Audit Evaluation and Reporting 1

Question 1

Government Auditing Standards require the auditor to report on

Answer 1

scope of auditor’s testing of internal control and entity’s compliance with laws and regs

Question 2

Auditor’s report on significant deficiencies should include “ Restriction on distribution” and is restricted to

Answer 2

audit committee, management, and others with the organization and to specified governmental regulatory authorities

Question 3

A client’s accounting data cannot be considered sufficient appropriate audit evidence to support the financial statements. T/F

Answer 3

True – AU-C 500.17 states accounting data is evidence to the financial statements but, by itself, accounting data cannot be considered sufficient support for financial statements.

Question 4

An advantage of statistical sampling over nonstatistical sampling is

Answer 4

allows the auditor to calculate the risk of reliance on the sample to assess control risk, and enables the auditor to make objective statements about the population on the basis of the sample. Because the auditor is able to measure and control the sampling risk, the auditor is able to measure the sufficiency of the audit evidence obtained.

Question 5

What is the focus of the second or wrap-up workpaper review

Answer 5

the fair presentation of the financial statements in conformity with GAAP – Did the audit meet it’s objective?

Question 6

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

Answer 6

A review
AT 301.01–.02 specifies that when an auditor is engaged to perform a service in relation to prospective financial statements and his report or the prospective financial statements is expected to be used by a third party or parties, then only an examination, a compilation, or the agreed-upon procedure is appropriate