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CPA - Audit > Audit Deck 1 > Flashcards

Audit Deck 1 Flashcards

1
Q

Is giving a disclaimer of opinion appropriate when the company omits information that is required by GAAP and this results in a material misstatement of financials?

A

No, inappropriate

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2
Q
  1. Can an auditor give an unmodified opinion if there are multiple problems but they don’t add up to something material?
  2. Do they need to disclose these problems?
A
  1. Yes
  2. No
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3
Q

During the physical inventory count, the auditor requested that certain material containers be opened to ensure they were not empty.
(Type of Audit Procedure)

A

Inspection

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4
Q

During a site visit to a branch warehouse, the auditor noted unauthorized personnel had access to the inventory. (Type of Audit Procedure)

A

Observation

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5
Q

The auditor obtained a copy of the company’s accounting manual and read the section on inventory to prepare for the physical inventory observation. (Type of Audit Procedure)

A

Inspection

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6
Q

The auditor sent a letter to the company’s outside attorney accompanied by management’s request for information concerning ending or threatened litigation, claims, and assessments. (Type of Audit Procedure)

A

Inquiry

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7
Q

The auditing firm’s computer-assisted audit specialist obtained an electronic billing file from the company and checked the accuracy of the summarized billings file. (Type of Audit Procedure)

A

Recalculation

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8
Q

The auditor obtained the company’s aging of accounts receivable and independently created the aging of certain accounts. (Type of Audit Procedure)

A

Reperformance

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9
Q

The auditor scanned the repairs and maintenance account for unusually large amounts. (Type of Audit Procedure)

A

Analytical

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10
Q

What type of opinion should an auditor express in the current year when they gave an adverse opinion in the previous year, but the current year has been properly stated in comparative form?

A

Unmodified Opinion with Emphasis of Matter Paragraph

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11
Q

Should an auditor test income statement accounts prior to or on the Balance Sheet Date?

A

Prior to the Balance Sheet Date

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12
Q

How many days after the report release date do auditors have to complete audit documentation for the audit of a Nonissuer?

A

60 days

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13
Q

Is assessing the risk of fraud required for both audits of issuer and nonissuer financial statements?

A

Yes!

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14
Q

Audit Documentation should show that accounting records agree with/to what?

A

The Financial Statements

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15
Q

What paragraph in the auditor’s report of a nonissuer has a statement that identifies the applicable financial framework and its origin?

A

The Opinion Paragraph!

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16
Q

Detecting overstatement of sales helps prove what assertion? (COVER-U)

A

Existence Assertion
(Why? If you discover that they overstate sales, this means they made up sales that don’t exist. In other words, you are proving some of those sales DON’T exist)

17
Q

What is the purpose of Audit Data Analytics (ADAs)?

A

To discover PATTERNS, ANOMALIES, and RELATIONSHIPS (ADA>PAR)

18
Q

Tracing from the Inventory Report (list of inventory) to Inventory Tags (looking at the tags on the actual PHYSICAL inventory), helps an auditor verify what assertion? (Think of COVER-U)

A

Existence

19
Q

When a Group Engagement Partner (GEP) decides not to refer to the work of a component auditor, what level of responsibility are they taking for the Components auditor’s work?

A

GEP is taking full responsibility for the Component Auditor’s work

20
Q

Referring to dividend record books produced by investment advisory services helps you TEST dividend ______?

A

Income

21
Q

Why do auditors send confirmation to all banks with which a client has done business throughout the year?

A

Corroborate deposits and loan balance info

22
Q

An auditor doesn’t use computer software to assess control risk because control risk is based on what?

A

Auditor judgment

23
Q

What is it called when audit documentation has the correct total at the bottom of a spreadsheet column?

A

“Footed”

24
Q

If there is a concern about a companies ability to continue as a going concern, and if this is adequately disclosed in the FS, what phrases are required in the separate report section?

A

“Substantial Doubt”, “Going Concern”

25
Q

Why do auditors send letters of inquiry to clients’ attorneys about claims from management about litigation, claims, and assessments?

A

To Corroborate those claims

26
Q

An Independent Auditor cannot share responsibility with internal auditors when it comes to:

A

Audit Decisions, judgements, and assessments

27
Q

Does a decrease in population variability INCREASE or DECREASE required Sample Size?

A

Decreases required Sample Size

28
Q

*What procedures would likely lead to discovery of noncompliance with laws and regulations?

A

Reading minutes of board meetings, inquiry of management or legal counsel, or performing tests of details of transactions. NOT reviewing an internal control questionare

29
Q

Why would an auditor review Inventory Turnover (COGS/Average Inv.) during the the overall review stage?

A

The auditor wants to review how well they are PERFORMING. (Typically a high inventory turnover rate means that they are performing well)

30
Q

Looking for bank transfers with a receipt date in a different accounting period than the disbursement date helps you detect what kind of fraud?

A

Kiting

31
Q

How many days after the report release date do auditors have to complete audit documentation for the audit of an Issuer?

A

45 Days

32
Q

What is it called when all the rows at the bottoms of columns in the audit documentation are correct? (think horizontal)

A

“Cross-footed”

33
Q

Does an increase in incorrect acceptance INCREASE or DECREASE the required Sample Size?

A

Decreases required Sample Size

CPA - Audit (6 decks)

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