AUD - GAAS

Question 1

What are Statements on Auditing Standards?

Answer 1

Interpretations of GAAS

Question 2

“Unconditional requirements” are identified in AICPA professional standards with the word…

Answer 2

“must”

Question 3

“Explanatory material” in AICPA professional standards referse to what?

Answer 3

Descriptive guidance that does not impose a professional requirement

Question 4

How many reporting standards are associated with GAAS?

Answer 4

Four

Question 5

What does the first standard of reporting require?

Answer 5

The auditor state explicitly in the audit report whether (or not) the financial statements conform to GAAP.

Question 6

What are the 2 categories of professional requirements are identified by AICPA professional standards?

Answer 6

1. unconditional requirements
2. presumptively mandatory requirements

Question 7

The general standards of GAAS are considered personal in nature.

Answer 7

True - because they deal with characteristics associated with the auditor.

Question 8

What are the general standards of GAAS?

Answer 8

Training - adequate technical training & proficiency to perform audit

Independence - maintain independence in mental attitude in all matters

Due professional care - practice due professional care in performance of audit & preparation of the report

Question 9

Sufficient evidence refers to…

Answer 9

the quantity of evidence necessary to support the auditor’s opinion as to the fairness of financial statements

Question 10

Statements on Audititng Standards (SAS)

Answer 10

Official interpretations of GAAS

Question 11

The second standard of reporting states

Answer 11

The auditor’s report should indicate when accounting principles have not been applied consistently in relation to the prior period.

Question 12

The standards of reporting that have “implicit” effects on the auditor’s report

Answer 12

Consistency & Disclosure - no mention of consistency & disclosure is required if accounting principles have been applied consistently & if disclosure is adequate.

Question 13

The standards of reporting of GAAS govern…

Answer 13

the language that the auditor should use in communicating to users the results of auditing procedures

Question 14

The second fieldwork standard requires the auditor to…

Answer 14

consider the implications of internal control primarily to assess the risk of material misstatement of the entity’s financial statements and to determine the nature, timing, and extent of auditing procedures to be performed.

Question 15

List the three fieldwork standards for GAAS

Answer 15

(PIE)

1. Planning & Supervision
2. Internal control
3. Evidence

Question 16

What are Statements on Auditing Standards?

Answer 16

Pronouncements issued by the Auditing Standards Board of the AICPA that serve as interpretations of GAAS

Question 17

List the four reporting standards for GAAS

Answer 17

1. GAAP (explicit)
2. Consistency (implicit)
3. Disclosure (implicit)
4. Opinion (explicit)

Question 18

List the three general standards for GAAS

Answer 18

(TID)

1. Training
2. Independence
3. Due Professional Care

Question 19

What does the third Standard of Fieldwork under GAAS require?

Answer 19

The auditor to obtain “sufficient appropriate audit evidence”

Question 20

The exercise of due professional care requires…

Answer 20

a critical review of the work performed and the judgments made be performed at every level of supervision.

Question 21

The Field Work Standards address…

Answer 21

How the audit is to be conducted & include planning, supervision, evidence, and understanding of the entity and its environment.

Question 22

When is the auditor required by GAAS to exercise due care?

Answer 22

In performance of the audit and the preparation of the report

Question 23

Due care encompasses

Answer 23

1. the employment of reasonable care & dilligence
2. critical review at every level of supervision of the work done
3. critical review of the judgment exercised by those assisting in the audit

Question 24

Exercising due care is defined as

Answer 24

requiring “critical review” of the work performed and the audit judgments made at every level of supervision.

Question 25

An independent auditor must have

Answer 25

technical training that is adequate to meet the requirements of a professional