A5

Question 1

in order for an auditor to audit and report on a non-issuer’s internal control, management must:

Answer 1

present its written assessment about the effectiveness of IC

Question 2

the audit of internal control over financial reporting must be integrated with:

Answer 2

an audit of the entity’s FS

Question 3

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

Answer 3

management, the auditor

Question 4

PCAOB standards require the same auditor to perform an integrated audit, which includes audits of:

Answer 4

both FS and effectiveness of internal control

Question 5

The report on an entity’s internal control specifically state that projections of the internal control evaluation to __________ is inappropriate

Answer 5

future periods

Question 6

the auditor should obtain _________ about the effectiveness of the entity’s internal control

Answer 6

management’s written assessment

Question 7

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

Answer 7

extensive

Question 8

differences in scope, procedures, and purpose of the audit of internal control versus the audit of the FS?

Answer 8

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

Question 9

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:

Answer 9

not required to test controls over all relevant assertions

Question 10

the auditor is not required to provide an opinion on the audit committees oversight but is required to report:

Answer 10

to the board when oversight is ineffective

Question 11

an entity level control exists:

Answer 11

independently of the audit (internal within the entity)

Question 12

selecting controls to test is part of the _______ process in an integrated audit of a nonissuer

Answer 12

risk assessment

Question 13

the auditor’s conclusion on the operating effectiveness of internal control occurs ______ the risk assessment process

Answer 13

after

Question 14

determining evidence necessary to conclude on the effectiveness of a given control is part of the _______ process in an integrated audit of a nonissuer

Answer 14

risk assessment

Question 15

an evaluation of an entity’s information technology risk and controls should utilize the:

Answer 15

top down approach (used in selecting controls to test in an integrated audit)

Question 16

top down approach is used in:

Answer 16

selecting controls to test in an integrated audit

Question 17

performing ______ are frequently the most effective way of understanding sources of potential misstatements.

Answer 17

walkthroughs

Question 18

a walkthrough involves:

Answer 18

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

Question 19

the evaluation of the operating effectiveness of controls occurs after:

Answer 19

the planning stage

Question 20

the top down approach used during an audit of internal control over financial reporting begins by:

Answer 20

understanding the overall risks to internal control over financial reporting at the FS level

Question 21

after completing the first step of the top down approach (understanding the overall risks), then:

Answer 21

the auditor will consider controls at the entity level, and then focuses on accounts, disclosures and assertions

Question 22

An auditor that is testing controls at a company with multiple business units should test controls over:

Answer 22

specific risks at business units that are material to the companys consolidated FS

Question 23

entity level controls include controls related to:

Answer 23

the entity as a whole. (not specific event)

examples:
the control environment, the risk assessment process, the polices over risk management practices

Question 24

in reporting on a nonissuers internal control over financial reporting, the auditor’s report should include a paragraph stating that,

Answer 24

because of inherent limitations of any internal control, errors or fraud may occur and not be detected

Question 25

an engagement to report on whether a previously reported internal control weakness continues to exist is a ______, not required by:

Answer 25

voluntary engagement, professional standards

Question 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:

Answer 26

provide a written report to accompany the CPA’s report

Question 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

Answer 27

material weaknesses and significant deficiencies

Question 28

the auditor is required to communicate all deficiencies in internal control to ______, and deficiencies that constitute a significant deficiency or material weakness to ____________

Answer 28

management, management and the audit committee

Question 29

in an audit report of an issuer, a scope limitation requires the auditor to:

Answer 29

disclaim an opinion or withdraw from the engagement

Question 30

in an audit report of an issuer, a material weakness in internal control requires the auditor to:

Answer 30

issue an adverse opinion

Question 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:

Answer 31

disclosed all significant deficiencies and material weaknesses to the auditor

Question 32

an auditor is required to communicate material weaknesses prior to:

Answer 32

the issuance of the auditor’s report on internal control over financial reporting (to management and audit committee in writing)

Question 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:

Answer 33

the effect of the material weakness on the opinion on the fairness of the FS

Question 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)

Answer 34

exclude

Question 35

since a review of a nonpublic company’s FS is conducted under SSARS, it is not subject to:

Answer 35

attestation standards

Question 36

attest engagements generally result in:

Answer 36

an examination report, a review report, or an agreed-upon procedures report on subject mater that is the responsibility of another party

Question 37

an engagement to review pro forma FS is:

Answer 37

an attest engagement

Question 38

statements on standards for attestation engagements do not address services involving:

Answer 38

advocating for a client (for example, testifying as an expert witness)

Question 39

compliations of prospective FS are governed by:

Answer 39

statements on standards for accounting and review services (SSARS)

Question 40

________ provide a framework for the attest function beyond historical FS

Answer 40

attestation standards

Question 41

Both GAAS and attestation standards allow the auditor to use another auditor’s/practitioner’s work as long as:

Answer 41

certain procedures are performed (due diligence on independence, professional competence, etc)

Question 42

an attest engagement may be part of a larger engagement such as:

Answer 42

a business acquisition study or feasibility study

Question 43

an engagement to report on mangaements discussion and analysis (MD&A) would be considered an attest engagement because:

Answer 43

the accountant is issuing an examination or review report on another party’s assertion

Question 44

a management consulting engagement to provide EDP advice to a client is not considered an attest engagement, because:

Answer 44

the accountant is not issuing an examination, review, or agreed upon procedures report on another party’s assertion

Question 45

negative assurance may be expressed when:

Answer 45

an accountant is requested to report on the results of performing a review of management’s assertion

Question 46

______ assurance is provided in a compilation of prospective FS

Answer 46

no

Question 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:

Answer 47

perform a review

Question 48

a practitioner that doesn’t have knowledge of the client’s business and industry should obtain the appropriate knowledge _______ commencing the engagement

Answer 48

before ( read industry trade journals)

Question 49

A CPA should refer to statements on standards for accounting and review services (SSARS) when:

Answer 49

performing a preparation, compilation or review of historical FS for nonissuers

Question 50

_____ applies to preparation and compilations of pro forma financial information

Answer 50

statements on standards for accounting and review services (SSARS)

Question 51

A CPA should refer to _______ when performing consulting services

Answer 51

standards for consulting services (SSCS)

Question 52

attestation engagements specifically exclude:

Answer 52

consulting services, advocacy services, and preparation

Question 53

__________ may result in reports related to compliance with laws and regulations

Answer 53

attest engagements

Question 54

conceptual similarity between GAAS and attestation standards?

Answer 54

the CPA is required to be independent in both standards

Question 55

attestation standards are much _____ in scope than auditing standards

Answer 55

broader

Question 56

The CPA would be required to comply with _____ when engaged to audit FS prepared for use in another country

Answer 56

GAAS

Question 57

In a ______, the practitioner develops the findings, conclusions, and recommendations presented

Answer 57

consulting services

Question 58

______ addresses the auditor’s responsibilities when engaged to issue letters (comfort letters) to a broker or dealer of securities

Answer 58

statements on auditing standards

Question 59

______ address the auditors responsibilities when communicating with an audit committee regarding management’s consultations with another CPA for engagements

Answer 59

Statement on auditing standards and PCAOB auditing standards (for nonissuers and issuers)

Question 60

in an attest engagement, There is no requirement that the accountant’s report be restricted to specified parties when:

Answer 60

reporting on an assertion about the subject matter instead of reporting directly on the subject matter

Question 61

in an attest engagement, use of the accountant’s report should be restricted to specified parties in _____ situations:

Answer 61

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

Question 62

the consistency assertion in an MD&A presentation addresses:

Answer 62

whether non-financial data has been accurately derived from related records

Question 63

the presentation and disclosure assertion in MD&A addresses:

Answer 63

whether information included in the presentation is properly classified, described, and disclosed

Question 64

the completeness assertion in MD&A addresses:

Answer 64

whether descriptions of transactions and events necessary to obtain an understanding of the entities financial condition are appropriately included in the MD&A presentation

Question 65

the occurrence assertion in MD&A addresses:

Answer 65

whether reported transactions or events have occurred during a given period

Question 66

an examination of a financial forecast is a professional service that involves:

Answer 66

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

Question 67

the accountant’s standard report specifically states that the accountant assumes no responsibility to:

Answer 67

update the report for events and circumstances occurring after the date of the report

Question 68

the accountant’s compilation report on a client’s financial forecast should include a warning of limitations that:

Answer 68

prospective results may not be achieved

Question 69

the accountant’s report on a review of pro forma financial information should include a reference to:

Answer 69

the FS from which the historical information is derived and a statement as to whether such FS were audited or reviewed

Question 70

the report on a review of pro forma financial info would include an explanation of:

Answer 70

the objective and limitations of the information

Question 71

If the auditor has audited the FS from which the pro forma financial information is derived, an opinion on a reference:

Answer 71

may be expressed

Question 72

the report on a compilation should include a statement that:

Answer 72

the accountant assumes no responsibility to update the report for events subsequent to the report date, describes the limitations on the presentation’s usefulness

Question 73

hypothetical assumptions are used in:

Answer 73

financial projections

Question 74

an accountant gives _____ assurance related to hypothetical assumptions

Answer 74

no

Question 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:

Answer 75

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

Question 76

examples of prospective FS:

Answer 76

projected balance sheets, financial forecasts, and financial projections

Question 77

a presentation of pro forma FS should include all significant _____ effects related to the transaction.

Answer 77

direct

Question 78

_____________ are hypothetical “what if” prospective financial statements.

Answer 78

Financial projections

Question 79

because the user may need to ask the responsible party questions about the underlying assumptions, financial projections are _________ reports

Answer 79

restricted use. to whom the responsible party is negotiating with directly

Question 80

______ are appropriate for general use

Answer 80

financial forecasts

Question 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:

Answer 81

events and circumstances frequently do not occur as expected

Question 82

_______ is responsible for the projected FS

Answer 82

management

Question 83

an agreed upon procedures report should indicate a list of:

Answer 83

the specific procedures performed

Question 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:

Answer 84

determine what procedures are to be performed

Question 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:

Answer 85

responsibility for the sufficiency of the procedures in an agreed upon procedure engagement

Question 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:

Answer 86

an adverse opinion

Question 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:

Answer 87

agreed upon procedures report

Question 88

what report would include an opinion that the projection is presented in conformity with AICPA guidelines?

Answer 88

an examination report related to financial projections

Question 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:

Answer 89

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

Question 90

in an examination of a financial forecast. what circumstance would the CPA issue a qualified opinion?

Answer 90

if AICPA presentation guidelines were not followed

Question 91

_____ are not appropriate for general use

Answer 91

financial projections

Question 92

______ should include a summary of significant assumptions

Answer 92

prospective FS

Question 93

an accountant performing an engagement to compile prospective FS should make inquires about:

Answer 93

the accounting principles used in the preparation of the prospective FS

Question 94

when performing an attestation engagement related to a client’s prospective FS, the accountant should ensure that the client discloses:

Answer 94

all significant assumptions that are used for the prospective FS

Question 95

a compilation of a financial projection report disclaims any assurance on:

Answer 95

projected FS

Question 96

agreed upon procedure reports state that the practitioner didn’t conduct:

Answer 96

an examination of the subject matter

Question 97

agreed upon procedure engagements provide _____ assurance

Answer 97

no

Question 98

reviews provide ______ assurance

Answer 98

limited (negative)

Question 99

a practitioner may perform an agreed-upon procedures engagement on prospective FS provided that:

Answer 99

prospective FS include a summary of significant assumptions

Question 100

All reports on prospective FS require a statement indicating that the prospective results:

Answer 100

may not be achieved

Question 101

an examination provides ____ assurance

Answer 101

reasonable

Question 102

management discussion and analysis is a:

Answer 102

written explanation provided by management about the past and future performance of the entity

Question 103

the date of the agreed upon procedures report is ordinarily determined by the completion of:

Answer 103

agreed upon procedures

Question 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?

Answer 104

rely on the departments audit report on internal controls placed in operation and their operating effectiveness

Question 105

Reviewing the service auditor’s report on controls placed in operation would be the most efficient procedure when an audit client uses:

Answer 105

a service organization for several processes

Question 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:

Answer 106

part of the under company’s information system

Question 107

in considering whether the service auditor’s report is satisfactory for the user auditor, the user auditor should:

Answer 107

make inquires concerning the service auditor’s reputation

Question 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:

Answer 108

evaluate whether the complementary controls are necessary to achieve stated control objectives

Question 109

the service auditor should include in her report:

Answer 109

a description of the scope and nature of the procedures performed

Question 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

Answer 110

controls placed in operation

Question 111

a report on controls placed in operation (Type 1 report) disclaims:

Answer 111

an opinion on the operating effectiveness on internal control

Question 112

there are two types of reports on the processing of transactions by service oranizations:

Answer 112

1. reports on controls place in operation

2. reports on controls place in operation and tests of operating effectiveness

Question 113

A type 1 report on internal controls for a service organization should include:

Answer 113

management’s description of the service organization’s system

Question 114

the client’s auditor can use the service auditor’s report as:

Answer 114

audit evidence for the clients internal control

Question 115

the client’s auditor is permitted, but not required, to make reference to the work of a service auditor to:

Answer 115

explain a modification of the user auditor’s opinion

Question 116

entity compliance with compliance requirements is presumed to be evaluated and monitored by management on:

Answer 116

an ongoing basis

Question 117

test of the operating effectiveness of controls may be required if any one of the following exist:

Answer 117

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

Question 118

detection risk of noncompliance is inversely related to:

Answer 118

risk of material noncompliance

Question 119

audit risk of noncompliance is:

Answer 119

risk of material noncompliance * detection risk of noncompliance

Question 120

the report on agreed upon procedures related to assertions about compliance with specified requirements should contain:

Answer 120

procedures and findings. since the work performed is less in scope than an examination, the accountant disclaims any opinion.

Question 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:

Answer 121

the use of specified parties

Question 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

Answer 122

negative assurance (not an opinion)

Question 123

an auditor who is engaged to report on compliance with aspects of contractual agreements in connection with audited FS should ensure that:

Answer 123

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)

Question 124

in an examination of an entity’s compliance with specified requirements, the auditor should assess attestation risk, which is composed of:

Answer 124

control risk, inherent risk, and detection risk.

Question 125

for the purposes of a compliance examination, control risk represents the risk that material noncompliance will not:

Answer 125

be prevented or detected on a timely basis by the entitys controls

Question 126

in an examination of an entity’s compliance with specified requirements, the practitioner’s consideration of materiality is affected by:

Answer 126

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

Question 127

compliance attestation standards apply for an examination of:

Answer 127

a client’s compliance with specified requirements, such as debt covenants associated with a bank loan

Question 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:

Answer 128

an other matter paragraph

Question 129

2 CFR 200 single audit expands the auditor’s responsibilities to include:

Answer 129

procedures designed to test and report on compliance matters having a direct and material effect on major federal award programs

Question 130

2 CFR 200 single audit expands procedures to:

Answer 130

major programs as defined by the Circular

Question 131

2 CFR 200 single audit objectives relate to management’s assertions regarding:

Answer 131

compliance with laws, rules, and regulations

Question 132

2 CFR 200 single audit relates to the financial and compliance audits of:

Answer 132

major federal financial assistance programs

Question 133

audits of federal financial assistance under the Single Audit Act require that:

Answer 133

the auditor determine if the auditee has complied with laws, regulations, and provisions of the contracts or grant agreements

Question 134

materiality in audits of federal financial assistance is set at the:

Answer 134

program level

Question 135

2 CFR 200 single audit allows auditors to use __________ to determine major grants

Answer 135

risk based approach

Question 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:

Answer 136

20, 40, circumstances and auditor’s judgement

Question 137

Programs in excess of _____ are generally considered to be major grants

Answer 137

$750,000

Question 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:

Answer 138

internal control pertaining to compliance, and should document this understanding of internal control

Question 139

under single audit act, materiality is determined separately for:

Answer 139

each major federal financial assistance program

Question 140

Under a GAGAS audit, materiality levels may be lower due to:

Answer 140

public accountability of the entity, the various legal requirements, and the visibility and sensitivity of governmental programs, activities, and functions

Question 141

the risk based approach of the single audit act is designed to focus the auditor’s tests of federal financial assistance on the:

Answer 141

programs with the highest risk

Question 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:

Answer 142

the risk

Question 143

a single audit represents a combined audit of both:

Answer 143

an entity’s financial statements and federal financial assistance programs

Question 144

a nonfederal entity that expends federal financial assistance administered by another entity is a:

Answer 144

sub recipient

Question 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:

Answer 145

sub recipient

Question 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:

Answer 146

a recipient

Question 147

an individual who receives and expends federal awards received from a passthrough entity is:

Answer 147

a recipient

Question 148

a nonfederal entity compensated for goods or services with federal monies is:

Answer 148

a vendor

Question 149

in auditing a not for profit entity that receives governmental financial assistance, the auditor has a responsibility to assess whether management has identified:

Answer 149

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

Question 150

___________ specify that the auditor should design the audit to provide reasonable assurance that material errors and fraud are detected

Answer 150

government auditing standards (the yellow book)

Question 151

free rents received as part of an award to carry out a federal program are treated as:

Answer 151

federal funds expended

Question 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

Answer 152

fair market value, assessed value

Question 153

government loans are considered:

Answer 153

cash assistance programs

Question 154

if material instances of noncompliance are identified, the auditor should express:

Answer 154

qualified or adverse opinion on compliance

Question 155

______ assurance is provided on the entity’s compliance with requirements of the major program

Answer 155

reasonable

Question 156

the auditor should first contact the _______ to report the fraud

Answer 156

specific agency that provided the grant

Question 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)

Answer 157

the scope of the auditor’s testing of internal controls

Question 158

Reporting responsibilities under GAGAS are expanded to include:

Answer 158

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

Question 159

Generally Accepted Government Auditing Standards primarily apply to audits of:

Answer 159

federal financial assistance and government organizations but have been adopted by some states for audits of state financial assistance and other governmental funding

Question 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

Answer 160

government auditing standards

Question 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:

Answer 161

formally designated committee with oversight over the financial reporting process

Question 162

in auditing under government auditing standards, the auditor would report significant deficiencies in the design of the client’s internal control to:

Answer 162

audit committee

Question 163

material instances of fraud and illegal acts discovered need to be communicated:

Answer 163

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

Question 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:

Answer 164

the auditor’s report

Question 165

Per government auditing standards, audit documentation should contain sufficient info so that:

Answer 165

supplementary oral explanations are not required

Question 166

per government auditing standards, the auditor should obtain written representation from managment stating:

Answer 166

that management is responsible for taking corrective action on audit findings of the compliance audit

Question 167

as part of the written report requirement the auditor writes under Government auditing standards on internal control, the auditor must describe:

Answer 167

the scope of the auditor’s work in obtaining an understanding of internal control and her assessment of control risk

Question 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:

Answer 168

that the audit should be planned to obtain reasonable assurance about whether noncompliance could have a material effect on the programs audited

Question 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:

Answer 169

federal inspector generals, grantor, take appropriate remedial action

Question 170

GAGAS prescribe additional standards related to internal control reporting, such as:

Answer 170

requiring that the auditor provide a written report on internal control in every FS audit and specific reporting over internal control over compliance

Question 171

engaged to an audit for FS in accordance with GAGAS, the report on the audit of the FS should describe the:

Answer 171

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

Question 172

_______ would determine the extent to which the entity’s programs achieve the desired level of results

Answer 172

program audit

Question 173

Under a governmental audit, ________ will include identification of management’s interpretation of compliance requirements that are subject to different interpretations

Answer 173

management letter

Question 174

_______ should include a statement that management has disclosed all governmental programs to the auditor

Answer 174

representation letter

Question 175

a report on internal control over compliance will include:

Answer 175

• 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

Question 176

an objective of a compliance audit of a governmental entity is to:

Answer 176

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

Question 177

government audit standards define three types of engagements:

Answer 177

financial audits, attest engagements, and performance audits

Question 178

single audits and program specfic audits are defined by:

Answer 178

2 CFR 200 and the single audit act

Question 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

Answer 179

presumptively mandatory requirement

Question 180

________ indicates that the requirement must be followed in all cases where the requirement is relevant.

Answer 180

unconditional requirement

Question 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:

Answer 181

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)

Question 182

governemnt auditing standards requrie a written report on internal control in:

Answer 182

every audit

Question 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:

Answer 183

separate reports will be issued

Question 184

all reports on prospective FS require a statement indicating:

Answer 184

that the prospective results may not be achieved

Question 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_______

Answer 185

60 days of the report release date, by the report release date

Question 186

In a financial statement audit, communication of significant deficiencies should include _______, whereas in an audit of internal control, ______ is required

Answer 186

restricted use language, no restriction on the use of the report

Question 187

an opinion on ______ is over a period of time, and an opinion on ____ is at a point in time

Answer 187

FS, internal control

Question 188

CPA should refer to SSARS when:

Answer 188

• performing a preparation, compliation or review of historical FS for nonissuers
• preparation and compiliation of pro forma financial info

Question 189

Pro forma FS are not considered:

Answer 189

prospective FS

Question 190

the report on pro forma FS is not required to contain:

Answer 190

a restricted use paragraph

Question 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:

Answer 191

comfort letter

Question 192

in an integrated audit, management’s written rep letter should:

Answer 192

• 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

Question 193

in performing an integrated audit for a nonissuer, what are material weaknesses?

Answer 193

• ineffective oversight by those charged with governance
• identification of a MM that controls wouldnt have detected
• fraud committed by senior managment

Question 194

______ is the appropriate authoritative literature for both an audit of internal control and:

Answer 194

SAS, FS audit of a nonissuer

Question 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:

Answer 195

FS

Question 196

In an integrated audit of a nonissuer, management is required to:

Answer 196

• 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

Question 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:

Answer 197

withdrawl or disclaimer

Question 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:

Answer 198

• economic conditions
• prior knowledge of IC
• complexity of operations
• previously communicated deficiencies during planning efforts

Question 199

Periodic comparision of actual assets with amounts shown in the accounting records is:

Answer 199

control activity related to the existence of specific assets (not entity level control)

Question 200

examples of entity level controls:

Answer 200

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)

Question 201

the audit team should evaluate risk factors for:

Answer 201

both audit of IC and FS

Question 202

In an integrated audit, design effectiveness can be tested through:

Answer 202

inquiry, observation, and inspection of documentation

Question 203

In an integrated audit, operating effectiveness can be tested through:

Answer 203

reperformance and recalculation

Question 204

In an integrated audit, auditor’s are responsible for:

Answer 204

• 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

Question 205

when a service organization is part of an entity’s IC, an auditor should test:

Answer 205

the entity’s relevant controls over the activities of the service organization to obtain evidence that controls are operating effectively

Question 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?

Answer 206

disclaim an opinion on the cost benefit statement

Question 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:

Answer 207

an other matter paragraph making reference to the other report and indicating the nature of the opinion expressed

Question 208

the date of the report on internal control should coincide with:

Answer 208

the date of the audit report on FS

Question 209

in an integrated audit, whether or not a material weakness exists, the auditor must

Answer 209

express an opinion directly on the effectiveness of internal control

Question 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?

Answer 210

express an opinion on whether the previously reported weakness has been eliminated

Question 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:

Answer 211

part of an audit of the FS

Question 212

compensating controls, if found to be operating effectively, may limit:

Answer 212

the severity of an identified deficiency and prevent it from being a material weakness

Question 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?

Answer 213

• inquire managment
• obtain written rep from management
• inquire about and examine documents for the subsequent period

Question 214

In an integrated audit where there are two separate auditors auditing the FS and internal control, the:

Answer 214

principal auditor decides whether the other auditor is referenced in the auditor’s report

Question 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:

Answer 215

appropriate action should be taken

Question 216

If, during the audit of internal control, a deficiency is noted, the auditor should _______ in a FS audit

Answer 216

consider any deficiency in determining the nature, timing, and extent of substantive tests

Question 217

A practitioner’s report on agreed upon procedures that is in the form of procedures and findings should contain:

Answer 217

• disclaimer of opinion on the subject matter (no assurance)

- a statement that the engagement was conducted in accordance with attestation standards established by AICPA

Question 218

a control deficiency exists because:

Answer 218

deficiency in design of controls or failures in the operation effectivness.

Question 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.

Answer 219

assertion, assurance

Question 220

What should the auditor do when discovering a control deficiency?

Answer 220

The auditor must determine if the control deficiency is a material weakness by obtaining further audit evidence.

Question 221

Serially numbered identification plates on computers is a control related to which cycle?

Answer 221

PPE

Question 222

criteria established in the Internal Control—Integrated Framework (2013) issued by:

Answer 222

committe of sponsoring organizations of the treadway commission

Question 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.

Answer 223

doesnt

Question 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:

Answer 224

the Comptroller General of the United States.

Question 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:

Answer 225

historical FS, not finanical forecast

Question 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

Answer 226

finanical forecast

Question 227

auditor’s purpose in establishing materiality levels in a compliance audit includes:

Answer 227

• 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