Audit

Question 1

What are the 5 threats to independence

Answer 1

1. Self-Review Threat
2. Familiarity Threat
3. Advocacy Threat
4. Self-Interest Threat
5. Intimidation Threat

Question 2

What are the 6 assertions for balance sheet acounts

Answer 2

1. Existence
2. Completeness
3. Accuracy, valuation, and allocation
4. Rights and obligation
5. Classification
6. Presentation

Question 3

What are the 6 assertions for Income Statement accounts

Answer 3

1. Occurrence
2. Completeness
3. Accuracy
4. Cutoff
5. Classification
6. Presentation

Question 4

What needs to be included in Key Audit Matters (KAM)

Answer 4

• Matters that required significant auditor attention
• Rationale for why each matter was considered KAM
• For some situations, why some matters were left out of KAM

Question 5

What is Emphasis of Matter paragraph (EOM)

Answer 5

Highlights matters within financial statements that users need to be aware of

Reasons to include:
- significant subsequent event
- early application of new accounting standard
- Major catastrophe that has occurred

Question 6

What is Other Matters paragrah

Answer 6

Highlights matters that aren’t included in disclosures that are deemed relevant

Can include:
- auditor is unable to withdraw from audit despite limitations of scope
- auditor has issued another report on another set of financial statements

Question 7

What is Other Information (OI)

Answer 7

other information included in financial report (client side)

Auditor must check:
- if material inconsistency between OI and FS
- if material inconsistency between OI and auditor’s knowledge obtained in audit

Question 8

What are the characteristics of a Review Engagement

Answer 8

• does not provide audit opinion
• does provide limited assurance
• primarily obtains evidence through inquiry and analytics vs. substantive testing and test of controls

Question 9

What are the characteristics of a Compilation Engagement

Answer 9

• auditor provides assistance with preparing FS
• no opinion or assurance is provided