AUD 1 - AUDIT STANDARDS AND ENGAGEMENT PLANNING

Question 1

What are the 3 types of audits?

Answer 1

1. Compliance Audit
2. Operational Audit
3. Financial Statement Audit

Question 2

What are Compliance Audits?

Answer 2

Compliance are audits specifically for determining if an entity is complying with applicable laws an regulations

** These are done by governmental or regulating entities. For example, the IRS conducts compliance audits on tax returns

Question 3

What are Operational Audits?

Answer 3

Operational Audits are audits specifically done to test if management’s policies are being carried out and to evaluate the effectiveness of internal controls.

** Operational audits are done by the internal audit team

Question 4

What are Financial Statement Audits?

Answer 4

Financial statement audits are specifically and only designed to determine if financial statements are presented fairly in accordance with AFRF

** Financial statement audits are not designed to determine if the entity is in compliance with laws and regulations

** Financial statement audits are done exclusively by CPAs

Question 5

What type of auditiors do Clarity Standards apply to?

Answer 5

Clarity Standards apply to audits of non-public/nonissuers and are issued by the Auditing Standards Board of the AICPA

Question 6

What type of audits do “Mandatory” and “Presumptively Mandatory” requirements apply to?

Answer 6

Audits of Public/issuers and audits of nonpublic/nonissuers

Question 7

What are the 3 categories of GAAS?

Answer 7

1. General Standards
2. Fieldwork Standards
3. Reporting Standards

Question 8

What are the 3 standards under the general standards category?

Answer 8

TIP

1. Training and Proficiency
2. Independence
3. Professional Care

Question 9

What are the 3 standards under the fieldwork standards category?

Answer 9

PIC

1. Planning and supervision
2. Internal Controls
3. Corroborative Appropriate Audit Evidence

Question 10

What are the 4 standards under the reporting standards category?

Answer 10

ANOE

1. Accounting Principles in Accordance with GAAP
2. No New Principles - Consistency
3. Omitted Disclosures - None
4. Express an Opinion

Question 11

Independence is required for what type of engagements?

Answer 11

Attestation engagements

1. Examinations (Audits)
2. Reviews
3. Agreed upon procedures
4. Special reports

ERAS

Question 12

Independence is not required for what type of engagements?

Answer 12

1. Compilations
2. Taxes
3. Consultations
4. Financial Statement Preparation
5. Bookkeeping
6. Payroll

Question 13

What is the difference between Auditing Standards and Auditing Procedures

Answer 13

• Auditing Standards measure the quality of the auditors performance
• Auditing Procedures are the acts to be performed by the auditor

Question 14

Who are “those charged with governance”?

Answer 14

the board of directors

Question 15

Who is “management”

Answer 15

Executives of the entity