Audit 101

Question 1

consulting services engagement

Answer 1

No In witting, just have objective and integrity not independent required

Question 2

A.Service Organization

B.Type Report 1:

C.Type Report 2

Answer 2

A,an organization or segment of an organization that provides services to user entities that are relevant to those user entities’ internal control over financial reporting

B.a report on management’s description of a service organization’s system and the suitability of the design of controls

C management’s description of a service organization’s system and the suitability of the design and operating effectiveness of controls

Question 3

The objective of a review of interim financial information

Answer 3

to provide the CPA with a basis for reporting whether material modifications

Question 4

Inventory Audit Asertion

Answer 4

A.inventories are properly stated at cost (except when market is lower),
B.slow-moving, excess, defective, and obsolete items included in inventories are properly identified, and
C.inventories are reduced, when appropriate, to replacement cost or net realizable value

Question 5

Prior to seeking approval of nonaudit services related to internal control from the audit committee, a registered public accounting firm must do all of the following

Answer 5

A.describe in writing, to the audit committee, the scope of service.

B.discuss with the audit committee the potential effects of the services on independence of the firm.

C.document the substance of the discussion with the audit committee.

Question 6

An accountant’s report on a review of pro forma financial information should

Answer 6

reference to the financial statements from which the historical financial information is derived.

Question 7

When considering the risk of material misstatements due to fraud

Answer 7

The type of risk that may exist; that is, whether it involves fraudulent financial reporting or misappropriation of assets
The significance of the risk; that is, whether it is of a magnitude that could lead to result in a possible material misstatement of the financial statements
The likelihood(probabilidad)of the risk; that is, the likelihood that it will result in a material misstatement in the financial statements
The pervasiveness of the risk; that is, whether the potential risk is pervasive to the financial statements as a whole or specifically related to a particular assertion, account, or class of transactions

Question 8

When a party such as a broker-dealer or other financial intermediary, other than an underwriter or other party with a due diligence defense under section 11 of the Securities Act of 1933, requests a comfort letter but does not provide the required representation letter

Answer 8

accountants should not provide a comfort letter but may provide another form of letter.

Question 9

procedures ordinarily should be applied when an independent accountant conducts a review of interim financial information of a nonissuer?

Answer 9

Read the minutes of the board of directors’ meeting

Question 10

Attestation risk

Answer 10

as the risk that the practitioner may unknowingly fail to modify appropriately the opinion. It is composed of inherent risk, control risk, and detection risk

Question 11

NonCompliance tradución

Answer 11

incumplimiento

Question 12

T or F

understanding of internal controls uses analitical procedures?

Answer 12

Falses

Question 13

What required in review of interim financial information

Answer 13

Mental actitude not opinion, not observation, and consistently

Question 14

The written communication regarding significant deficiencies and material weaknesses identified during the audit of financial statements should:

Answer 14

include a statement that indicates the purpose of the auditor’s consideration of internal control was to express an opinion on the financial statements, but not to express an opinion on the effectiveness of the entity’s internal control over financial reporting.
include a statement that indicates the auditor is not expressing an opinion on the effectiveness of internal control.
include a statement that indicates that the auditor’s consideration of internal control was not designed to identify all deficiencies in internal control that might be significant deficiencies or material weaknesses.
include the definition of the term material weakness and, where relevant, the definition of the term significant deficiency.
identify the matters that are considered to be significant deficiencies and, if applicable, those that are considered to be material weaknesses.
include a statement that indicates the communication is intended solely for the information and use of management, those charged with governance, and others within the organization and is not intended to be and should not be used by anyone other than these specified parties. If an entity is required to furnish(anadir) such auditor communications to a governmental authority, specific reference to such governmental authorities may be made.

Question 15

documents the procedures that are applied and the conclusions reached in an audit engagement

Answer 15

Working Paper

Question 16

T or F
A.Information obtained indirectly from outside sources is the most reliable audit evidence.
B.To be reliable, audit evidence should be convincing rather than persuasive
C.Effective internal control provides more assurance about the reliability of audit evidence.

Answer 16

A. F directly
B. F persuasive
C. True

Question 17

A review in Quality Control may include consideration of whether, for example:

Answer 17

A.the work has been performed in accordance with professional standards and applicable regulatory and legal requirements,
B.significant findings and issues have been raised for further consideration,
C.appropriate consultations have taken place and the resulting conclusions have been documented and implemented,
D.the nature, timing, and extent of work performed is appropriate and without need for revision,
E.the work performed supports the conclusions reached and is appropriately documented,
F.the evidence obtained is sufficient and appropriate to support the report, and
the objectives of the engagement procedures have been achieved.

Question 18

primary objective of the fraud brainstorming

Answer 18

assess the potential for material misstatement due to fraud

Question 19

R and O ( Inventory )

Answer 19

Inspect agreements to determine whether any inventory is pledged as collateral or subject to any liens.(conexiones)

Question 20

Agreed Upon Procedures

Answer 20

An accountant may accept an engagement that is less than the scope of an audit but may apply limited procedures to specified elements, accounts, or items of a financial statement. These procedures may be identified prior to application.
The Report Should Include A statement referring to standards established by the AICPA