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Auditing > AUD1 > Flashcards

AUD1 Flashcards

1
Q

a consulting service in which a CPA expresses a conclusion about the reliability of a written statement that is the responsibility of someone else

A

What is an attestation service?

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2
Q

Overview of the Financial Statement Audit Process

A
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2
Q

At the completion of the audit work, the auditor determined if the preliminary assessements of risks were appropriate in light of the evidence collected and whether sufficient evidence was obtained.

A

What does EVALUATE RESULTS and ISSUE AUDIT REPORT mean?

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3
Q

Unqualified means that, because the financial statements are free of material misstatements, the auditor does not find it necessary to qualify his or her opinion about the fairness of the financial statements.

A

What does UNQUALIFIED/UNMODIFIED report mean?

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4
Q

In this phase, the auditor also assesses the possibility of contigent liabilities, such as lawsuits, and searches for any events subsequent to the balance sheet date that may impact the financial statements.

A

What does COMPLETE THE AUDIT mean?

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5
Q

What are the PRELIMINARY ENGAGEMENT ACTIVITIES?

A
  1. Determining the audit engagement team requirements
  2. Ensuring the independence of the audit team and audit team.
  3. Establish and understanding with the client regarding the services to be performed and the other terms of the engagement.
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5
Q

What does EVALUATE RESULTS and ISSUE AUDIT REPORT mean?

A

At the completion of the audit work, the auditor determined if the preliminary assessements of risks were appropriate in light of the evidence collected and whether sufficient evidence was obtained.

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7
Q

What does PLANNING THE AUDIT mean?

A

Proper planning is important to ensure that the audit is conducted in an effective and efficient manner.

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8
Q

An Audit Risk is the risk that the auditor expresses an inappropriate audit opinion when the financail statements are materially misstated.

A

What is an Audit Risk?

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9
Q

A systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and communicating the results to interested users.

A

What does Auditing mean?

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9
Q
  1. Client acceptance/continuance
  2. Preliminary engagement activities
  3. Plan the audit
  4. Consider and audit internal control
  5. Audit business processes and related account (e.g. revenue generation)
  6. Complete the audit
  7. Evaluate results and issue audit report
A

What are the Major Phases of the Audit?

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10
Q

Internal control is designed and effected by an entity’s board of directors, management, and the other personnel to provide reasonable assurance regarding the achievement of objectives in the following categories.

  1. realibility of financial reporting
  2. effectiveness and efficiency of operations
  3. compliance with applicable laws and regulations
A

What does “consider and audit control mean?”

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11
Q

On preliminary engagement activities, what should the auditor include about the companies’ entity and environment?

A
  1. Nature of the entity
  2. Industry, regulatory, and the other external factors
  3. Objectives and strategies and related business risks.
  4. Entity performance measures.
  5. Internal control.
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13
Q

What is an attestation service?

A

Attestation service is a consulting service in which a CPA expresses a conclusion about the reliability of a written statement that is the responsibility of someone else

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14
Q

Qualify report mean that explaining that the financial statements are fairly stated except for the misstatement identified by the auditor.

A

What does QUALIFY REPORT mean?

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15
Q

What are assurance services?

A

Assurance Services are Independent professional services that improve the quality of information, or its context, for decision makers.

15
Q

What is an Audit Risk?

A

An Audit Risk is the risk that the auditor expresses an inappropriate audit opinion when the financial statements are materially misstated.

15
Q

Auditors usually organize audits by grouping affected by a company’s sales and collection process, and are audited together.

A

What does audit business processes and related accounts?

16
Q

Assurance Services are Independent professional services that improve the quality of information, or its context, for decision makers.

A

What are assurance services?

17
Q

Materiality is the magnetude of an omission or misstatement of accounting information that, in the light of surrounding circumstances, makes it probable that the judgement of a reasonable person relying on the information would have been changed or influence by the omission or misstatement.

A

What is materiality?

19
Q

What does Auditing mean?

A

Auditing is a systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and communicating the results to interested users.

20
Q

What is an attest service?

A

It occurs when a practitioner is engaged to issue … a report on subject matter, or an assertion about subject matter, that is the resposibility of another party.

20
Q
  1. Determining the audit engagement team requirements
  2. Ensuring the independence of the audit team and audit team.
  3. Establish and understanding with the client regarding the services to be performed and the other terms of the engagement.
A

What are the PRELIMINARY ENGAGEMENT ACTIVITIES?

20
Q

Proper planning is important to ensure that the audit is conducted in an effective and efficient manner.

A

What does PLANNING THE AUDIT mean?

21
Q
A

Overview of the Financial Statement Audit Process

23
Q

What does COMPLETE THE AUDIT mean?

A

In this phase, the auditor also assesses the possibility of contigent liabilities, such as lawsuits, and searches for any events subsequent to the balance sheet date that may impact the financial statements.

24
Q

Professional standards require that public accounting firms establish policies and procedures for deciding whether to accept new clients and to retain current clients.

A

What is Client Acceptance/Continuance?

26
Q

What is an ADVERSE REPORT?

A

If the misstatement is considered so material that it pervasively affects the interpretation of the financial statements are NOT fairly stated and should not be relied upon.

27
Q

If the misstatement is considered so material that it pervasively affects the interpretation of the financial statements are NOT fairly stated and should not be relied upon.

A

What is an ADVERSE REPORT?

28
Q

What does QUALIFY REPORT mean?

A

Qualify report mean that explaining that the financial statements are fairly stated except for the misstatement identified by the auditor.

29
Q

What does audit business processes and related accounts?

A

Auditors usually organize audits by grouping affected by a company’s sales and collection process, and are audited together.

31
Q

What is materiality?

A

Materiality is the magnetude of an omission or misstatement of accounting information that, in the light of surrounding circumstances, makes it probable that the judgement of a reasonable person relying on the information would have been changed or influence by the omission or misstatement.

32
Q

It occurs when a practitioner is engaged to issue … a report on subject matter, or an assertion about subject matter, that is the resposibility of another party.

A

What is an attest service?

33
Q

What does “consider and audit control mean?”

A

Internal control is designed and effected by an entity’s board of directors, management, and the other personnel to provide reasonable assurance regarding the achievement of objectives in the following categories.

  1. realibility of financial reporting
  2. effectiveness and efficiency of operations
  3. compliance with applicable laws and regulations
35
Q

What does UNQUALIFIED/UNMODIFIED report mean?

A

Unqualified means that, because the financial statements are free of material misstatements, the auditor does not find it necessary to qualify his or her opinion about the fairness of the financial statements.

36
Q

What is Client Acceptance/Continuance?

A

Professional standards require that public accounting firms establish policies and procedures for deciding whether to accept new clients and to retain current clients.

37
Q

What are the Major Phases of the Audit?

A
  1. Client acceptance/continuance
  2. Preliminary engagement activities
  3. Plan the audit
  4. Consider and audit internal control
  5. Audit business processes and related account (e.g. revenue generation)
  6. Complete the audit
  7. Evaluate results and issue audit report
38
Q
  1. Nature of the entity
  2. Industry, regulatory, and the other external factors
  3. Objectives and strategies and related business risks.
  4. Entity performance measures.
  5. Internal control.
A

On preliminary engagement activitiess, what should the auditor include about the companies’ entity and environment?

39
Q
A

Auditing (3 decks)

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