are based on subjective decisions on accounting estimates or inappropriate applications of accounting policies.

Misstatement would not be in audit procedure of nonsampling or calculations. Mistatement are the results of ommission or errors in the clients accounting information.

7133-a cpa firm would provide itself reasonable assurance of meeting its responsibility to offer professional evices that conform to professional standards by ;

Maintaning a comprehensive system of QC set by Statement of QC standards issued to provide guidance with respect to audit quality control. Developng audit procedures are done throug QC.

2643- Audit documention should:

Show that the accounting records agree or reconcile with the fs. Audit documentation is not the primary support of the fs. The clients books and records should be the primary support of the fs. these are management fs.

2378- what documentiion information is required under GAAS;

that the audit documentation of the accounting records agree or reconcile with the fs.

and not a list of procedures performed on the finds. this is required for AUP

4436-what is true about analytical procedures as a substantive test: analyitcal procedures are not required to be used as a substantive test and not subject to management discretions and are more likely to be used for accounts that are more predictable. analytical can be used with substantive testing but not required.

11048-in assessing tolerale rate of deviation of test of contorls that was perfomred using stat. sampling, an auditor should considered;

pertinent internal control at a given rate ordinarally results in a lower rate because controls may not be working but it does not mean there is a dollar misstatment from substantive testing.

Question 35

Practice Test A1-A3 5-20-20

A1;M8

A2: M4

A3;M8, m9

Answer 35

2857-Stratified MPU is a statistical technique that may have more effeceict the Unstratifiey MPU because: Rembeer what Stratisfy is: Stratify goes from large to homgenous.

Stratify emphasize higher dollar value items in larger so it would have the desired level with a smaller sample

5505- Before applying the principal substantive test $$ to an entity’s A/R at the interim, the auditor should:

This based on timing ( interim v ye)risk: when audit procedure are perform befor ye, auditor must assess the incremental risk involved. are the sufficient alternative procedure exist to extend interim to year end. Want to mitigate the risk.

Incorrect in the rejection ( variable = testing of effeciency and attributed =cotntol risk too high)

Incorrect acceptance varibable effectiveness and sample control risk to low,