AUD 6 - Miscellaneous Flashcards
Threats to compliance. What is defined as the threat that a member will not act with objectivity b/c the member’s interest are opposed to the interests of the client?
Adverse interest threat
Adverse interest threat = lose _______
objectivity
Advocacy threat = compromise _______
standards
Familiarity threat = _______
sympathetic
Management participation threat = acting as _______
management
Self-interest threat = _______
benefits
What is defined as the threat that a member will promote the interests of the client or employing organization to the point that his or her objectivity or independence, as applicable, is compromised?
Advocacy threat
What is defined as the threat that, due to a long or close relationship w/ the client, a member will become too accepting of the product or service and too sympathetic to the client’s interests?
Familiarity threat
What is defined as the threat that a member will take on the role of client management or otherwise assume management responsibilities?
Management participation threat
What is defined as the threat that a member could benefit financially or otherwise from an interest in, or relationship with, a client, or persons associated with the client?
Self-interest threat
What is defined as the threat that a member will not appropriately evaluate the results of a previous judgment made, or service performed or supervised, by the member or an individual in the member’s firm, and that the member will rely on that service in forming a judgment as part of another service?
Self-review threat
Self-review threat = evaluate ___ _____
own work
What is defined as the threat that a member will subordinate his judgment to an individual associated w/ a client or any relevant third party due to that individual’s reputation or expertise, aggressive or dominant personality, or attempts to coerce or exercise excessive influence over the member?
Undue influence threat
Undue influence threat = subordinate _______
judgment
What is the first thing you do in the conceptual framework approach
Id threats to compliance w/ the fundamental principles
In the conceptual framework approach, what is the second step after identifying threats to compliance?
Evaluate significance of threat
In the conceptual framework approach, what is the final step?
Apply safeguards to eliminate threats or reduce threats to an acceptable level, whenever possible
Under the IFAC Code of Ethics for Professional Accountants, the engagement partner and the individual responsible for the engagement quality control review should be rotated off the audit engagement team for a public company after no more than how many years?
7 years
To exercise due professional care, a CPA must:
I. Posses the same degree of skill commonly possessed by others in the field
II. Critically review work done and judgment exercised by others assisting in the engagement
Both I and II
In computerized environments, what five functions should be kept separate (COPAL)?
Control group Operators Programmer Analyst Librarian
What does CAAT stand for?
Computer-assisted audit techniques
Are manual or computer assisted audit techniques more appropriate for simple batch systems with good audit trails?
Manual audit procedures (e.g. “auditing around the computer”)
What are two key risks with “auditing around the computer”?
- Insufficient paper-based evidence
- Insufficient audit procedures
What term describes the following:
Electronically marks a transaction and allows the auditor to follow it through the client’s system
Transaction tagging
