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CPA-AUD > AUDIT > Flashcards

AUDIT Flashcards

1
Q

4 assertions for account balances?

A
  1. Existence
  2. Completeness
  3. Rights and obligations
  4. Valuation and alloc.
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2
Q

4 assertions for presentation and disclosure?

A
  1. Occurrence and rights and obligations
  2. Completeness
  3. Classification and understandability
  4. Accuracy and valuation
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3
Q

Who is a covered member?

A
  1. Member of an attest team
  2. A person who can influence attest engagement
  3. All partners and partner equivalents which lead attest partner practices.
  4. Partner/partner equivalent who perform NAS of 10 hrs or more.
  5. The firm; inlcudings its benefit plan
  6. Entities controlled by 1-5
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4
Q

What is the standard control for completeness?

A

Controlling prenumbered forms.

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5
Q

What are financial projections?

A

Projections are “limited use” financial statements meant for the responsible party (generally management) and third parties with whom the responsible party is negotiating directly.

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6
Q

SOC 1 Report includes:

A

(Service organization control)A Type 1 report covers the service organization’s system and design of controls. A type 1 report will include a disclaimer of opinion about the operating effectiveness of the controls.

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7
Q

SOC 2 Report includes:

A

A Type 2 report covers the service organization’s system, design of controls, AND the operating effectiveness of controls (opinion).

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8
Q

What type of engagement provides:

  1. No assurance
  2. Limited assurance
  3. Reasonable assurance
A
  1. Preparation engagements and compilations.
  2. Reviews
  3. Audit of financial statements
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9
Q

How long do auditors store audit documentation for public companies?

A

7 years

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10
Q

If the financial statements are fairly stated in all material respects then what type of opinion does the auditor render?

A

Un-modified opinion for non-issuer or un-qualified for an issuer

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11
Q

Qualified opinion

A

Problem is material but not pervasive.

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12
Q

Adverse opinion

A

Material and pervasive problem. It effects the entire financial statements.

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13
Q

Disclaimer of opinion

A

Auditor is unable to obtain sufficient and appropriate evidence. The issue is both material and pervasive.

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14
Q

How often show a public accounting firm be inspected by the PCAOB?

A
  1. Every three years if auditors regularly issue 50 or more audit reports.
  2. Annually if auditor issues 100 or more reports for issuers.
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15
Q

Incorrect rejection relates to efficiency or effectiveness?

A

Efficiency.

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16
Q

If an auditor increases detection risk, then the audit can…

A

obtain less or weaker evidence.

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17
Q

When to include an emphasis of matter paragraph?

A

It is something crucial for the the f/s user to understand.

  1. Going concern
  2. Special accounting framework
  3. Change in accounting principle
18
Q

When to include an other matter paragraph?

A

Something that is relevant but not crucial for f/s users to understand.

19
Q

What is the top down approach?

A
  1. Begin at the financial statement level
  2. Focus on entity-level controls
  3. Focus on significant accounts and disclosures and their relevant assertions
20
Q

What is a significant deficiency?

A

A deficiency or combination of deficiencies in the design or operation of a control that doesn’t prevent, detect, or correct misstatements on a timely basis. This is less severe than a material weakness.

21
Q

Relationship between detection risk and substantive tests?

A

Inverse relationship; the lower the detection risk the more assurance needed from substantive tests.

22
Q

What type of assurance does a comfort letter provide?

A

Negative assurance

23
Q

What is performance materiality?

A

Materiality level for specific transactions or account

balances. It is less than the financial statement materiality level.

24
Q

A client imposed scope limitation is most likely to result in a ___ opinion from the auditor.

A

Disclaimer of opinion.

25
Q

Tracing a sample of inventory tags to the subsidiary ledger is performed to test the assertion ____?

A

Completeness

26
Q

A financial forecast is for limited use or general use.

A

General use.

27
Q

If you increase the tolerable misstatement then what would happen to sample size?

A

Decrease sample size

28
Q

If the assessed level of control risk increases then what happens to sample size?

A

Increases sample size.

29
Q

Quantities and error rate refer to….

A

Variables and attributes sampling

30
Q

Discovery sampling may be considered a special case of…

A

Sampling for attributes

31
Q

When an auditor qualifies an opinion because of inadequate disclosure, the auditor should modify what report sections?

A

Modify the auditors responsibility paragraph and opinion paragraph.

32
Q

For audits of public companies, audit documentation must be assembled within how many days of the report release date?

A

45 days

33
Q

Vouching tests …

A

Existence

34
Q

Tracing tests …

A

Completeness

35
Q

Each page of an entity’s financial statements that have been ‘reviewed’ should include the reference…

A

See Accountant’s Review Report

36
Q

When a client will not make essential corporate minutes available to the auditor, the audit report will probably contain a…

A

Disclaimer of opinion

37
Q

The risk of incorrect acceptance and the likelihood of assessing control risk too low relate to the

A

Effectiveness of the audit

38
Q

When third-party use of prospective financial statements is expected, an accountant may not accept an engagement to

A

Perform a review

39
Q

The objective of the allowance for sampling risk in sampling for tests of controls on internal control is to…

A

Estimate the range of procedural deviations in the population.

40
Q

An auditor tests an entity’s policy of obtaining credit approval before shipping goods to customers in support of management’s financial statement assertion of

A

Valuation or allocation.

41
Q

According to the AICPA Code of Professional Conduct, which of the following disclosures of client information by a member CPA to an outside party would normally require client consent?

A

Outsourcing professional services requires the notification and approval of the client. If the client doesn’t want any of their services outsourced, the CPA should either not outsource the work, or not accept the engagement in the first place.

CPA-AUD (1 decks)

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