A5 Flashcards
1
Q
in order for an auditor to audit and report on a non-issuer’s internal control, management must:
A
present its written assessment about the effectiveness of IC
2
Q
the audit of internal control over financial reporting must be integrated with:
A
an audit of the entity’s FS
3
Q
in the audit of an issuer, it is _______ responsibility to assess and report on internal control, but _______ is also required to assess and report on internal control
A
management, the auditor
4
Q
PCAOB standards require the same auditor to perform an integrated audit, which includes audits of:
A
both FS and effectiveness of internal control
5
Q
The report on an entity’s internal control specifically state that projections of the internal control evaluation to __________ is inappropriate
A
future periods
6
Q
the auditor should obtain _________ about the effectiveness of the entity’s internal control
A
management’s written assessment
7
Q
an engagement to audit internal control with generally be more ______ in scope than the assessment of control risk made during a financial statement audit of a nonissuer
A
extensive
8
Q
differences in scope, procedures, and purpose of the audit of internal control versus the audit of the FS?
A
in an audit of internal control, scope and procedures are more extensive, and the purpose is directed primarily toward the internal control report
in an audit of FS, the scope is less extensive, and the purpose is to determine the nature, timing, and extent of auditing procedures
9
Q
auditing procedures is more extensive when giving an opinion on internal controls because the auditor should obtain evidence on selected controls over all relevant assertions, whereas in a FS audit the auditor is:
A
not required to test controls over all relevant assertions
10
Q
the auditor is not required to provide an opinion on the audit committees oversight but is required to report:
A
to the board when oversight is ineffective
11
Q
an entity level control exists:
A
independently of the audit (internal within the entity)
12
Q
selecting controls to test is part of the _______ process in an integrated audit of a nonissuer
A
risk assessment
13
Q
the auditor’s conclusion on the operating effectiveness of internal control occurs ______ the risk assessment process
A
after
14
Q
determining evidence necessary to conclude on the effectiveness of a given control is part of the _______ process in an integrated audit of a nonissuer
A
risk assessment
15
Q
an evaluation of an entity’s information technology risk and controls should utilize the:
A
top down approach (used in selecting controls to test in an integrated audit)
16
Q
top down approach is used in:
A
selecting controls to test in an integrated audit
17
Q
performing ______ are frequently the most effective way of understanding sources of potential misstatements.
A
walkthroughs
18
Q
a walkthrough involves:
A
following a transaction from origination through the entity’s processes, including information systems, until it is reflected in the entities financial records, using the same documents and IT that entity personnel use
19
Q
the evaluation of the operating effectiveness of controls occurs after:
A
the planning stage
20
Q
the top down approach used during an audit of internal control over financial reporting begins by:
A
understanding the overall risks to internal control over financial reporting at the FS level
21
Q
after completing the first step of the top down approach (understanding the overall risks), then:
A
the auditor will consider controls at the entity level, and then focuses on accounts, disclosures and assertions
22
Q
An auditor that is testing controls at a company with multiple business units should test controls over:
A
specific risks at business units that are material to the companys consolidated FS
23
Q
entity level controls include controls related to:
A
the entity as a whole. (not specific event)
examples:
the control environment, the risk assessment process, the polices over risk management practices
24
Q
in reporting on a nonissuers internal control over financial reporting, the auditor’s report should include a paragraph stating that,
A
because of inherent limitations of any internal control, errors or fraud may occur and not be detected
25
an engagement to report on whether a previously reported internal control weakness continues to exist is a ______, not required by:
voluntary engagement, professional standards
26
an issuer believes it has eliminated a material weakness previously noted in its assessment of internal control, and has hired a CPA to attest to the improvements in internal control. the issuer's managment must:
provide a written report to accompany the CPA's report
27
in the engagement to audit the effectiveness of an entity's internal control, the auditor must communicate both _______ to management and those charged with governance
material weaknesses and significant deficiencies
28
the auditor is required to communicate all deficiencies in internal control to ______, and deficiencies that constitute a significant deficiency or material weakness to ____________
management, management and the audit committee
29
in an audit report of an issuer, a scope limitation requires the auditor to:
disclaim an opinion or withdraw from the engagement
30
in an audit report of an issuer, a material weakness in internal control requires the auditor to:
issue an adverse opinion
31
management is not required to include a written representation confirming the auditor's conclusion that a material weakness exists. however, management will include a written representation that management:
disclosed all significant deficiencies and material weaknesses to the auditor
32
an auditor is required to communicate material weaknesses prior to:
the issuance of the auditor's report on internal control over financial reporting (to management and audit committee in writing)
33
an adverse opinion on the operating effectiveness of internal control doesn't necessarily result in an adverse opinion on the fairness of the FS. however, the auditor should consider:
the effect of the material weakness on the opinion on the fairness of the FS
34
Attest engagements covered under statements on standards for attestation engagements (SSAE) specifically ________ services performed in accordance with Statements on standards for accounting and review services (SSARS)
exclude
35
since a review of a nonpublic company's FS is conducted under SSARS, it is not subject to:
attestation standards
36
attest engagements generally result in:
an examination report, a review report, or an agreed-upon procedures report on subject mater that is the responsibility of another party
37
an engagement to review pro forma FS is:
an attest engagement
38
statements on standards for attestation engagements do not address services involving:
advocating for a client (for example, testifying as an expert witness)
39
compliations of prospective FS are governed by:
statements on standards for accounting and review services (SSARS)
40
________ provide a framework for the attest function beyond historical FS
attestation standards
41
Both GAAS and attestation standards allow the auditor to use another auditor's/practitioner's work as long as:
certain procedures are performed (due diligence on independence, professional competence, etc)
42
an attest engagement may be part of a larger engagement such as:
a business acquisition study or feasibility study
43
an engagement to report on mangaements discussion and analysis (MD&A) would be considered an attest engagement because:
the accountant is issuing an examination or review report on another party's assertion
44
a management consulting engagement to provide EDP advice to a client is not considered an attest engagement, because:
the accountant is not issuing an examination, review, or agreed upon procedures report on another party's assertion
45
negative assurance may be expressed when:
an accountant is requested to report on the results of performing a review of management's assertion
46
______ assurance is provided in a compilation of prospective FS
no
47
whether an entity is in compliance with the provisions of the Foreign corrupt practices act is a legal determination. an accountant may perform an examination or an agreed upon procedures engagement with respect to such compliance but may not:
perform a review
48
a practitioner that doesn't have knowledge of the client's business and industry should obtain the appropriate knowledge _______ commencing the engagement
before ( read industry trade journals)
49
A CPA should refer to statements on standards for accounting and review services (SSARS) when:
performing a preparation, compilation or review of historical FS for nonissuers
50
_____ applies to preparation and compilations of pro forma financial information
statements on standards for accounting and review services (SSARS)
51
A CPA should refer to _______ when performing consulting services
standards for consulting services (SSCS)
52
attestation engagements specifically exclude:
consulting services, advocacy services, and preparation
53
__________ may result in reports related to compliance with laws and regulations
attest engagements
54
conceptual similarity between GAAS and attestation standards?
the CPA is required to be independent in both standards
55
attestation standards are much _____ in scope than auditing standards
broader
56
The CPA would be required to comply with _____ when engaged to audit FS prepared for use in another country
GAAS
57
In a ______, the practitioner develops the findings, conclusions, and recommendations presented
consulting services
58
______ addresses the auditor's responsibilities when engaged to issue letters (comfort letters) to a broker or dealer of securities
statements on auditing standards
59
______ address the auditors responsibilities when communicating with an audit committee regarding management's consultations with another CPA for engagements
Statement on auditing standards and PCAOB auditing standards (for nonissuers and issuers)
60
in an attest engagement, There is no requirement that the accountant's report be restricted to specified parties when:
reporting on an assertion about the subject matter instead of reporting directly on the subject matter
61
in an attest engagement, use of the accountant's report should be restricted to specified parties in _____ situations:
when reporting on agreed upon procedures engagement, when reporting directly on the subject matter on a written assertion has not been provided, and when the criteria used to evaluate the subject matter are appropriate for only a limited number of parties
62
the consistency assertion in an MD&A presentation addresses:
whether non-financial data has been accurately derived from related records
63
the presentation and disclosure assertion in MD&A addresses:
whether information included in the presentation is properly classified, described, and disclosed
64
the completeness assertion in MD&A addresses:
whether descriptions of transactions and events necessary to obtain an understanding of the entities financial condition are appropriately included in the MD&A presentation
65
the occurrence assertion in MD&A addresses:
whether reported transactions or events have occurred during a given period
66
an examination of a financial forecast is a professional service that involves:
1. evaluating the preparation of the prospective FS
2. evaluating the support underlying the assumptions
3. evaluating the presentation of the prospective FS in conformity with AICPA guidelines, and
4. issuing an examination report
67
the accountant's standard report specifically states that the accountant assumes no responsibility to:
update the report for events and circumstances occurring after the date of the report
68
the accountant's compilation report on a client's financial forecast should include a warning of limitations that:
prospective results may not be achieved
69
the accountant's report on a review of pro forma financial information should include a reference to:
the FS from which the historical information is derived and a statement as to whether such FS were audited or reviewed
70
the report on a review of pro forma financial info would include an explanation of:
the objective and limitations of the information
71
If the auditor has audited the FS from which the pro forma financial information is derived, an opinion on a reference:
may be expressed
72
the report on a compilation should include a statement that:
the accountant assumes no responsibility to update the report for events subsequent to the report date, describes the limitations on the presentation's usefulness
73
hypothetical assumptions are used in:
financial projections
74
an accountant gives _____ assurance related to hypothetical assumptions
no
75
partial presentations are presentations of prospective financial information which would not ordinarily be appropriate for general use because they omit one or more of these essential elements:
1. sales or gross revenue
2. gross profit or cost of sales
3. unusual or infrequently occurring items
4. provision for income taxes
5. discontinued operations or extraordinary items
6. income from continuing operations
7. net income
8. earnings per share
9. significant changes in financial position
76
examples of prospective FS:
projected balance sheets, financial forecasts, and financial projections
77
a presentation of pro forma FS should include all significant _____ effects related to the transaction.
direct
78
_____________ are hypothetical "what if" prospective financial statements.
Financial projections
79
because the user may need to ask the responsible party questions about the underlying assumptions, financial projections are _________ reports
restricted use. to whom the responsible party is negotiating with directly
80
______ are appropriate for general use
financial forecasts
81
an accountant's compliation report on a financial projection should include a statement that there will usually be differences between the projected and actual results because:
events and circumstances frequently do not occur as expected
82
_______ is responsible for the projected FS
management
83
an agreed upon procedures report should indicate a list of:
the specific procedures performed
84
a company engages a practitioner to assist the audit committee by performing specific procedures that were agreed to by the audit committee. the practitioner should involve the audit committee in:
determine what procedures are to be performed
85
a company engages a practitioner to assist the audit committee by performing specific procedures that were agreed to by the audit committee. the practitioner disclaims:
responsibility for the sufficiency of the procedures in an agreed upon procedure engagement
86
in an examination of prospective FS, if the assumptions do not provide a reasonable basis for the prospective FS, then the practitioner should express:
an adverse opinion
87
"indication that had the accountants perform additional procedures, other matters might have come to their attention that would have been reported" is a statement included in:
agreed upon procedures report
88
what report would include an opinion that the projection is presented in conformity with AICPA guidelines?
an examination report related to financial projections
89
The accountants report on compiled projected FS should include a statement that describes the limitations on the projection's usefulness. The report indicates these limitations by stating:
1. that there will usually be differences betweens projected and actual results
2. the accountant has no responsibility to update the report for events occurring after the date of the report
90
in an examination of a financial forecast. what circumstance would the CPA issue a qualified opinion?
if AICPA presentation guidelines were not followed
91
_____ are not appropriate for general use
financial projections
92
______ should include a summary of significant assumptions
prospective FS
93
an accountant performing an engagement to compile prospective FS should make inquires about:
the accounting principles used in the preparation of the prospective FS
94
when performing an attestation engagement related to a client's prospective FS, the accountant should ensure that the client discloses:
all significant assumptions that are used for the prospective FS
95
a compilation of a financial projection report disclaims any assurance on:
projected FS
96
agreed upon procedure reports state that the practitioner didn't conduct:
an examination of the subject matter
97
agreed upon procedure engagements provide _____ assurance
no
98
reviews provide ______ assurance
limited (negative)
99
a practitioner may perform an agreed-upon procedures engagement on prospective FS provided that:
prospective FS include a summary of significant assumptions
100
All reports on prospective FS require a statement indicating that the prospective results:
may not be achieved
101
an examination provides ____ assurance
reasonable
102
management discussion and analysis is a:
written explanation provided by management about the past and future performance of the entity
103
the date of the agreed upon procedures report is ordinarily determined by the completion of:
agreed upon procedures
104
An audit client has substantial assets held in a trust that is managed by the trust department of a bank. what is the most efficient way for the auditor to obtain information about the department's internal controls?
rely on the departments audit report on internal controls placed in operation and their operating effectiveness
105
Reviewing the service auditor's report on controls placed in operation would be the most efficient procedure when an audit client uses:
a service organization for several processes
106
When a service organization provides services that affect the initiation, execution, processing, or reporting of a user company's transactions, those services are considered to be:
part of the under company's information system
107
in considering whether the service auditor's report is satisfactory for the user auditor, the user auditor should:
make inquires concerning the service auditor's reputation
108
in some situations, the controls at a service organization are designed under the assumption that there will be certain complementary controls implemented by user organizations. There complementary controls should be included in the description of controls. The sevice auditor should obtain an understanding of such situations, in order to:
evaluate whether the complementary controls are necessary to achieve stated control objectives
109
the service auditor should include in her report:
a description of the scope and nature of the procedures performed
110
a report on ______ includes a statement that, "our responsibility is to express an opinion on the fairness of the presentation of the description and on the suitability of the design of the controls
controls placed in operation
111
a report on controls placed in operation (Type 1 report) disclaims:
an opinion on the operating effectiveness on internal control
112
there are two types of reports on the processing of transactions by service oranizations:
1. reports on controls place in operation
| 2. reports on controls place in operation and tests of operating effectiveness
113
A type 1 report on internal controls for a service organization should include:
management's description of the service organization's system
114
the client's auditor can use the service auditor's report as:
audit evidence for the clients internal control
115
the client's auditor is permitted, but not required, to make reference to the work of a service auditor to:
explain a modification of the user auditor's opinion
116
entity compliance with compliance requirements is presumed to be evaluated and monitored by management on:
an ongoing basis
117
test of the operating effectiveness of controls may be required if any one of the following exist:
1. risk assessment includes an explanation of the operating effectiveness of controls over compliance
2. substantive procedures do not provide enough evidence to support a conclusion, or
3. tests of controls are required by the applicable governmental audit requirements
118
detection risk of noncompliance is inversely related to:
risk of material noncompliance
119
audit risk of noncompliance is:
risk of material noncompliance * detection risk of noncompliance
120
the report on agreed upon procedures related to assertions about compliance with specified requirements should contain:
procedures and findings. since the work performed is less in scope than an examination, the accountant disclaims any opinion.
121
the practitioner's report on agreed upon procedures related to management's assertion about the entity's compliance with specified requirements is intended solely for:
the use of specified parties
122
___________ may be rendered in an engagement in which the auditor is reporting on compliance with aspects of contractual agreement in connection with audited FS
negative assurance (not an opinion)
123
an auditor who is engaged to report on compliance with aspects of contractual agreements in connection with audited FS should ensure that:
the applicable covenants have been subjected to audit procedures as part of the FS audit
(the auditor should consider the opinion rendered on complete FS and consider the uses of the report on compliance) (negative assurance is provided not an opinion)
124
in an examination of an entity's compliance with specified requirements, the auditor should assess attestation risk, which is composed of:
control risk, inherent risk, and detection risk.
125
for the purposes of a compliance examination, control risk represents the risk that material noncompliance will not:
be prevented or detected on a timely basis by the entitys controls
126
in an examination of an entity's compliance with specified requirements, the practitioner's consideration of materiality is affected by:
1. the nature of the compliance requirements, which may or may not be quantifiable in monetary terms
2. the nature and frequency of noncompliance identified with appropriate consideration of sampling risk
3. qualitative considerations, including the needs and expectations of the reports users
127
compliance attestation standards apply for an examination of:
a client's compliance with specified requirements, such as debt covenants associated with a bank loan
128
when an audit firm includes a report on compliance with aspects of contractual agreements in their auditor's report, it should be included in the auditor's report in:
an other matter paragraph
129
2 CFR 200 single audit expands the auditor's responsibilities to include:
procedures designed to test and report on compliance matters having a direct and material effect on major federal award programs
130
2 CFR 200 single audit expands procedures to:
major programs as defined by the Circular
131
2 CFR 200 single audit objectives relate to management's assertions regarding:
compliance with laws, rules, and regulations
132
2 CFR 200 single audit relates to the financial and compliance audits of:
major federal financial assistance programs
133
audits of federal financial assistance under the Single Audit Act require that:
the auditor determine if the auditee has complied with laws, regulations, and provisions of the contracts or grant agreements
134
materiality in audits of federal financial assistance is set at the:
program level
135
2 CFR 200 single audit allows auditors to use __________ to determine major grants
risk based approach
136
risk based auditing allows auditors to test as little as ____ percent of total federal programs or as much as ____ percent of total federal programs, depending on:
20, 40, circumstances and auditor's judgement
137
Programs in excess of _____ are generally considered to be major grants
$750,000
138
auditors engaged to perform audits of federal financial assistance (generally under the provisions of the Single Audit Act) must perform procedures to obtain an understanding of:
internal control pertaining to compliance, and should document this understanding of internal control
139
under single audit act, materiality is determined separately for:
each major federal financial assistance program
140
Under a GAGAS audit, materiality levels may be lower due to:
public accountability of the entity, the various legal requirements, and the visibility and sensitivity of governmental programs, activities, and functions
141
the risk based approach of the single audit act is designed to focus the auditor's tests of federal financial assistance on the:
programs with the highest risk
142
the segregation of programs into larger (type A) and smaller (type B) programs gives the auditor a basis for determining coverage and evaluating risk, the focus is on:
the risk
143
a single audit represents a combined audit of both:
an entity's financial statements and federal financial assistance programs
144
a nonfederal entity that expends federal financial assistance administered by another entity is a:
sub recipient
145
a state might receive federal funds and in turn provides those funds to a not for profit organization to accomplish an objective. the not for profit organization would be the:
sub recipient
146
a nonfederal entity that receives a grant award and contracts or provides that award to another entity to carry out the program would be:
a recipient
147
an individual who receives and expends federal awards received from a passthrough entity is:
a recipient
148
a nonfederal entity compensated for goods or services with federal monies is:
a vendor
149
in auditing a not for profit entity that receives governmental financial assistance, the auditor has a responsibility to assess whether management has identified:
laws and regulations that have a direct and material effect on the determination of amounts in an entities FS AND obtain an understanding of the possible effects on the FS of such laws and regulations
150
___________ specify that the auditor should design the audit to provide reasonable assurance that material errors and fraud are detected
government auditing standards (the yellow book)
151
free rents received as part of an award to carry out a federal program are treated as:
federal funds expended
152
federal noncash assistance, such as food stamps or donated surplus property, should be valued at _______ at the time of receipt or the ________ provided by the federal agency
fair market value, assessed value
153
government loans are considered:
cash assistance programs
154
if material instances of noncompliance are identified, the auditor should express:
qualified or adverse opinion on compliance
155
______ assurance is provided on the entity's compliance with requirements of the major program
reasonable
156
the auditor should first contact the _______ to report the fraud
specific agency that provided the grant
157
_________ is required to be included in the auditors report on internal controls and compliance with laws and regulations in accordance with Government Auditing standards (yellow book)
the scope of the auditor's testing of internal controls
158
Reporting responsibilities under GAGAS are expanded to include:
1. reports on compliance with laws, rules, and regulations, violations of which may affect FS amounts, and
2. reports on internal control over financial reporting
159
Generally Accepted Government Auditing Standards primarily apply to audits of:
federal financial assistance and government organizations but have been adopted by some states for audits of state financial assistance and other governmental funding
160
when reporting under _______, the auditor should consider whether any noted deficiencies in such internal controls should be reported to specific legislative and regulatory bodies
government auditing standards
161
in auditing under government auditing standards, when there is no audit committee, the auditor would report significant deficiencies in the design of the client's internal control to:
formally designated committee with oversight over the financial reporting process
162
in auditing under government auditing standards, the auditor would report significant deficiencies in the design of the client's internal control to:
audit committee
163
material instances of fraud and illegal acts discovered need to be communicated:
in the auditor's report on noncompliance. if applicable, the report should state that other instances of noncompliance were communicated to management in a separate letter
164
in an audit under government auditing standards, the pertinent views of the entity's responsible officials concerning the auditor's findings are generally part of:
the auditor's report
165
Per government auditing standards, audit documentation should contain sufficient info so that:
supplementary oral explanations are not required
166
per government auditing standards, the auditor should obtain written representation from managment stating:
that management is responsible for taking corrective action on audit findings of the compliance audit
167
as part of the written report requirement the auditor writes under Government auditing standards on internal control, the auditor must describe:
the scope of the auditor's work in obtaining an understanding of internal control and her assessment of control risk
168
as part of the written report requirement the auditor writes under Government auditing standards on compliance with laws and regulations, the auditor must state:
that the audit should be planned to obtain reasonable assurance about whether noncompliance could have a material effect on the programs audited
169
for financial statement audits under GAGAS, the auditor is required to directly report illegal acts discovered during the audit to ____ if management fails to disclose such illegal acts to the _____ or fails to:
federal inspector generals, grantor, take appropriate remedial action
170
GAGAS prescribe additional standards related to internal control reporting, such as:
requiring that the auditor provide a written report on internal control in every FS audit and specific reporting over internal control over compliance
171
engaged to an audit for FS in accordance with GAGAS, the report on the audit of the FS should describe the:
the scope of the auditor's testing of compliance with laws and regulations and internal control over financial reporting and should either present the results of those tests as part of their report or in a separate report containing that info
172
_______ would determine the extent to which the entity's programs achieve the desired level of results
program audit
173
Under a governmental audit, ________ will include identification of management's interpretation of compliance requirements that are subject to different interpretations
management letter
174
_______ should include a statement that management has disclosed all governmental programs to the auditor
representation letter
175
a report on internal control over compliance will include:
- the opinion that the audit was conducted in order to express an opinion on compliance but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance
- material weaknesses are identified
- significant deficiencies are not identified
176
an objective of a compliance audit of a governmental entity is to:
form an opinion on whether that government complied with applicable compliance requirements in all material respects, and then to report at the level specified by the governmental audit requirement
177
government audit standards define three types of engagements:
financial audits, attest engagements, and performance audits
178
single audits and program specfic audits are defined by:
2 CFR 200 and the single audit act
179
___________ indicates that the requirement must be followed in all cases where the requirement is relveant, except in rare circumstances in which auditors and audit organizations determine it is necessary to depart from the _______. If in rare circumstances, auditors judge it necessary to depart from a relevant ________, they must provide a special explanation, which includes their justification for the departure and how the alternative procedures performed in the circumstances were sufficient to achieve the intent of that requirement
presumptively mandatory requirement
180
________ indicates that the requirement must be followed in all cases where the requirement is relevant.
unconditional requirement
181
if the entity doesnt have adequate documentation to support 5 million in operating expenses paid from federal program funds, then the auditor would conclude that:
questioned costs of 5 million for operating expenses have been identified. (this will appear on the schedule of findings and questioned costs for federal awards)
182
governemnt auditing standards requrie a written report on internal control in:
every audit
183
if an auditor decides to issue separate reports rather than a combined report on internal control over financial reporting and compliance with laws and regulations, then the auditor should state in the audit report that:
separate reports will be issued
184
all reports on prospective FS require a statement indicating:
that the prospective results may not be achieved
185
in a FS audit, communication of significant deficiencies must be made within ______, whereas in an audit of internal control, it must be made by_______
60 days of the report release date, by the report release date
186
In a financial statement audit, communication of significant deficiencies should include _______, whereas in an audit of internal control, ______ is required
restricted use language, no restriction on the use of the report
187
an opinion on ______ is over a period of time, and an opinion on ____ is at a point in time
FS, internal control
188
CPA should refer to SSARS when:
- performing a preparation, compliation or review of historical FS for nonissuers
- preparation and compiliation of pro forma financial info
189
Pro forma FS are not considered:
prospective FS
190
the report on pro forma FS is not required to contain:
a restricted use paragraph
191
issuing a letter to requesting parties in connection with a nonissuer entity's FS included in a registration statement filed with the SEC is a:
comfort letter
192
in an integrated audit, management's written rep letter should:
- whether there were any significant changes to internal control after the as of date of the report
- management has performed an evaluation on the effectiveness of internal control
- describe fraud resulting in material misstatement or fraud invovling senior management or key employees
- management didnt rely on auditor's procedures as the basis of its assessment
193
in performing an integrated audit for a nonissuer, what are material weaknesses?
- ineffective oversight by those charged with governance
- identification of a MM that controls wouldnt have detected
- fraud committed by senior managment
194
______ is the appropriate authoritative literature for both an audit of internal control and:
SAS, FS audit of a nonissuer
195
In an integrated audit of a nonissuer, management should provide a written assessment about the effectiveness of the entity's control in a report that accompanies the auditor's report. The as of date in the management's assessment should coincide with the date of:
FS
196
In an integrated audit of a nonissuer, management is required to:
- identify and document control objectives and the controls that meet those objectives
- accept responsibility for the effectiveness of IC
- perform an evaluation of the effectiveness of IC
197
For both issuers and nonissuers, the auditor should obtain a written rep letter from management that acknowledges responsibility for establishing and maintaining effective IC. Failure to obtain such written rep is a scope limitation that will generally result in:
withdrawl or disclaimer
198
For both issuers and nonissuers in an integrated audit, planning involves developing an overall strategy for the scope and performance of the engagement. The auditor should consider:
- economic conditions
- prior knowledge of IC
- complexity of operations
- previously communicated deficiencies during planning efforts
199
Periodic comparision of actual assets with amounts shown in the accounting records is:
control activity related to the existence of specific assets (not entity level control)
200
examples of entity level controls:
risk assessment process controls, binannual distribution of the code of conduct, and period end financial reporting controls
(they have a pervasive effect on a company's IC)
201
the audit team should evaluate risk factors for:
both audit of IC and FS
202
In an integrated audit, design effectiveness can be tested through:
inquiry, observation, and inspection of documentation
203
In an integrated audit, operating effectiveness can be tested through:
reperformance and recalculation
204
In an integrated audit, auditor's are responsible for:
- obtaining sufficient evidence to support an opinion about the effectiveness of the entity's IC overall (not necessary to obtain evidence for each individual control)
- incorporating an element of unpredictability into the testing
- determining the effect of any identified control deviations on the assessment of risk associated with the control
- obtaining more evidence for controls that are subject to a greater risk of failure
205
when a service organization is part of an entity's IC, an auditor should test:
the entity's relevant controls over the activities of the service organization to obtain evidence that controls are operating effectively
206
management's report on internal control included a statement that the cost of correcting a weakness noted by the auditors would exceed the benefits derived from implementing the correction. what is the auditor's appropriate response?
disclaim an opinion on the cost benefit statement
207
For nonissuers, the auditor is required to report on both the company's FS and on its internal control over financial reporting. If separate reports are issued, each report should contain:
an other matter paragraph making reference to the other report and indicating the nature of the opinion expressed
208
the date of the report on internal control should coincide with:
the date of the audit report on FS
209
in an integrated audit, whether or not a material weakness exists, the auditor must
express an opinion directly on the effectiveness of internal control
210
what is an auditor's responsibily if a previously reported IC weakness is subsequently eliminated and managment engages an independent auditor to attest to the improvement?
express an opinion on whether the previously reported weakness has been eliminated
211
In an integreated audit for a nonissuer, no restriction on the use of the report is required. The communication of significant deficiencies and material weaknesses should include restricted use language only when:
part of an audit of the FS
212
compensating controls, if found to be operating effectively, may limit:
the severity of an identified deficiency and prevent it from being a material weakness
213
A subsequent event related to an entity's internal control was discovered before the date of the auditor's report. what is the auditor's responsibility?
- inquire managment
- obtain written rep from management
- inquire about and examine documents for the subsequent period
214
In an integrated audit where there are two separate auditors auditing the FS and internal control, the:
principal auditor decides whether the other auditor is referenced in the auditor's report
215
In an integrated audit, the auditor has no responsibility to stay informed with respect to events that occur after the date of the auditor's report when performing an integrated audit. But if the auditor becomes aware of conditions that existed at the report date:
appropriate action should be taken
216
If, during the audit of internal control, a deficiency is noted, the auditor should _______ in a FS audit
consider any deficiency in determining the nature, timing, and extent of substantive tests
217
A practitioner's report on agreed upon procedures that is in the form of procedures and findings should contain:
- disclaimer of opinion on the subject matter (no assurance)
| - a statement that the engagement was conducted in accordance with attestation standards established by AICPA
218
a control deficiency exists because:
deficiency in design of controls or failures in the operation effectivness.
219
In an internal control audit, management is required to provide an assertion about the effectiveness of the entity's internal controls. However, management does not provide ________ about the internal controls.
assertion, assurance
220
What should the auditor do when discovering a control deficiency?
The auditor must determine if the control deficiency is a material weakness by obtaining further audit evidence.
221
Serially numbered identification plates on computers is a control related to which cycle?
PPE
222
criteria established in the Internal Control—Integrated Framework (2013) issued by:
committe of sponsoring organizations of the treadway commission
223
The combined report on compliance and internal control over compliance reporting should include a statement that the auditor (does/doesnt) express an opinion on internal control over compliance.
doesnt
224
The combined report on compliance and internal control over compliance reporting should include a statement that the audit was conducted in accordance with generally accepted auditing standards and with Government Auditing Standards issued by:
the Comptroller General of the United States.
225
a statement that the accountant didnt audit or review the FS, nor was the accountant required to perform any procedures to verify the accuracy or completeness of info provided by managment, is included in a compliation report on:
historical FS, not finanical forecast
226
when an accountant compiles a _______, the accountant's report should include a statement that the practicioner assumes no responsibility to update the report for events and circumstances occuring after the date of the report
finanical forecast
227
auditor's purpose in establishing materiality levels in a compliance audit includes:
- materiality limits are used to plan audit timing, procedures, and volume testing
- materiality limits are used in conjunction with planning risk assessment procedures
- materiality is significant in allowing the auditor to formulate an opinion on compliance
