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AUD > A5 > Flashcards

A5 Flashcards

1
Q

what are the elements of internal control

A

C - Control environment
R - Risk assessment
I - Information and communication system
M - Monitoring
E - Existing Control activities

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2
Q

Who do PCAOB internal control standards apply to

A

Issuers (public company)

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3
Q

Who do AICPA internal control standards apply to

A

non issuers private company

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4
Q

When performing an integrated audit, what approach shold be used in selecting controls to be tested

A

top down approach

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5
Q

when are the auditors and management’s responsibility presented in separate paragraphs

A

when auditng a private company (either separately or combined report

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6
Q

what opinion does the presence of a material weakness in internal controls result in

A

adverse opinion

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7
Q

what is a financial forecast fs

A

Prospective FS based on expected conditions and expected courses of action

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8
Q

what standards does an audit engagement follow?

A

PCAOB for issues, and SAS for non issuers

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9
Q

what standards do preparation, compilation, and review engagements. follow

A

SSAES (statements on standards for accounting and review services)

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10
Q

what standards do attest engagements follow?

A

SSAE (statements on standards for attestation engae magnets

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11
Q

what two items will an attestion never referrence

A

1- historic financial statements
2 - GAAP

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12
Q

what are the common concepts included in SSAE

A

CAPE CORP
C - Compliance
A - Acceptance and continuance
P- Preconditions are present
E - ENgagement documentation (timeliness, retention, ownership, confidental
C - Acceptance of change in terms as reasonable
O - using work of others
R - Responsibility of quality control
P - professional skepticism and professional judgement

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13
Q

What are some subject areas that SSAE provides standards

A

agree upon procedures
financial forecasts and projections
pro forma FS
compliance
Mgt discussion and analysis
reporting on controls at a serivce org

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14
Q

what is a financial projection fs

A

prospective FS based on hypothetical assumptions. what if

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15
Q

what are the prospective FS engagement types

A

preparation
compilation
examination
agree upon procedure

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16
Q

Agreed upon procedures engagement have the following conditions

A

I - independence
A - agreement of parties (procedures, criteria material limits:)
M - measurability and consistency
S - ufficiency of procedures (clients responsibility)
U - use of report (general or restricted)
R - responsibility of subject matter (clients responsible)
E - engagement to perform AUP on prospective FS

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17
Q

What criteria is used to determine findings in an agreed upon procedures enegagmenet

A

the client and CPA will agree on criteria , procedures, and materiality limits for reporting

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18
Q

which prospective FS are for Limited Use

A

Both Financial Forecasts and Financial Projections

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19
Q

which prospective FS are for general use

A

only financial forecasts

20
Q

explain the limited use of prospective FS

A

these prospective FS are only able to be used by responslie party or by parting negoating wiht repsonsible parties.
can be either financal forecast or financial projections

21
Q

explain the general use of prospective FS

A

financial forecast can be used by all parites. (public)

22
Q

What is an agreed upon procedure engagement

A

type of attestation engagement in which CPA is eneagged by. client to issue a report based on specific procedures performed

23
Q

requirements for compliance examination

A

1 - perform risk assessment
2 - design responses to risk assessment
3 - determine if supplementary audit requirements exit
4 - obtain written representation form mgt
5 - prepare reports
6 - prepare required documentation

24
Q

what two types of engagments are addressed by attestation standards

A

1- compliance with specific requirements
2 - internal control over compliance

25
Q

what must be true for an auditor to report on a clients complacne in connection to fs audit

A

1- auditor must have audited clients fs express unmodified or qualified
2 - only issue negative assurance on compliance

26
Q

what is the objective of CPA examination procedures applied to an entity’s compliance with specified requirements

A

express opinion on an entity’s compliance or related assertions, based on specified criteria

27
Q

what is a SOC report

A

Service Organizations Controls
an independent evaluation of service providers control and practices

28
Q

SOC Report 1

A

This is a report on the SOC internal controls relevant to the entity’s internal controls over financial reporting
SOC 1 = IC
restricted report

29
Q

SOC report 2

A

this report is on controls at a SO relevant to security , availability, processing integrity, confidence, or privacy
restricted report

30
Q

Type 1 SOC report (Can be for either SOC 1 or SOC 2)

A

report on design and implementation of service orgs controls. does not provide assurance. report is for a Specific date. (type 1 , one day)

31
Q

Type 2 SOC report (can be for either SOC 1 or SOC 2)

A

reports on design, implementation, and Operating effectiveness of service orgs controls. report is on a specified period
just remember period and OPerating effectiveness

32
Q

What are the key categories of performance audit objectives (GAGAS)

A

Effectiveness, Economy, Efficiency
Internal Control
Compliance
Prospective Analysis

33
Q

In FS audit, GAGAS requires a report on what

A

internal controls over financial reporting

34
Q

WHat are the types of engagements under government audit standards

A
  • financial audits
  • attest engagements
  • performance audits
35
Q

auditor’s objectives in a compliance audit of a governmental entity

A

form an opinion on whether the govt compled with applicable compliance requirements and report at the level specified by governmental audit requiements

36
Q

when can a audtior report on compliance

A
  • with contractual agreements or regulatory requirements in connection with FS audit
  • attestation engagement regarding entity compliance with requirements to specific laws/regulations or on internal control over compliance
  • over compliance of a single audit engagement when auditing a recipient of federal financial assistance
37
Q

what should i know with regards to compliance reports in connection with audited FS

A
  • may only issue a negative assurance
  • if report on compliance is included in audited FS report, restriction of use is enforced on all reports.
  • if report on compliance is separate of FS report, only report on compliance is restricted
38
Q

how will a compliance attestation enaggemnt be

A

agree upon procedures (no assurance) or examination (reasonable assurnace) no review allowed

39
Q

what does GAGAS define as what the auditor must comply to

A

“unconditional requirements”

40
Q

what does GAGAS define as what the auditor should comply to

A

“presumptively mandatory requirements”
if you depart you must document

41
Q

What does GAGAS include

A

all of GAAS standards by reference and expands requirements with additional standards focused on gov’t audits and govt financial assistance audits

42
Q

single audits represent

A

supplementary audit requirements that relate to federal financial assistance

43
Q

what is important in determining if govt assistance has been qualified or if it is owed back to grantor

A

compliance

44
Q

what is the yellow book

A

a written report on internal control and compliance.

45
Q

who can have a single audit

A

entities that spend equal or more than $750,000 of fedreal financial assistance in fiscal year

46
Q

what are the auditors responsibilities in a single audit

A
  • express opinion regarding fair presentation of FS (GAAP)
  • express opinion regarding fair presentation of SEFA
  • report on iC over FR and compliance (GAGAS)
  • report on compliance for each major program and report onIC over compliance
  • provide a schedule of findings and questioned costs
47
Q

how should single audits materiality be evaluated

A

individually for each program.

AUD (7 decks)

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