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AUD > AUD IIII Blake CPA > Flashcards

AUD IIII Blake CPA Flashcards

1
Q

Compilation report

A

Auditor does not need to be independent

Read F/S for obvious material misstatements

No assurance

May be used to obtain credit

MGT Rep letter not required

report states: accountant does not express an opinion, conclusion, or provide and form of assurance on F/S

Compiled F/S should be attached to the compilation report stating compilation was conducted in accordance with SSARS

Date on compilation report should be the date of completion of the compilation

No title

Lack of independence is stated in last paragraph of report

Disclaims an opinion (no opinion expressed)

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2
Q

Review Report

A

Analytics and Inquiry

Need Representation letter

Limited assurance

Engagement letter

In accordance with SSARS

No consideration of IC

Independence required

No opinion is expressed

No risk of fraud assessment

Report attached to review stating that reviews are substantially less in scope than audit

See Independent Accountant’s report on each page

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3
Q

Audit procedures: Test of details

A

Substantive procedures:
Inspection, observation, confirmation

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4
Q

Interim review

A

WHERE THE ANNUAL FINANCIALS ARE AUDITED FALL UNDER SAS OR PCAOB requirements of a nonissuer or issuer this would require an understanding of internal control

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5
Q

CORROBORATE

A

CONFIRM OR GIVE SUPPORT

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6
Q

When is ratio analysis used?

A

often used to examine relationships btw B.S. accounts

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7
Q

Trend analysis

A

best for examining Income statement accounts

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8
Q

Risk Analysis

A

evaluate relationships btw B.S. accounts

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9
Q

Statements on Auditing standards

PCAOB standards

A

Non-issuers for SARS

PCAOB for public firms

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10
Q

Existence & occurrence procedures: COV

A
  1. Confirmation of account with third parties
  2. Observation, inspection, and examination: of assets, processes and procedures. (persuasive forms of evidence)
  3. Vouching: of transactions from F/S to Supporting documents
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11
Q

Completeness procedures: TAO

A
  1. Tracing: source documents to accounting records to F/S
  2. Analytical review: Figure out how certain items might not be included in the account balance. Ex: unrecorded liabilities or omissions of pledged assets
  3. Observation: of processes and procedures

Cutoff procedures

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12
Q

Rights & Obligations procedures

A

Inspection of documentation supporting transactions, inspection of contracts Ect. (loan agreements) - better evidence

Positive Confirmations

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13
Q

Valuation procedures

A

NRV = Gross A/R - AFDA
1. Inspection of documentation supporting transactions
2. Footing and cross-footing schedules
3. INDEPENT RECALCULATION: ex: Aging of A/R to agree value & recalculation of Depreciation. ESTIMATES***
4. Reconciliation of supporting schedules to G/L items

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14
Q

uNDERSTANDABILITY of Presentation & Classification Procedures

A
  1. Inspection: of documentation supporting transactions
  2. Review of all related disclosures for compliance with GAAP
  3. Inquire of MGT regarding disclosures for the account and for related accounts
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15
Q

Trade A/R

A

Sales to customers

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16
Q

Non-Trade receivables

A

Related party: advances to officers, employees & subsidiaries - must be separated from Tade A/R

17
Q

Inventory Turn over ratio

A

COGS/Average inventory-

Decrease compared to last year means inventory was slower moving do to product obsolescence, would make auditor to further inspect inventory

valuation assertion

18
Q

Examination reports provide what type of Assurance?

What falls under

A

Positive Assurance (Opinion)

19
Q

Prospective (Attestation) F/S in accordance with Statements on Standards for Attestation Engagements include?

A

Accountant ensures that the CLIENT discloses ALL Sig ASSUMPTIONS that are used for the Prospective Statements

-Historical F/S not REQUIRED

20
Q

AUP Engagements

What is included in the AUP Report?

A

Must be independent

NO ASSURANCE - Disclaimer of Opinion

Be in the Form or PROCEDURES & FINDINGS

Engaging party takes responsibility accepting the adequacy of procedures for their purposes

May/may not be restricted - Depends

Practitioner AND Engaging party define criteria used to determine findings

Include ALL findings in the AUP Report

Provides NO Conclusion

21
Q

Examination Engagement - Prospective Statements - Assumptions do not provide a reasonable basis for prospective F/S what type of Opinion is expressed?

A

Adverse Opinion

22
Q

Attestation Engagements (SSAE)

A

Examination, Review or Agreed-Upon procedures on Subject Matter

May result in reported related to Compliance with Laws & Regulations

23
Q

When a previously reported internal control weakness has been subsequently eliminated and management engages an auditor to attest to their improvement, what is the objective of the auditor?

A

Expresses and opinion on whether the weakness has been eliminated

Auditor must obtain design AND operating effectiveness of Identified Control

24
Q

If Auditor is engaged to issue a report on client’s Compliance with contractual agreements or regulatory requirements in connection with F/S audit what is true?

A

Auditor must have issued a Qualified or Unmodified opinion - and may only issue NEGATIVE assurance on compliance

25
Q

Government Auditing Standards report on Audit of F/S should describe:

Material instances of noncompliance identified, what type of opinions may be expressed?

A

Scope of auditors testing of compliance with laws and regulations and I.C. over Financial reporting AND Present the RESULTS OF THOSE TESTS

Negative Assurance

Written report on the auditors understanding on internal control in ALL Audits

Qualified or Adverse Opinion on Compliance

Reasonable Assurance is provided on the compliance requirements of the MAJOR PROGRAMS

26
Q

Single Audit Act - GAGAS AUDIT

Reports on compliance with laws, rules and regulation

A

Combined audit of Entity’s F/S & Federal Assistance Programs

Materiality is determined Separately for each Major Federal Financial Assistance Program

Materiality is determined BEFORE RISK IS ASSESSED

Not ALL BALANCES must be tested

GAGAS - Materiality levels lower due to PUBLIC ACCOUNTABILITY of entity, legal requirements

27
Q

Two types of Service Auditor Reports for Service Organizations:

Type I

Type II

A

Type 1: Reports on design and implementation of controls at a Service organization (Does not provide auditor with basis for reducing Assessment of CR) - Disclaimer of Opinion

Type 2: Reports on design, implementation, and operating effectiveness of controls

28
Q

SSAES EXCLUDE SSARS SERVICES - Examples:

A

Review of a nonpublic company’s financial statements under SSARS - not subject to Attestation standards

29
Q

Single Audit Recommended Reporting - Where are the opinions?

A

Follow GAAS & Single Audit Act

F/S have OPINION

Report on I.C. over Financial reporting & Non-compliance with provisions, laws and regulations NO OPINION

Report on Compliance of Each major program has an opinion

ADDITIONAL REPORTS:

Compliance over Major Programs - Opinion

Report on I.C. over compliance - No opinion

Schedule of Findings costs

30
Q

When is an Emphasis of matter paragraph used?

A

Refers to an event or matter that is appropriately presented or disclosed in the F/S and is So important that it is fundamental so the users of the F/S can fully understand the presentation.

No effect on Opinion

31
Q

What kind of audit evidence does an auditor need to obtain?

A

Sufficient appropriate evidence

AUD (6 decks)

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