Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

AUD > AUD 1 > Flashcards

AUD 1 Flashcards

1
Q

Adverse

A

Material and pervasive departure from GAAP

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Emphasis of Matter para.

A

Does not change opinion. Should state “Our opinion is not modified with respect to this matter”

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

May, might, could

A

indicate that auditor exercisies professional judgment in the circumstances

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

auditor should not report opinion on whether the basis of accounting used is appropriate

A

would report that they are presented fairly in conformity with GAAP or other comprehensive basis of accounting, would reference the notes of f/s that describe basis, would state that the basis of presentation of accounting other than GAAP

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

expressed adverse opinion prior year f/s bc of lack of adequate disclosure. this year everything is stated correctly. auditor should

A

express unmodified opinion with emphasis of matter paragraph added to the report

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Emphasis of matter para is required when

A

an entity appropriately changed the accounting for investments from the cost method to the equity method. This change had a material effect on the f/s. emphasis of matter para. is required when there is a justified change in accounting principle that has a material effect on the entity’s financial statements

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Contingency

A

an existing condition, situation or set of circumstances involving uncertainty as to possible gain or loss that will be ultimately determined when a future event occurs or fails to occur

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

SSARS

A

Preparations, compilations, and reviews

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Preparation

A

SSARS, a nonattest engagement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Management participation threat

A

results from an auditor taking on the role of management

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

self interest threat

A

that a financial or other interest will inappropriately influence auditors behavior or judgement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

familiarity threat

A

aspects of the relationship with management or other key personnel, such as a close or long relationship, or that of an immediate family member, will lead an auditor to take a position that is not objective.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

self review threat

A

an auditor that has provided nonaudit services will not appropriately evaluate the results of previous judgements made as part of the nonaudit services when performing audit services

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

attest engagement

A

SSAEs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

objective of a review

A

to provide the accountant with a reasonable basis for expressing limited assurance that there are no material modifications that should be made to the f/s

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

financial statements reviewed by an auditor

A

should be accompanied with a report stating that a review is substantially less in scope than an audit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

the DOL requires

A

auditor independence when auditing and providing an opinion on the f/s

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

In a review

A

auditor should inquire about actions taken at board of directors meetings

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

A contingent fee is permitted

A

when representing a non-attest client in an IRS examination

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

ssae

A

agreed upon procedures,

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Cognizant agency

A

is typically the federal awarding agency that provides the most amount of direct funding to an nonfederal agency

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

a report on proforma financial statements

A

is not required to contain a restricted use paragraph

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Reports that are required to have restricted use paragraphs

A

financial projection, comfort letter, and auditors report on compliance with aspects of regulatory requirements in connection with audited financial statements

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

prior to the issuance of the practiioners report

A

the client must acknowledge and agree to the procedures that were performed were appropriate to meet the intended purpose

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

examination engagements provide

A

positive assurance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

review engagements provide

A

limited or negative assurance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

compilations and agreed upon procedures provide

A

no assurance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

compilation report on a financial forecast

A

should include a statement that says there will usually be differences between forecasted and actual results

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Attest engagements specifically exclude

A

consulting, advocacy, and return prep

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Agreed upon procedures report should include

A

ALL findings from the application of the agreed upon procedure

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

risk of material noncompliance is inversely related to

A

detection risk of noncompliance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

SAS-

A

issued by ASB for nonissuers’ f/s

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

SSARS

A

issues by AICPA ARSC committee, for preps, comps, reviews of f/s

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

SSAEs

A

issued by AICPA ASB or other designated body, apply to exams, reviews and agree-upon procedures of other than f/s

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

Assertions about transactions and events and related disclosures

A

Occurrence, completeness, accuracy, cutoff, classification, presentation
CPA COC

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

occurrence

A

transactions and events that have been recorded or disclosed have occurred

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

completeness

A

all transactions and events that should be recorded were recorded and all related disclosures that should be included in the f/s were included

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

accuracy

A

amounts and other data were recorded appropriatedly and related disclosures were appropriately measured and described

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

cutoff

A

transactions and events were recorded in the correct accounting period

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
40
Q

classification

A

transactions and events were recorded in the proper accounts

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
41
Q

presentation

A

transactions and events are appropriately aggregated or disaggregated and clearly described, and related disclosures are relevant and understandable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
42
Q

Assertions about account balanced and related disclosures

A

Existence, right and obligations, completeness,- accuracy, valuation, and allocation, - classification, presentation
CPA REC

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
43
Q

PCAOB audit evidence has 5 assertions

A

existence or occurrence, completeness, valuation or allocation, -rights and obligations,- presentation and disclosure

44
Q

objective of a compilation

A

apply accounting and financial reporting expertise to assist management in the presentation of f/s without undertaking to obtain or provide assurance on them.
must: determine independence, report on the statements, disclaim any assurance, disclose any lack of independence, and associate name with the statements, which is included with the report

45
Q

objective of a review of f/s

A

to obtain limited assurance as a baisis of reporting whether the accountant is aware of any material modifications that should be made to the statements for them to be in accordance with the reporting framework. Must be independent. limited assurance is aka negative assurance. review is performed primarily through inquiry and analytical procedures

46
Q

3 types of attestation engagements

A

exams, reviews, and agreed-upon procedures

47
Q

assurance services

A

focus on improving information rather than providing advice
usually involve one party’s intention to monitor another

48
Q

Consulting services

A

SSCS issued by the AICPA, no independence, uses skills, education, knowledge, etc in the consulting process. Client interest, understanding the client, and communication with the client is important

49
Q

Consulting services include of or more

A

consultations: short time counsel;, advisory services: develops findings, conclusions and recommendations for client consideration and decision making; implementation services: puts action plan into effect;, transaction services: relates to specific client transaction usually with 3rd party;, staff and other support services: provides staff and other support to perform tasks;, product services: client provides product in support of the installation, use or maintenance of the product.

50
Q

Statements on Quality control standards: 6 elements

A

Leadership responsibiltities (tone at the top)
relevant ethical requirements
acceptance and continuance of client relationships and specific engagement
human resources
engagement performance
monitoring

51
Q

AICPA code of professional conduct

A

responsibilities, the public interest, integrity, objectivity and independence, due care, and scope and nature of services

52
Q

audit risk

A

risk that an auditor expresses an inappropriate opinion on materiality misstated f/s

53
Q

inherent risk

A

the susceptibility of an assertion that could be materials, individually or combined with other misstatements, before consideration of related controls

54
Q

control risk

A

risk that internal control will not timely prevent or detect and correct a material misstatement that could occur ina n assertion

55
Q

detection risk

A

risk that the procedures performed by the auditor to reduce audit risk to an acceptably low level will not detect a material misstatement. Detection risk is the only component of audit risk that can be changed at the auditor’s discretion. (inherent risk and control risk exist independently of the audit and cannot be changed by the auditor)
The acceptable level of detection risk for a given audit risk is inversely related to the assessed RRMs at the assertion level.

56
Q

audit risk =

A

inherent risk x control risk x detection risk
risk of material misstatement x detection risk

57
Q

performance materiality

A

amount set by auditor at less than the materiality for the statements as a whole or particular classes of transactions, balances, or disclosures

58
Q

judgemental misstatements

A

results from management’s unreasonable f/s recognition, measurement, presentation, etc. of inappropriate accounting policies

59
Q

projected misstatements

A

auditor’s best estimates of the misstatements in populations based on audit samples

60
Q

analtical procedures

A

evaluations of financial information made by a study of plausible relationships amount financial and nonfinancial data

61
Q

substantive procedures

A

tests of details and analytical procedures designed to detect materials misstatements at the assertion level

62
Q

current ratio

A

current assets/current liabilities

63
Q

quick ratio

A

current assets - inventory - prepaids/current liabilties

64
Q

receivables turnover

A

net sales/average net receivables

65
Q

days sales in receivables

A

of days in year/receivables turnover

66
Q

inventory turnover

A

COGS/average inventory

67
Q

days sales in inventory

A

365/inventory turnover

68
Q

total asset turnover

A

net sales/total assets

69
Q

debt-to-equity ratio

A

total debt/total equity

70
Q

times interest earned

A

net income + interest expe + income tax exp/interest exp

71
Q

COGS ratio

A

COGS/net sales

72
Q

gross margin percentage

A

net sales - COGS/average inventory

73
Q

net operating margin percent

A

operating income / net sales

74
Q

return on equity

A

net income/total equity

75
Q

objectivity

A

the ability ot perform tasks without bias

76
Q

petence

A

the attainment and maintenance of knowledge and skills of the function as a whole at the level required to enable assigned tasks to be performed diligently and with appropriate level of quiality

77
Q

application of systematic and disciplined approach

A

to planning, performing, supervising, reviewing and documenting internal audit activities

78
Q

external auditor

A

should reperform some of the body of work of the internal audit function

79
Q

the external auditor should communicate to those charged with governance

A

how they plan to use the work of the internal audit function to obtain audit evidence and provide direct assistance

80
Q

auditor’s specialist

A

an individual or organization with expertise in a field other than accounting or auditing. can be either an internal specialist (staff member of audit firm) or an external specialist

81
Q

The auditor should obtain an understanding of the expertise of the auditor’s specialists sufficient to

A

determine the nature, scope, and objectives of the work and
evaluate the adequacy of that work for the auditor’s purposes

82
Q

the autior should not refer to the work or findings of the auditor specialist when expressing

A

and unmodified opinion

83
Q

the auditor May refer to the work of an auditor’s specialtist if the reference is relevant to the understanding

A

a modified opinion. the report should state that the reference does not reduce the auditor’s responsibilitiy

84
Q

The auditor does not refer to a management’s specialist (the company being audited)

A

in an auditor’s report

85
Q

components of internal control

A

CRIME
control activities,
risk assessment process
information system
monitoring of controls
control environment

86
Q

control activities

A

policies and procedures that help ensure that management directives are carried out

87
Q

assessment process

A

the entity’s identification and analysis of relevant risks

88
Q

information system

A

including related and relevant business processes, supplorts the identification, capture and exchange of information ina form and time fram that enable people to carry out their responsibilities

89
Q

monitoring of controls

A

assesses the effectiveness of internal control over time

90
Q

control environment

A

set the tone of an organization, influencing the control consciousness of its members

91
Q

hot site

A

service facility that is fullly operationals and is promptly available

92
Q

cold site

A

a shall facility suitable for quick installation of computer equipment

93
Q

warm site

A

provided an intermediate level of back up and causes more downtime than a hot site

94
Q

slaes department

A

preparies sales orders based on customer orders

95
Q

credit reports to the treaurer

A

authorizes credit for all new customers and initieate write off of credit losses

96
Q

inventory warehouse

A

maintains physical custody of products

97
Q

inventory control

A

maintains records of quantities of products in the inventory warehouse

98
Q

shipping department

A

preparies shipping documents and hsips prodcuts based on authorized sales orders

99
Q

billing department

A

prepares cuomster invoices based on goods shipped

100
Q

A/R department

A

maintains the a/r subsidiary ledger

101
Q

mail room

A

received mail and prepared initial cash receipts records

102
Q

cash receipts department

A

safeguards and promptly deposists cash receipts

103
Q

general ledger department

A

maintains the a/r control account and records sales. daily summaries of sales are recorded in a sales journal

104
Q

receiving department

A

prepares receiving reports and handles all receipts of goods or materials including sales returns

105
Q

two types of service auditor reports

A

Type 1 and type 2:
type 1: report of design and implementation of controls at a service organization
type 2: reports on design, implementation, and operating effectivesness of controls at a service organization

AUD (1 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions