AUD V Blake CPA Flashcards
SOX TITLE II Auditor Independence
SOX TITLE I -
PCAOB Audit Documentation
SEC - Other Audit Partners
Rotate every 5 years of engagement (Lead Partner/Concurring)
PCAOB Public Audit Documentation - 7 years
Private (Audit Documentation)
- 5 years
SEC - Other partners rotate (7years)
SEC Lead partners qre subject to a “timeout period” before returning to engagement
Non-Audit service - How many hour to warrant attention
Cool Off period - before accountant is hired by firm audited
How many audits a firm must do in order to qualify for PCAOB Annual inspection?
5 years
Atleast 10 hours - Become a covered person
1 year cool off period before being able to become CFO
100 Audits a year
Independence auditor cannot have a total amount outstanding from consumer loans equal to what?
AICPA code of conduct, attest services to public must be what % majority owned?
Assembly for Final audit documentation following report release date for Issuers & non-issuers
$10,000 - Considered impaired if at or greater than this amount
50%
Issuers: 45 days - maintain documents 7 years
Non-issuers: 65 days - maintain documents 5 years
Due care
requires that firm & members of engagement team observe the profession’s technical & ethical standards
Principle of Objectivity
obligation to be impartial, intellectually honest & free of conflicts of interest
Is an Administrative staff considered a covered member?
Not A Key Position
Must not work on Engagement - clerical work okay
No can accept engagement with out violating independence & objectivity
No need to disclose information in attestation
Can you use name of founding partner passes away?
Yes, as long as founding partner and all partners are CPA’s
What is an Act’s discreditable?
Non giving back client documents when requested
Is departure from GAAP okay if it helps the F/S from being misleading to outside users?
Yes, as long as there is justification, reason and proof and not intended to MISLEAD
SSAR’s Engagements
Preparation (No Assurance, Non-Attest)
Compilation (No Assurance, Attest)
Review (Limited Assurance, Attest)
SSAR’s - Preparation of F/S
NO ASSURANCE - NON ATTEST
Engagement Letter - Establish understanding with client
Knowledge of Accounting principles
Understand clients business
Read the F/S
Evaluate Document Results
NO REPORT
SSAR’S - Compilation
NO ASSURANCE & ATTEST
Engagement Letter - Establish understanding with client
Knowledge of Accounting principles
Understand clients business
Read the F/S
Evaluate Document Results
CREATE REPORT
SSAR’S – Review
Everything done in Recuperation & Compilation AND:
LIMITED/NEGATIVE ASSURANCE – ATTEST Engagement
Engagement Letter
Inquiry
Analytical Procedures
CLIENT Representation letter
AUDIT
REASONABLE ASSURANCE - ATTEST
Everything done in preparation, compilation & Review &:
Contact Prior Auditor
Draft Audit Plan
Assess ROMM (Due to Fraud & Error)
Inquiries (OUTSIDE ORGANIZATION/3rd parties)
Understand Internal Controls (Test, If reporting/relying on operating effectiveness of controls)
Or entity used IT tech extensively
Substantive Procedures
Inconsequential findings
Less than immaterial - NO ONE needs to be notified even if related to non compliance with laws and regulations
GAGAS ethics principles:
Public interest - auditors services should be designed to meet the needs of the collective well-being of the community of people and entities served
Integrity - work that is done with an objective, fact based, nonpartisan, non-ideological
Professional behavior - auditors honest effort in performance of professional services with relevant technical and professional standards
Can External auditors rely on the professional judgement of internal auditors, even for routine procedures?
No, Internal auditors cannot make any type of judgement calls
All judgement calls are made the Independent (external) auditor
What kind of evidence is Corroborative evidence?
When is the reliability of audit evidence enhanced?
Related to sufficiency of evidence NOT reliability
When there is satisfactory Internal Control structure designed and operating effectively
Lower risk of incorrect acceptance requires what kind of sample size?
Larger Sample Size
Top Down Approach
Overall Risk @ F/S lvl
Considers Controls @ Entity lvl
Focuses on accounts, disclosures, & assertions that may have a REASONABLE POSSIBILITY of Material Misstatement
Qualified or Adverse Opinions
Qualified or Disclaimer of Opinion
GAAP Issues
Scope Limitation (GAAS issues)
When testing existence of Sales (overstatement) what is the best starting point?
Sales Journal to shipping documents
Include sales on account and in cash
How do auditor’s determine whether or not to use analytical procedures as Substantive tests?
on the precision and reliability of the data used to develop expectations
Availability, reliability, and precision used to develop expectations
How can automated internal controls be tested efficiently?
Inherently consistent
one sample that goes through automated control to ensure is operating as designed - ensure no overrides happen without proper approval - in order to consider it to be truly automated
