Audit - ninja Flashcards
Agreed-upon procedures in accordance w SSAES
Report the diff bw agreed upon n audit procedures
Violation of SEC or PCAOB
May not prepare or issue any audit report w respect to that issuer
Cpa changes engagement to a review ac to SSARS bc scope limitation. Cpa review report should:
1) refer to scope limitation that caused the change
2) describe the auditing procedures that have already been applied
Cpa should consider ….. when review extent n nature of the risks to internal controls associated w IT?
1) entity has responded adequately to the risks arising from IT by establishing effective controls
2) maintain integrity of info n security of data
Supplemental reporting std for gov’t fin audit?
Cpa should report scope of their testing of compliance w laws n regulations n internal control
Perform in a review engagement of a nonissuer’s f/s in ac w SSARS?
Making inquiries of mgmt
Both an engagement to compile n to review a nonpublic entity’s f/s
CPA does not contemplate obtaining an understanding of internal control
When will auditor expect to find that an entity implemented automated controls to reduce risks of misstatement?
When transactions are high-volume and recurring
Cpa may accept this engagement only if:
CPA also performs procedures on Gold’s fin position & results of operations
Working paper will generally not include:
lease agreement, working trial balance, internal control flow chart or bond indenture agreement
a working trial balance
Prior year’s FS require precessor auditor revision, so as a sucessor auditor you should:
Ask mgmt to arrange a group meeting for the 3 of them
Successor auditor should ask client to request predecessor auditor to allow you to review ….. documents?
predecessor’s working papers
Predecessor auditor allows successor auditor to review her working paper regarding:
both contingencies and BS accounts
communicate materiality to governance? yes or no?
No, only if mgmt creates troubles
communicate pay rate and hours with governance? yes or no
no, that is in the engagement letter
4 matters that communicated to those in charge of governance:
1) Auditor’s Resp in relation to FS audit
2) Planned Scope & Timing of Audit
3) Sig. timing of audit
4) Auditor Independence
All independence issues have to communicate to governance in oral or writing?
writing
What is most likely to be found on review on client’s cut off period for sales?
unrecorded sales at year-end
Those charge with governance means:
mgmt or subgroup of governance
Not require to communicate with those in charge of governance?
degree of reliance auditor placed on mgmt representation letter
Good governance will not include:
Mgmt & those who in governance should be kept seperated (never- interwine at all times)
The objectives of the audit is to express an unmodified opinion, however, in some circumstance it may prevent us from expressing an unmodified opinion:
Engagement letter
Is 3rd party a consideration in agreed-upon procedures?
no
reducing attestion risk:
examination of evidences
performing only substantive procedures, becuase….?
control policies and procedures are unlikely to pertain the assertion
auditor’s resp to let audit committee know that any significant deficiency comes to auditor’s attention?
yes -(appropriate mgmt to know) through engagement letter
engagement letter establishes an understanding of the resp of …?
auditor
auditor must provide reasonable assurance that professional service confirm with professional std by?
maintaining a comprehensive systems of quality control that is suitable to its organizational structure
what allow auditor to take an engagement after fiscal year?
remedy of limitation resulting from taking an engagement after fiscal yr, like inventory counting, etc
Can an auditor only audit B/S & not other fin reports?
Yes, as long as all fin info is not limited for access.
Can auditor audit F/S w/o Cash Flow stmt?
Yes, if auditor qualified the opnion for the omission
initial phase of audit, audit discuss what with mgmt?
timing of audit procedures
inappropriate to distribute fin projection to?
potential stockholders in an offering stmt
will engagement includes evaluation of support for the assumption over projection?
No.
substantive testing:
comparing vendor invoices with receiving reports
competence of internal auditors:
professional certificates, quality of WP
auditor should decline audit when?
client refuse to let cpa contact legal counsel
use another auditor work & take another auditor’s resp, what should you do?
review WP and reperform audit testing to validate conclusion
can auditor share assessment of inherent risk and control risk with internal auditor?
no
auditor uses the assessment of material mistatement (inherent risk and control risk) to determine what?
detection risk
what would affect NET of auditing procedures when internal auditor works relate to assertion?
assertion relates to fixed assets addition
What is SysTrust?
AICPA and CICA (canadian) formed a professional attestation service that offer availability, security & integrity of business system.
what is “% coverage rule” of single audit act?
any nonprofit that receive more than 50% of ferderal funding will need to select & test those major projects
When entity is low-risk, % of coverage rule reduces to?
25%
When there is a mistatement but auditor fails to find it:
Detection risk
what provision is it that cpa has to ensure that the client’s website meets a certain criteria?
Web Trust, SSAE Stmt on Stds for Attestation Engagement
appropriate of audit evidence means?
reliable and relevant
both compilation and review, auditor does not have to be…?
understand th internal control
OMB requires nonprofit org to have a single audit or specific project audit if it is over $?
$500,000 or more in a yr
Which authorization body designs to promulgate attestation std?
Auditing Std Board
what is subrecipient?
nonfederal entity that expends federal awards received from a pass-through entity to carry out a federal program
what is an important step for initial planning phase for F/S audit?
understanding of risk assessment process
Compiled personal unaudited F/S means that the F/S will not be used to obtain credit?
yes
F/S sends to related parties directly, what is an example?
sends to a bank to require a loan
stmt of revenue and expenses prepared using special purpose framework?
stmt of income - regulatory basis
Providing assurance on investmen statistic performance from investment company is a SSAE ?
yes
Does auditor requires to know the nonprofit org makes use of the federal award and its distribution?
no
Is auditor must document internal control that complies with laws & regulations?
yes
inital planning stage for audit?
obtain an understanding on risk assessment process
auditor most likely use what to determine the preliminary judgement about materiality?
annualized interim F/S
Internal questonaires are used for?
facilitate test of controls
always pick the smaller amount for materiality?
yes
obtain knowledge of client’s industry n environment to?
understand the events and transactions that affects the client’s f/s
to understand the continue business for the audit planning, the auditor most likely would?
review prior year work paper and client’s permanent files
what affect the auditability of entity’s f/s?
the adequacy of the accounting records
you must plan and perform audit of F/S according to GAAS with an attitude of what?
professional skeptism
objective of planning stage of the audit?
assess potential misstatement due to frauds
ultimate objective of assesssing control risk?
material misstatement will exist in F/S
what software extract info from client software?
generalized audit software
2 frauds:
missappropriation of assets or fraudulent reporting
what reflects the mgmt philosophy and operating styles?
control environment
internal control policies and procedures affect?
mgmt financial stmt assertion
noncompliance with laws and regulations:
large amount of cash taken out from the bank
noncompliance with laws are hard to detect by auditor due to:
it is more operating aspect than accounting aspect
