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CPA - BEC, FAR, REG, AUD > AUD > Flashcards

AUD Flashcards

1
Q

TF: A qualified opinion due to insufficient evidence is in the notes to FS

A

False; it is included in the auditors responsibility paragraph

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2
Q

Inadequate disclosure of a firm’s ability to continue as a going concern may lead to a ___ or ___ opinion

A

qualified; adverse

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3
Q

Mitigating factors for firm’s with going concern issues:

A

1: postpone expenditures 2: dispose of assets 3: borrow money or restructure debt 4: increase ownership equity (sell stock)

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4
Q

Lack of independence requires a ____ opinion

A

No opinion; DISCLAIMER

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5
Q

TF: If mgt does not provide reasonable justification for a change in acct. principle, there is a disclaimer issued

A

False

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6
Q

Illegal activity warrants a ____ or ____ opinion

A

qualified; adverse

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7
Q

TF: GAAP is mentioned in the opinion paragraph and GAAS is mentioned in the auditor responsibility paragraph

A

True

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8
Q

When disclaiming an opinion, the auditor responsibility and opinion paragraphs are omitted

A

False; the opinion paragraph does specify that NO opinion is issued

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9
Q

TF: Departures from GAAP result in a qualified or unqualified opinion

A

False: qualified or adverse opinion

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10
Q

When an emphasis of matter paragraph for going concern is present, it comes before the opinion paragraph

A

False: the paragraph follows the opinion paragraph

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11
Q

Client imposed restrictions warrant a _____ or _____ opinion

A

Qualified; disclaimer

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12
Q

TF: A qualified opinion resulting from a scope limitation results in a “Basis for a Qualified Opinion” paragraph

A

True; the paragraph comes BEFORE the opinion paragraph; the opinion paragraph has the heading ““Qualified Opinion”

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13
Q

A disclaimer of opinion is issued when:

A

significant scope limitation, auditor is not independent, and the FS are not audited

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14
Q

TF: Auditor has the responsbility to make inquiries about subsequent events between the date of the auditor’s report and the date on which the report is submitted

A

True

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15
Q

TF: in obtaining evidence about subsequent events, the auditor should examine the latest available interim information and compare them with the FS under audit

A

True

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16
Q

TF: An auditor would not perform a review or express negative assurance on supplementary information required by GAAP

A

True

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17
Q

If mgt declines to present supplementary information required by GASB, the auditor should issue an _______ opinion with an ________ paragraph

A

unmodified; other matter

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18
Q

For supplementary information, limited procedures should be performed and an other matter paragraph added following the opinion paragraph

A

True

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19
Q

Disclaiming an opinion on FS as a whole but including a stmt that the current asset portion of the entity’s balance sheet was fairly stated is appropriate

A

NOT appropriate; it might overshadow the disclaimer of opinion

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20
Q

TF: An auditor may report on summary FS that are derived from a complete set of FS but the auditor may not indicate whether the information is consistent in all material respects with the complete set of FS

A

False; the auditor must indicate so

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21
Q

TF: A description of how the income tax basis differs from the GAAP should be included in the management representation letter

A

False; notes to the FS

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22
Q

TF: Modifications are made to the auditor’s standard report only when there is a departure from GAAP

A

True

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23
Q

TF: An accountant is required to comply with Statements on Standards for Accounting and Review Services when preparing standard monthly JE’s

A

False; only when submitting unaudited financial statements

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24
Q

TF: An accountant with an immaterial direct financial interest in a client is independent with respect to that client

A

False; NOT independent

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25
Q

______ analysis is used to examine relationships between balance sheet accounts

A

Ratio

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26
Q

TF: Compiled FS should be prepared in accordance with Statements on Standards for Accounting and Review Services

A

True

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27
Q

TF: An accountant performing a review is required to obtain a client rep letter from the owner, manager, CEO, or CFO

A

True

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28
Q

TF: The following procedures are performed in a review engagement:

1: tests of the accounting records
2: tests of mgt’s assertions regarding continued existence
3: inquiries of the entity’s attorney concerning contingent liabilities

A

False; NOT performed

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29
Q

Obtaining a _____ _____ from the CEO will be performed in a review engagement of a nonissuer

A

representation letter

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30
Q

A review is substantially less in scope than an ______

A

audit

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31
Q

A review engagement provides _____ assurance but a compilation expresses _____ assurance

A

limited; no

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32
Q

Independence is not required by which of the following engagements: review, compilation, agreed upon procedures, or audit

A

compilation

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33
Q

An auditor should withdraw from an engagement when:

A

The client refuses to provide the auditor with a signed representation letter

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34
Q

TF: In order to compile a nonissuer’s FS, the accountant should identify material misstatements in the FS

A

False; obtain a general understanding of the client’s business transactions

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35
Q

TF: A review of the interim financial information of a publicly held company is conducted in accordance with PCAOB standards and SSARS

A

False; only PCAOB

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36
Q

A comfort letter contains an opinion as to whether the ______ _______ _______comply in form with the accounting requirements of the SEC.

A

audited financial statements

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37
Q

TF: When reviewing management’s discussion and analysis (MD&A) prepared pursuant to rules and regulations adopted by the SEC, the auditor is required to comply with SSAE

A

True

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38
Q

TF: SSAE addresses services such as testifying as an expert witness

A

False

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39
Q

TF: A sufficient understanding of internal control is required to be obtained in an attestation engagement

A

False; NOT required

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40
Q

TF: Negative assurance may be expressed when an accountant is requested to report on the audit of historical financial statements

A

False; report on the results of performing a review of management’s assertion

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41
Q

TF: Attest engagements may not result in reports related to compliance with laws and regulations.

A

False; they may

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42
Q

TF: A financial projection is appropriate for general use

A

False; a financial forecast only is

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43
Q

TF: Mgt is responsible for the fair presentation of FS

A

True

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44
Q

TF: It is appropriate for the auditor to request a review of the predecessor auditor’s engagement letter.

A

False; it is NOT; reviewing working papers is appropriate

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45
Q

TF: Matters that may facilitate the evaluation of financial reporting consistency between the current and prior years would be asked of the predecessor auditor before accepting the engagement

A

False; AFTER accepting

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46
Q

TF: An internal auditor may assist the auditor in obtaining an understanding of internal control and in performing tests of controls and substantive tests.

A

True

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47
Q

TF: A pre-audit conference is scheduled in order to discuss staff suggestions concerning the establishment and maintenance of time budgets

A

False; it is used to give guidance to the staff regarding technical and personnel aspects of the audit

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48
Q

Selecting a sample of vendors’ invoices for comparison to receiving reports is performed during the __________

A

fieldwork

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49
Q

TF: “Fairness and accuracy” is a type of financial statement assertion.

A

False; the assertions are: Rights and obligations, Valuation and allocation, Understandability and classification

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50
Q

________ is reflected by the organizational level to which the internal auditor reports

A

Objectivity

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51
Q

TF: The size of the auditing firm and the number of auditors assigned to the audit should influence the nature and extent of necessary planning activities.

A

False; should NOT

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52
Q

According to PCAOB standards, a ________ accounting function is indicative of less complex operations.

A

centralized

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53
Q

TF: The work of an internal auditor may aid the external auditor in obtaining an understanding of internal control, assessing risk, and performing substantive tests, including tests of controls

A

True

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54
Q

TF: When an auditor increases the assessed level of control risk, the extent of tests of details increases

A

True

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55
Q

The acceptable level of detection risk is inversely related to the ____________

A

assurance provided by substantive tests

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56
Q

TF: As the acceptable level of detection risk increases, the assurance (effectiveness) that must be provided from substantive tests can increase

A

False; decrease

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57
Q

TF: Detection risk should bear an inverse relationship to control risk

A

True

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58
Q

Audit risk is made up of the risk of material misstatement and ________ ______

A

detection risk

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59
Q

Risk of material misstatement is comprised of inherent and _______ risk

A

control

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60
Q

________ ________ is the risk that a material misstatement that could occur in a relevant assertion will not be prevented or detected (and corrected) on a timely basis by the entity’s internal control.

A

control risk

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61
Q

A _____ misstatement is a specific misstatement identified during the audit.

A

known

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62
Q

TF: Inherent risk and control risk do not exist independently of the audit.

A

False; they do

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63
Q

______ _______ increases when an auditor performs substantive analytical audit procedures for financial statement accounts at an interim date.

A

Detection risk

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64
Q

TF: During planning, the audit team is not required to discuss the fraud risk factors

A

False; they are required

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65
Q

TF: A lack of independent checks is a fraud risk factor that provides an opportunity for misappropriation of assets

A

True

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66
Q

______ ______ performed during planning often use data aggregated at a high level.

A

analytical procedures

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67
Q

TF: The auditor provides reasonable assurance to find direct and indirect effects of noncompliance

A

False; reasonable assurance for direct and NONE for indirect

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68
Q

TF: The audit plan usually cannot be finalized until the representation letter has been signed by the client

A

False; it cannot be finalized until the consideration of the entity’s internal control has been completed

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69
Q

A requirement during planning is to perform ______ ______ which involve comparisons of recorded amounts to expectations

A

analytical procedures

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70
Q

Why should an auditor should concentrate on the substance of the controls rather than their form because?

A

Management may establish appropriate procedures but not enforce compliance with them

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71
Q

The _____ _____ element of an entity’s internal control relates to the tone of the organization, which includes human resource policies and practices.

A

control environment

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72
Q

TF: The auditor’s ultimate purpose of assessing control risk is to evaluate the risk of financial statement misstatement.

A

True

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73
Q

Inherent limitations of internal control are human error, _____ _____, and collusion.

A

Management override

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74
Q

Tests of controls include such procedures as inspecting documentation, inquiry, observation, and ________.

A

reperformance

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75
Q

TF: Inquiry alone generally will support a conclusion for a lower assessed level of control risk

A

False; will NOT

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76
Q

TF: As part of understanding internal control, an auditor is required to obtain knowledge about the operating effectiveness of controls.

A

False; NOT required; only those controls that are relied on are tested for operating effectiveness

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77
Q

__________ are among the most reliable types of evidence, as they constitute external evidence sent directly to the auditor

A

confirmations

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78
Q

TF: When the A/R doubled and the AFDA has remained the same that may indicate that the client opened a second retail outlet during the current year and its credit sales approximately equaled the older outlet

A

True

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79
Q

______ ______ accounts tend to be more predictable than ______ ______ accounts

A

income statement; balance sheet

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80
Q

To test for completeness, the auditor should trace from the general ledger to the original source documents

A

False; from document to the general ledger

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81
Q

TF: The auditor’s risk assessment affects the nature, extent, and timing of audit procedures, but does not determine the relevance of audit evidence

A

True

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82
Q

TF: For some assertions, analytical procedures are not more effective and efficient at providing an appropriate level of assurance than are tests of details

A

False; are

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83
Q

Prenumbered receiving reports completed by the client’s employees are considered ______ ______ and are the least reliable of the items listed

A

internal evidence

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84
Q

TF: Accounting for unused prenumbered purchase orders and receiving reports is performed in the vouchers payable department

A

False; it is not

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85
Q

The revenue cycle includes sales, receivables, and _____ ______

A

cash receipts

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86
Q

The auditor often traces a sample of shipping documents to sales invoices to test __________ of sales.

A

completeness

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87
Q

TF: An auditor should trace from the shipping documents to the sales invoices to check for understatement of sales (i.e. completeness)

A

True

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88
Q

TF: Failure to record purchase returns would result in actual inventory quantities being greater than those recorded in the perpetual inventory records

A

False; sales returns

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89
Q

_______ confirmation is used when the combined assessed level of inherent and control risk relative to accounts receivable is low

A

negative

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90
Q

What account is relatively difficult to predict because it may fluctuate at management’s discretion?

A

Accounts payable; this account will not be tested prior to the balance sheet date

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91
Q

When inventory observation test counts are traced to the client’s inventory listing, the financial statement assertion is _________

A

completeness

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92
Q

By vouching to time card data, the auditor is testing the _________ assertion for hours worked

A

occurrence

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93
Q

TF: A copy of the remittance listing is sent to the accounts receivable clerk and used to update the subsidiary accounts receivable records.

A

True

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94
Q

A larger tolerable misstatement results in a ________ sample size

A

smaller

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95
Q

A higher risk of incorrect acceptance results in a _______ in sample size

A

decrease

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96
Q

The sample size in an attribute sampling application is affected by the allowable risk of assessing control risk too low, the tolerable deviation rate, and the _____ _____ ____

A

expected deviation rate

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97
Q

_________ sampling is used to test controls

A

attribute

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98
Q

The risk of incorrect acceptance and the risk of assessing control risk too low relate to the _________ of an audit in detecting an existing material misstatement

A

effectiveness

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99
Q

TF: The upper deviation rate consists of the sample deviation rate plus an allowance for sampling risk

A

True; when this exceeds the tolerable rate, the planned reliance on a control should be reduced

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100
Q

________ estimation is most effective if there is a correlation between book values and audit amounts.

A

ratio

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101
Q

______ sampling is normally used to estimate a numerical measurement of a population

A

variables

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102
Q

TF: Materiality limits do apply to client representations involving management fraud

A

False; do NOT

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103
Q

TF: Management acknowledges its responsibility for the design of controls to detect and prevent fraud in its management representation letter.

A

True

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104
Q

TF: Providing extensive advisory services for a client impairs an auditor’s independence

A

False; it does not; the auditor is simply an advisor

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105
Q

TF: Under Rule 302, contingent fees are permitted when they involve a legal proceeding or ruling

A

True

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106
Q

TF: If a covered member owns municipal utility bonds issued by a client, and the bonds are not material to the member’s wealth independence is NOT impaired

A

False; it is because it is a direct financial interest

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107
Q

TF: Audit documentation should demonstrate compliance with quality control standards.

A

False; it is not required

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108
Q

TF: Debt agreements are included in the permanent file

A

True

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109
Q

TF: The permanent file does not include a working trial balance

A

True

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110
Q

TF: The content of the representation letter will generally not affect the nature and extent of audit documentation

A

True

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111
Q

TF: The report release date is the date after which existing documentation must not be deleted, and additions to the documentation file must be documented as such.

A

False; the documentation completion date

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112
Q

TF: According to PCAOB standards, the documentation completion date is sixty days following the report release date.

A

False; forty-five

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113
Q

TF: The audit documentation that makes up the current file would include a copy of the bank reconciliation.

A

True

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114
Q

TF: The test data must consist of all possible valid and invalid conditions

A

False

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115
Q

An ____ ____ ____ utilizes dummy accounts

A

integrated test facility

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116
Q

TF:Generally Accepted Government Auditing Standards primarily apply to audits of federal financial assistance and government organizations

A

True

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117
Q

TF: A concurrent opinion on the financial statements taken as a whole is not a required part of the auditor’s report.

A

True

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118
Q

TF: The auditor will express an opinion on the effectiveness of internal control over compliance

A

False; will NOT

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119
Q

TF: Under the Single Audit Act, materiality is calculated in relation to the FS as a whole

A

False; determined separately for each major federal financial assistance program.

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120
Q

TF: Risk of material noncompliance is inversely related to detection risk

A

True

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121
Q

TF: Government Audit Standards define three types of engagements: financial audits, attest engagements, and performance audits.

A

True

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122
Q

TF: A government internal audit function is presumed to be free from organizational independence impairments for reporting internally when the head of the organization is not accountable to those charged with governance

A

False; when he is removed from political pressures to conduct audits objectively, without fear of political reprisal

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123
Q

TF: Professional behavior includes independence of mind and appearance when providing audits under GAGAS

A

False; objectivity

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124
Q

TF: Serving the public interest includes an auditor’s honest effort in the performance of professional services

A

False; professional behavior

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125
Q

TF: The self-interest threat is the threat that a financial or other interest will inappropriately influence an auditor’s judgment or behavior.

A

True

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126
Q

TF: Management participation threat is the threat that results from an auditor’s taking on the role of management or otherwise performing management functions on behalf of the entity undergoing an audit.

A

True

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127
Q

TF: Professional skepticism is one of the six interrelated elements of quality control.

A

False; engagement performance

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128
Q

The six interrelated elements of quality control are: human resources, engagement/client acceptance and continuance, leadership responsibilities, performance of the engagement, monitoring, and ___________ _______

A

ethical requirements

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129
Q

The _____ should approve the authorization of the write off of uncollectible accounts

A

treasurer

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130
Q

TF: An adverse opinion results when there is a departure from GAAP

A

True

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131
Q

A ________ opinion results from scope limitations, such as management’s refusal to furnish a client representation letter.

A

disclaimer

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132
Q

TF: Sampling interval is the tolerable misstatement divided by the reliability factor

A

True

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133
Q

Sample size is calculated by taking the _______ and dividing by the sampling interval

A

population

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134
Q

TF: The PCAOB consists of at least one auditor

A

False; exactly two CPAs

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135
Q

TF: It is acceptable to use the names of one or more past owners in a CPA partnership

A

True

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136
Q

Mgt is responsible for:

A

financial statements and internal control

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137
Q

When preparing financial statements an auditor must:

A

identify the framework, describe the framework and present the financials in accordance to the framework standards

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138
Q

Inherent limitations of an audit include: intangibles, impairment, bad debts,warranties, asset life/salvage, and _____

A

lawsuits

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139
Q

PCAOB is required when:

A

auditing an issuer (PUBLIC COMPANY)

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140
Q

PCAOB establishes ____________ to be used in the preparation and issuance of audit reports for issuers

A

auditing and related professional practice standards

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141
Q

TF: Public accounting firms do not have to register with the PCAOB to audit public companies

A

False; DO have to register

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142
Q

The International Auditing and Assurance Standards Board (IAASB) sets standards for:

A

IFAC (Intl Federation of Accountants)

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143
Q

Statements on Standards for Auditing and Attestation Engagements are issued by the ______

A

AICPA

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144
Q

The International Ethics Standards Board sets the code of ethics for:

A

IFAC

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145
Q

3 conditions of fraud:

A

pressure, opportunity, rationalization

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146
Q

An auditor must be independent of an entity UNLESS:

A

GAAS requires otherwise or the auditor is required by law to accept the engagement and report on the F/S

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147
Q

NET of auditing procedures stands for:

A

nature, extent (a lot, a little or something in between), and timing (EOY, in the middle of the year, etc.)

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148
Q

Sufficient, ______ evidence

A

appropriate

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149
Q

Weak internal controls =/=

A

adverse opinion

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150
Q

F/S should be:

A

adequate, reasonable estimates, consistent, relevant, reliable, comparable, and understandable; they should also represent underlying transaction

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151
Q

TF: Opinions are addressed to mgmt

A

False; NOT

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152
Q

DIM: managements responsibility

A

Design, Implementation, Maintenance of I/C

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153
Q

REPPORTS CRIME: auditors responsibility

A

responsibility, express opinion, plans and performs audit, performing procedures, obtain audit evidence, risk assmt of material misstmt, test I/C (consider them), stmt prep and fair presentation, controls are not being issued an opinion, reasonableness of estimates, estimates made by management, evaluating presentation of FS

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154
Q

Audit report should not be dated before:

A

date the audit obtained sufficient appropriate audit evidence

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155
Q

Auditors report date shows:

A

final date of responsibility for the auditor

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156
Q

There should be an explicit stmt that shows that the F/S are presented _____ and are ________ with GAAP (or financial reporting framework)

A

fairly; in accordance

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157
Q

For comparative stmt, the date for the __________ audit should be used

A

most recent

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158
Q

An auditor does or does NOT issue an opinion on the effectiveness of internal controls

A

DOES NOT

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159
Q

GAAS is in the ______ paragraph

A

scope

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160
Q

GAAP is in the ______ paragraph

A

opinion

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161
Q

GAAS requires DIM but ______ do not

A

ISA

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162
Q

No reference to component auditor unless:

A

component auditor performed in accordance with GAAS, use of different financial reporting framework,

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163
Q

TF: A reference is made to the component auditor when the other auditor assumes responsbility

A

False

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164
Q

If F/S are false, frauduluent, deceptive or misleadinf the auditor should

A

withdraw from the engagement

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165
Q

If there is a MATERIAL GAAP problem, then there’s a _____ opinion

A

qualified

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166
Q

Very material (pervasive) there’s a _____ opinion

A

adverse

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167
Q

If there’s a MATERIAL GAAS problem, then there’s a _____ opinion

A

qualified; insufficient evidence problem

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168
Q

Very materials (pervasive; significant) warrants a ______ under GAAS

A

disclaimer

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169
Q

Qualified opinion (aka “except for”) results when there’s:

A

lack of disclosures, improper presentation, etc.

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170
Q

Emphasis of matter paragraph ______ modify the opinion paragraph

A

does NOT

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171
Q

Materially misstated F/S is a ____ issue

A

GAAP

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172
Q

Insufficient appropriate audit evidence is a ______ issue

A

audit evidence

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173
Q

Qualified:

A

GAAP or GAAS material issue

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174
Q

Adverse:

A

GAAP very material issue

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175
Q

Disclaimer:

A

GAAS very material issue

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176
Q

TF: Piece meal opinions are allowed

A

False

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177
Q

Emphasis of matter and ______ paragraph do not affect unmodified opinion

A

other matter

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178
Q

Emphasis of matter is included when:

A

required or included due to auditor’s judgment

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179
Q

Emphasis of matter paragraph goes _____ the opinion paragraph

A

AFTER; goes before other matter paragraph

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180
Q

Emphasis paragraph must have:

A

heading “Emphasis of Matter”, describe the matter and explain that it does not affect auditor’s opinion

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181
Q

Emphasis of matter paragraph required when:

A

auditor concludes that there’s a going concern issue, justified change in accounting principle, subsequent discoveries that lead to change in auditor opinion, and F/S prepped in accordance with an applicable special purpose framework

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182
Q

EOM paragraph may be used when there’s:

A

a catastrophe, uncertainty, related party transaction and subsequent events that are unusually important

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183
Q

TF: Other Matters Paragraph include info other than those disclosed in financial stmt that is deemed to important to the users

A

True

184
Q

Other Matters Paragraph is AFTER:

A

Emphasis of Matter paragraph

185
Q

OM paragraph requirements:

A

heading “Other Matters”, describe the matter and the location

186
Q

OM paragraph is required when:

A

audit report use is restricted, change in audit opinion, predecessor auditor report not reissued, comparative or compiled and reviewed were not audited or reviewed and compiled, material inconsistency in other info and reports on supplementary information, referring to required supplementary info, restrict use of special purpose financials, report on compliance included in report

187
Q

OM paragraph may be necessary when:

A

describing the reasons an auditor can withdraw from an engagement, required by law to provide further explanation, reporting on more than one set of financial statements

188
Q

Going concern procedures: ADMITS

A

analytical procedures, debt compliance, meeting minutes, inquiries of legal counsel, talk to third parties, subsequent events

189
Q

Intl standards want an auditor to determine a going concern condition:

A

throughout the engagement

190
Q

Events that indicate financial doubt: FINE

A

financial difficulties, internal matters, negative trends and external matters

191
Q

TF: Unmodified opinion does equal a good investment

A

False

192
Q

Borrowing money and increasing ownership equity are _____ events

A

mitigating; also includes selling assets and delaying or reducing expenditures

193
Q

TF: An auditor may issue a disclaimer due to going concern uncertainty

A

True

194
Q

Emphasis of matter paragraph for going concern must include words

A

“substantial doubt and “going concern” do NOT say “ for one year” in the paragraph

195
Q

Intl standards use _____ doubt instead of substantial doubt

A

significant

196
Q

Going concern is a _____ issue

A

GAAS

197
Q

Inadequate disclosure is a _____ issue

A

GAAP

198
Q

If there’s a failure to be consistent, there a ______ statement

A

explicit

199
Q

An emphasis of matter paragraph included in year of change in accounting principle needed in year of change AND

A

in the years going forth until the new accounting principle has been implemented consistently

200
Q

Immaterial change:

A

NO revision

201
Q

If there’s a retroactive restatement, then the emphasis of matter paragraph is:

A

required only in the period of change

202
Q

Estimates and correction of errors ______ affect consistency standards

A

do NOT; correction of error example would include moving from cash to accrual

203
Q

Restriction of use of auditors communication requires a _______ paragraph

A

other matters

204
Q

Identification of specified parties and communication that auditors communication is restricted is included in an __________ paragraph

A

other matters

205
Q

If there are specified parties added to the list when an auditor’s communication is restricted, the ____________ paragraph should be revised

A

other matters

206
Q

GAAP consistency change unjustified =

A

auditor disagrees

207
Q

TF: Not all disclosures aare required

A

True; however, make sure omission does not make financials false, fraudulent, deceptive or misleading

208
Q

An adverse or qualified opinion requires the auditor to modify the _______paragraph

A

auditor’s responsbility

209
Q

Basis for Modification paragraph is ______ the opinion paragraph AND should use the headings ____________ or _________

A

BEFORE; basis for adverse opinion; basis for qualified opinion

210
Q

Lack of indepedences causes a _______

A

disclaimer

211
Q

TF: If a client does not allow an auditor to review something, an adverse opinion is NOT allowed

A

True

212
Q

Undetected material misstatement requires a ________ or _______

A

disclaimer or withdraw

213
Q

No audit work =

A

no opinion (not even a bad opinion)

214
Q

Scope limitation is a _____ issue

A

GAAS

215
Q

Material misstatement uncertainty is a _____ issue

A

GAAP

216
Q

Insufficient evidence problem is a ____ issue

A

GAAS

217
Q

When disclaiming an opinion, the ______ opinion should be modified

A

auditor responsibility; a basis for disclaimer of opinion paragraph should be included

218
Q

TF: GAAP allows a company to use different inventories even if the methods are not disclosed

A

False; METHODS MUST BE DISCLOSED

219
Q

The audit report is addressed to:

A

the client that ENGAGED them

220
Q

Related party transactions are included in a:

A

emphasis of matter paragraph

221
Q

In a report qualified for inadequate disclosure, the auditor should add ____________ and modify_______

A

a paragraph titled “basis for qualified opinion”; opinion paragraph

222
Q

When PY F/S have not been audited and CY F/S have been, there is a ______ _______ resulting in a _____ issue so a ___________ opinion is issued

A

scope limitation; GAAS; disclaimer of

223
Q

Updating an opinion requires DORCS in an emphasis of matte or other matter paragraph: DORCS is

A

date of auditor report, opinion previously issued, reason for prior opinion, changes that have occurred, statement that the “opinion….is different”

224
Q

Updating an opinion will cause a company to be __________ with GAAP

A

in conformity

225
Q

Old/predecessor CPA’s should:

A

read the statements for the current period, compare the statements audited with the current period statements, obtain a letter of representation from the successor auditor, inquire of and obtain a letter of representation from MANAGEMENT

226
Q

Dating predecessor report: Unrevised - use__________, Revised - use _______

A

use the original report date in any reissue of a previous report, dual date

227
Q

When the report of the predecessor auditor is NOT reissued:

A

auditor expresses an opinion on CY financials and indicate a few matters in a other matter paragraph

228
Q

The other matter paragraph points noted when a predecessor auditor’s report is not reissued are:

A

PY F/S were audited by a predecessor auditor, predecessor auditor should not be named unless practice was acquired or merged by successor, type of opinion expressed and any modifications, the nature of the emphasis of matter or other matter paragraph in predecessor report, and date of predecessor auditor’s report

229
Q

If PY financials were NOT audited, an other matter paragraph is included stating the service performed in the PY, the date of the PY period, a stmt that the service was less in scope than an audit and _______

A

a description of any material modifications described in the report

230
Q

Recognized event (looking back) requires a _______

A

financial statement adjustment

231
Q

Unrecognized event (looking forward) may require a _______

A

footnote disclosure

232
Q

The CPA is responsible up to _________

A

date of report

233
Q

During fieldwork, the CPA has an active responsibility to investigate certain _______ events

A

subsequent

234
Q

Subsequent event procedures: PRIME

A

post balance sheet transactions, representation letter should be obtained from mgmt., inquiry, minutes of stockholders directors and other committee meetings, examine latest available interim financial information

235
Q

After the original date of the auditor’s report, the auditor has ____________

A

no active responsibility; if the auditor is aware of any information relating to subsequent events before the report release date then they should consider adjusting the financials or the disclosures

236
Q

Adjusting financials to reflect a subsequent event, that is a ______issue

A

GAAP

237
Q

An auditor dual dates to extend responsibility for _______

A

the particular subsequent event ONLY

238
Q

Using a later date extends responsibility for ________ subsequent events

A

ALL

239
Q

Subsequent discovery of facts AFTER report release date would require the auditor to: advise the client to reissue revised F/S along with a NEW auditor report, advise the client to make the necessary disclosures and revisions to any imminent F/S, and ___________

A

if the effect cannot determined on a timely basis, provide notification that the F/S should not be relied upon

240
Q

If the client refuses to revise F/S after a subsequent discovery of facts, the auditor should notify the B.O.D and ________

A

prevent further reliance on the F/S

241
Q

Steps to prevents further reliance are : DAR

A

Dissociate, Alert agencies, Relying parties

242
Q

Checking for other adequate procedures is a mitigating action for a ____________audit procedure

A

omitted; if there is no alternative then the auditor should promptly apply the procedure

243
Q

When other information requires revision, there is a ______paragraph describing the material inconsistency

A

other matter; also withhold the use of the report OR withdraw from the engmt and consult with legal counsel

244
Q

When mgmt. refuses to correct, the auditor should

A

notify those charged with governance

245
Q

PCAOB standards audit procedures:

A

evaluate the appropriateness of methods, reconcile to the underlying accounts and other records, use the same materiality considerations

246
Q

Evaluation of audit results for supplementary information include: making sure supplemental information is fairly stated, accumulate misstatement and these should be communicated to management,

A

evaluate whether the uncorrected misstatements are material either individually or in combination

247
Q

An auditor’s report on supplementary information can be either a other matters paragraph OR ____________

A

a separate report including reference to the report on the F/S, the date of report, nature of opinion and on the F/S and report modifications

248
Q

For nonissuers, when an auditor issues a qualified opinion on the F/S, a _______ opinion is issued on the supplemental information

A

qualified

249
Q

For nonissuers, when the auditor issues an adverse or disclaimer of opinion,
_____________

A

no opinion is issued

250
Q

For issuers, the auditor’s report on supplemental information can be on the F/S or ____________

A

in a separate report; the separate report should identify the auditor’s report on the financial statements

251
Q

For issuers, the auditor’s report on the supplemental information should not be dated earlier than:

A

the date of the auditor’s report on the F/S OR the date on which the auditor obtained sufficient appropriate audit evidence

252
Q

When there’s a material misstmt on supplemental information, describe the misstmt and express a ______ or _____ opinion

A

qualified; adverse; GAAP problem!

253
Q

When there’s not sufficient appropriate audit evidence for supplemental information, issue a ___________ and describe the reason for the disclaimer

A

disclaimer of opinion; GAAS problem!

254
Q

For issuers, when an auditor expresses an adverse or disclaimer of opinion,

A

express an adverse or disclaimer of opinion

255
Q

Required procedures for supplementary information:

A

inquiries of mgmt., determine if supplementary info is consistent with mgmt.’s responses audited F/S and other knowledge, obtain written mgmt. representations regarding the required supplementary info

256
Q

TF: An auditor is required to audit supplementary information

A

False

257
Q

An other matter paragraph should be included for supplemental information with the following info:

A

the required suppl. info is included and the auditor has applied the required procedures; the req. suppl. info is omitted, some req suppl info is missing, the auditor has identified material departures from the guidelines, auditor is not able to complete the procedures OR unresolved doubts about conformance of req. suppl. info

258
Q

The other matter paragraph for suppl. info should have a ___________

A

disclaimer of opinion

259
Q

The reporting accountant’s report should include:

A

a brief description of the nature of the engmt, stmt that the engmt was performed in accordance with AICPA standards, ID of the specific entity, stmt describing the appropriate application of the req’s of the applicable reporting framework, stmt that preparers of F/S are responsible for proper accounting trmt, stmt that any differences in facts or circumstances could change report, stmt restricting use of report, and stmt saying that accountant lacks independence if not indpt.

260
Q

Restriction of use of an auditor’s report is to:

A

mgmt., B.O.D., and specific parties (prior and current auditors)

261
Q

Distribution of a report outside the US, the auditor may use either:

A

the report of the other country or the report set out in the ISAs or a U.S. form of report that reflects that the F/S being reported on have been prepared in accordance with a financial reporting framework generally accepted in another country

262
Q

Distribution in the U.S. requires the auditor to have a _________ paragraph that identifies the financial reporting framework, refers to the note in the FS that describes the framework, and __________

A

emphasis of matter; indicates that the framework differs from accounting principles generally accepted in the US

263
Q

TF: The auditor should apply ________ procedures to the supplementary information

A

limited

264
Q

When auditing a specific element, determine the materiality _________ instead of _________

A

separately for each element; as a whole with the FS

265
Q

A ________ opinion is issued when there’s a material modification to the F/S that affects the specific element

A

adverse

266
Q

A __________ opinion is issued when there’s a scope limitation on the F/S that affects the specific element

A

disclaimer of

267
Q

Negative assurance:

A

no identified instances of NONcompliance

268
Q

When instances of noncompliance are identified, a ________ of the instances is recorded

A

description

269
Q

An adverse or disclaimer of opinion on audited FS , would cause an auditor to _________ when engaged to report on summary statements

A

withdraw

270
Q

________ is responsible for the preparing of summary financial statements

A

management

271
Q

Compilation and review =

A

unaudited/disclaimer; there is NO assurance

272
Q

Issue a report that is applicable to the __________

A

highest level of service rendered

273
Q

SARS provides standards for ______ and _____ for NONISSUERS (private/nonpiblic co.’s)

A

compilations; reviews

274
Q

TF: Manangement is responsible for the applicable reporting framework

A

True

275
Q

Understanding the client for compilations:

A

staff qualif., transac. types and frequency, acct basis, form of financial statements and content, form of accounting records

276
Q

TF: Independence is required for a compilation

A

FALSE; NOT required; lack of independence however must be DISCLOSED

277
Q

Statements on Auditing Standards applies to:

A

reviews

278
Q

Inquiries, analytical procedures and letter of representation from management are very important for :

A

review engagements; review engagement standards are the same for public and non-public companies

279
Q

Letter of engagement is ______for a review

A

mandatory

280
Q

Testing of I/C, audit rest work and assessing fraud risk are__________ for a review

A

NOT required

281
Q

Failure to obtain a letter of representation from mgmt in a review results in __________

A

consideration of withdrawal from engagement

282
Q

A letter of representation of rep from mgmt is or is not required for a compilation

A

NOT required

283
Q

TF: A review should have a document of significant findings

A

True

284
Q

Reviews express ______assurance

A

LIMITED

285
Q

Each page of review documentation should have

A

“see independent accountant’s review report”

286
Q

TF: Quarterly reports are audited

A

FALSE; unaudited

287
Q

TF:A comfort letter is intended for general use

A

False; it is intended for the addressees

288
Q

TF: If a comfort letter is to be issued, a review of interim information must be performed

A

True

289
Q

TF: An audit of a single financial statement is NOT allowed under GAAS

A

False; IS allowed

290
Q

Financial statements that are prepared in accordance with a comprehensive basis of accounting other than GAAP that are NOT suitably titled require a _______ opinion with a ______________ paragraph

A

qualified; basis for modification

291
Q

A report on compliance in connection with audited financial statements provides only _______ assurance on compliance

A

negative

292
Q

Testing of internal controls is NOT a requirement for a(n) ________

A

review

293
Q

Compliance with Statements on Standards for Accounting and Review Services is required when:

A

submitting unaudited financial statements

294
Q

An accountant with an immaterial direct interest is considered _____________

A

NOT independent

295
Q

______ analysis is used to examine relationships between balance sheet accounts

A

Ratio

296
Q

For a compilation, independence is _______

A

implied

297
Q

TF: Inquiry about a related party transaction is performed in a review engagement

A

True

298
Q

Five GENERAL standards for attestation: TIPPY

A

training and proficiency, independence, performance/due professional care in planning and performance, professional adequate knowledge of subject matter, and your belief that the subject matter is capable of evaluation against criteria that are suitable and available to users

299
Q

Fieldwork standards: PA

A

planning and supervision, appropriate sufficient evidence; NO internal control

300
Q

Reporting standards: SSER

A

identify SUBJECT matter, disclose SIGNIFICANT reservations about the engagement, EXPRESS conclusions about the subject matter, and RESTRICT use of the report to specific parties

301
Q

TF: When reporting on an assertion, no restriction of the use is required

A

True

302
Q

Consider withdrawing if there’s a _______ on an examination or review

A

scope limitation

303
Q

Negative assurance is provided with a(n) _____

A

review

304
Q

Positive assurance is provided with a(n) ______

A

examination

305
Q

______ assurance is provided with agreed upon procedures

A

NO

306
Q

If the client is the responsible party and fails to provide a written assertion, it is a _______ and the auditor should _______

A

scope limitation; withdraw

307
Q

If the client is not the responsible party to provide a written assertion, the report should be _____

A

restricted

308
Q

TF: An agreed upon procedures report does NOT include significant findings

A

False; it DOES

309
Q

TF: A review of prospective financial statements is allowed

A

False

310
Q

A _______ opinion is needed for agreed upon procedures

A

disclaimer of

311
Q

Financial projection is _____ use and a financial forecast is _____ use

A

limited; general

312
Q

For a financial projection, there should be a stmt on the purpose of the projection and a ________

A

restricted use paragraph

313
Q

TF: Pro forma may not be examined or reviewed

A

FALSE; they may; proforma financials are NOT the same as prospective financials

314
Q

TF: MD&A is not required by the SEC for issuers

A

FALSE; it IS REQUIRED

315
Q

The MD&A may be examined and ______

A

reviewed

316
Q

TF: A review of interim financial information for a public company requires evaluation of its internal controls

A

True

317
Q

Letters for underwriters provide _____assurance on unaudited interim financial information

A

negative

318
Q

An examination of a __________ would include an evaluation of the support of the assumptions underlying the forecase but a _____ would NOT

A

financial forecast; compilation

319
Q

An attest engagement is when the accountant is issuing an examination, review or ____________ report on another party’s assertion

A

agreed upon procedures

320
Q

Preconditions for an audit:

A

applicable financial reporting framework, mgmt responsibilities, mgmt scope limitations

321
Q

MGMT is responsible for:

A

F/S, internal controls, and providing accountant with financial information

322
Q

Lack of records is a __________

A

scope limitation

323
Q

3 types of fraud:

A

corruption (cheating), asset misappropriation (stealing), financial stmt fraud (lying)

324
Q

Audit is subject to inherent limitations/risks that _______ and _____ will not be detected

A

errors; fraud / if either of them are discovered, they CPA must report

325
Q

With an initial audit, communication with the predecessor auditor should be ________ acceptance

A

BEFORE; this is mandatory

326
Q

Materiality for financial statements as a whole should use the ________ level of misstatement that could affect the F/s

A

smallest

327
Q

You should consider _______ and ______ when assessing materiality

A

quantitative; qualitative

328
Q

Cycles:

A

Revenue, inventory, investment, payroll, financing, PP&E, expenditure

329
Q

Transaction, balances, and ______ are the three categories of cycles

A

disclosures

330
Q

TF: Risk assessment procedures are not required by all F/S audits

A

FALSE; ARE REQUIRED

331
Q

Substantive procedures are tests of the ______ balances

A

DOLLAR; test of details, test of dollars balance, and analytical procedures are all substantive procedures

332
Q

PCAOB standards state that financial statement assertions are CEO APROVeD

A

completeness, existence, occurence, allocation, presentation, rights, obligations, valuation and disclosure

333
Q

A ______ audit plan is required for every audit

A

written

334
Q

IR*CR =

A

Risk of material misstatement; exist INDEPENDENT of financial statement audit

335
Q

IRCR____

A

DR - detection risk

336
Q

TF: Detection risk is not controlled by the auditor

A

FALSE; it is

337
Q

Control risk deals with a material misstatement that will not be _______ in a timely manner

A

detected

338
Q

Inherent risk assumes there are no _______ controls

A

related

339
Q

Detection risk is when the auditor ______the mistake and thereby gives the ____opinion

A

misses; WRONG

340
Q

LESS detection risk work means _______ work for us

A

MORE

341
Q

MORE detection risk means _____ works for us

A

LESS

342
Q

LESS risk of material misstatement leads to ______ detection risk

A

LESS

343
Q

MORE risk of material misstatement leads to _______detection risk

A

MORE

344
Q

There’s a(n) ______ relationship between risk of material misstatement and detection risk

A

inverse

345
Q

Internal auditors may assist an independent CPA in obtaining an understanding of internal control, performing substantive tests and ___________

A

performing tests of controls

346
Q

If a specialist’s findings makes an independent auditor modify its opinion, then the auditor of a nonissuer may____________

A

refer to the specialist in the auditor’s report

347
Q

The extent of involvement of a client’s internal auditors happens in the _______ stage of an audit

A

planning

348
Q

The indpt auditor may NOT share the assessment of inherent or _____risk with the internal auditor

A

control

349
Q

TF: A change in the tolerable misstatement does NOT have an effect on the control risk

A

True

350
Q

TF: Fairness and accuracy is a financial statement assertion

A

FALSE

351
Q

What are the financial statement assertions?

A

valuation and allocation, rights and obligations, and understandability and classification

352
Q

Objectivity is reflected by the organizational level to which an internal auditor reports as well as policies ___________

A

that prohibit the areas of audit

353
Q

Inherent, control, and ______ risk may be assessed in non-quantitative terms

A

detection

354
Q

Increasing the ___________ results when there is a decrease in detection risk

A

tests of details

355
Q

Control risk should assessed in terms of _____________

A

financial statement assertions

356
Q

As detection risk increases, the level of assurance provided by ______________ can decrease

A

substantive tests

357
Q

Tests of details is associated with ______ risk

A

detection

358
Q

Factual misstatements refer to:

A

misstatements about which there is no doubt

359
Q

Analytical procedures performed during planning often use data aggregated at a _______ level

A

high

360
Q

TF: The auditor provides no assurance that indirect effects of noncompliance will be detected

A

True

361
Q

A requirement during planning is to perform _______________

A

analytical procedures

362
Q

Observation and ______ are used to evaluate the design of controls

A

inspection

363
Q

Human resource procedures and policies is included in the ______________________________ element of an entity’s internal control

A

control environment

364
Q

In obtaining an understanding of internal controls, an auditor is required to obtain knowledge about the ______________

A

design of controls AND whether they have been implemented

365
Q

TF: As part of audit planning, an understanding of internal control is relevant to the financial reporting objective

A

True

366
Q

Valid and relevant are factors of:

A

sufficiency

367
Q

Sufficiency is impacted by quality and ________

A

risk of material misstatement

368
Q

TF: Evidence must relate to the financial statement assertions

A

True

369
Q

Analytical procedures used in the final review stage is to help ___________

A

see if ending balances are reasonable

370
Q

Analytical procedures should be used on ______accounts

A

predictable

371
Q

Positive confirmation:

A

demand for a response

372
Q

Negative confirmation:

A

response by third party if he/she disagrees

373
Q

FIVE CARROT CARS

A

Footing,crossfooting and recalculation; inquiry (internal and external); vouching (directional testing for support for what’s reported in RECORDS - existence or occurence); examination or inspection (existence assertion); confirmation; analytical procedures; reperformance; reconciliation; observation; cutoff review; auditing related accounts simultaneously; ; representation letter; subsequent events review

374
Q

Assertions: CoVERU

A

complete; valuation; rights and obligations; existence

375
Q

Asset balances test the ______ assertion

A

existence

376
Q

Liability balances test the ______ assertion

A

completeness

377
Q

The biggest audit concern is:

A

overstatement

378
Q

Segregation of duties: ARC

A

authority, recordkeeping, and custody

379
Q

Auditor can prepare __________ to support lower control risk

A

aging schedule

380
Q

Lockboxes are ideal safeguards for _____

A

cash

381
Q

If NO cashier, _____ makes deposit

A

treasurer

382
Q

TF: An auditor is NOT required to obtain information about the operating effectiveness of internal controls

A

TRUE

383
Q

TF: Substantive testing can be entirely eliminated for significant transaction classes

A

FALSE

384
Q

TF: Analytical procedures and risk assessment procedures are always necessary in a financial statement audit

A

TRUE

385
Q

Analytical procedures are used on ________ accounts, which are more predictable

A

income statement

386
Q

Positive confirmations is used when there are: large amounts, expect errors/disputes, and when there’s ____________

A

weak IC

387
Q

Confirmations provide evidence about rights and obligations and________

A

existence; may provide a little info on valuation

388
Q

TF: If there’s no response for a confirmation, send out a second and third request

A

True

389
Q

With tracing, the biggest concern is an understatement of expenses and _______

A

liabilities

390
Q

Accounting department functions:

A

approve invoice, approve invoice for payment, and record payment after TREASURER pays

391
Q

Payments after year end from a customer will help you find an unrecorded ______

A

liability

392
Q

Lapping:

A

use today’s receipts to cover yesterday’s fraud

393
Q

Analytical procedures are required during the ______ and _______

A

planning; final review

394
Q

Ensuring that credit approval is obtained before goods are shipped supports the ________ assertion

A

allocation and valuation

395
Q

_______ confirmations are used when the combined assessed level of inherent and control risk is low

A

negative

396
Q

NO letter of inquiry of legal counsel would result in a ________ opinion

A

disclaimer of

397
Q

TF: An attorney would NOT make an evaluation about a client’s ability to continue as a going concern

A

True

398
Q

In auditing contingent liabilities, an auditor would want to ______________

A

review the minutes of meetings of stockholders

399
Q

Inventory turnover: COGS/

A

average inventory

400
Q

Average number of days sales in inventory is:

A

365/inventory turnover

401
Q

A company’s liquidity is assessed by the ___________

A

balance sheet

402
Q

Acid test ratio: cash + __________+ accounts receivables/current liabilities

A

marketable securities

403
Q

Total asset turnover:

A

Net sales/ average total assets

404
Q

Accounts payable:

A

purchases/average accounts payable

405
Q

Net profit margin:

A

net income/net sales

406
Q

Return on total assets:

A

net income/average total assets

407
Q

Return on assets (alternate):

A

net income/net sales * net sales/average total assets

408
Q

Return on investment:

A

net income+interest expense (1-tax rate)/average (LT liab. + equity)

409
Q

Return on common equity:

A

net income- preferred dividends/average common equity

410
Q

Book value per share:

A

total SE-preferred stock/ number of common shares outstanding

411
Q

Out of A.R.C, sales order and credit and the treasurer are _________

A

authorization ( the “a” in ARC)

412
Q

Out of A.R.C., billing/AR/accounting are _________

A

recordkeeping (the “r” in ARC)

413
Q

Out of A.R.C., warehouse and shipping are ______

A

custody (the “c” in ARC)

414
Q

When there is a higher risk of incorrect acceptance, the sample size________

A

decreases

415
Q

The variables sampling application is affected by the variability in the population, the acceptable level of risk, the tolerable misstatement, and ________

A

the expected misstatement

416
Q

Attribute sampling is used to __________

A

test controls

417
Q

The risk of acceptance and the likelihood assessing control risk too low affects the _____________ of the audit

A

effectiveness

418
Q

An increase in tolerable misstatement results in a _________ sample size

A

smaller

419
Q

________ sampling is normally used to estimate a numerical measurement of a population

A

variable

420
Q

Upper deviation rate: sample deviation rate+ _________

A

allowance for sampling risk

421
Q

Probability proportional to size sampling is designed to estimate ____________

A

overstatement errors

422
Q

When planning an auditor’s sample for a test of control, an auditor should take into account the allowable risk of ____________

A

assessing control risk too low

423
Q

The _______deviate rate is compared to the _______ deviation rate when making decisions about reliance on controls

A

upper; tolerable

424
Q

Examples of nonsampling risk include failure to recognize misstatements in documents examined, using inappropriate audit evidence and ____________________________

A

selecting inappropriate audit procedures

425
Q

TF: Objectivity applies to attestation services only

A

FALSE; independence applies to attestation only; objectivity applies to ALL

426
Q

TF: Any direct material interest impairs independence regardless of materiality

A

True

427
Q

A passbook loan and a credit card balance under $10K __________ impair independence

A

does NOT

428
Q

Impairment of independence if a client is more than _______ year(s) overdue in the payment of professional fees

A

one

429
Q

SOAP:

A

Summary of adjustments past

430
Q

TF: A direct financial interest in a client impairs independence regardless of materiality

A

True

431
Q

The lead and concurring partners are subject to a ____ year time out while other partners are subject to ____ years

A

5;2

432
Q

TF: Under IFAC, internal audit outsourcing services are allowed but are not allowed under U.S ethics standards

A

True

433
Q

TF: Contingent fees are not allowed when representing a client in an examination before the IRS

A

FALSE; are allowed; contingent fees are NOT allowed when preparing a tax return

434
Q

TF: Independence is required for the preparation of a tax return

A

FALSE

435
Q

Contingent fees are permitted when they involve a _____________ or ruling

A

legal proceeding

436
Q

______ include the procedures that are applied and the conclusions reached in an audit engagement

A

working papers

437
Q

TF: During a test data approach, all valid and invalid conditions must be tested

A

FALSE

438
Q

__________ is when the auditor reprocesses the client’s data using the auditor’s own software

A

Parallel simulation

439
Q

_________ uses test data commingled with actual data to test transactions

A

integrated test facility

440
Q

Only a __________ would result in an unmodified paragraph with an emphasis of matter paragraph included

A

justified change in accounting principle

441
Q

TF: When there’s a material departure for GAAP in order to avoid the financial statements from being misleading, an emphasis of matter paragraph is included

A

True

442
Q

The fundamental principles of professional ethics: integrity, objectivity, professional competence and due care and _________

A

professional behavior

443
Q

TF: A purchase order is an external piece of evidence

A

FALSE; internal

444
Q

The organizational status of an internal auditor assesses the internal auditor’s________

A

objectivity

445
Q

If population variability increases, the sample size______

A

increases

446
Q

Comparing deviation rates to tolerable rates helps an auditor determine whether or not to __________

A

rely on a control

447
Q

If there’s a material weakness in the operating effectiveness of internal controls then a(n) _____ opinion is issued

A

adverse

448
Q

______ sampling examines the rate of occurrence

A

attribute

449
Q

TF: In Government Auditing Standards, the scope of the auditor’s testing of internal controls is required to be included in the auditor’s report on internal controls

A

True

450
Q

TF: Negative assurance is expressed on supplementary information

A

False

451
Q

TF: To obtain reasonable assurance, an auditor should plan the work and properly supervise assistants

A

True

452
Q

TF: An understanding of internal control is required in a review

A

FALSE; NOT required

453
Q

To detect kiting, the receipt per bank is recorded _______ the disbursement date per bank

A

BEFORE

454
Q

When the combined level of control and inherent risk is low, ______ confirmations are used

A

positive

455
Q

When there’s a large number of SMALL BALANCES, ________ confirmation is used

A

negative

CPA - BEC, FAR, REG, AUD (8 decks)

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