Audit Section 1 Flashcards
Provides the most authoritative guidance for the auditor of a nonissuer?
General guidance provided by a Statement on Auditing Standards
AICPA audit and accounting guides and SAS (Statement Auditing Standards) interpretations are
are interpretive publications that provide guidance regarding how SASs should be applied in specific situations. They are not as authoritative as SASs
In certain audit engagements, the auditor may be required to comply with auditing requirements in addition to GAAS. The auditor may conduct the audit in accordance with
Both GAAS and government auditing standards (GAGAS)
What identifies a requirement for audit evidence?
The term Appropriate. Because The auditor must obtain sufficient appropriate audit evidence to afford a reasonable basis for the opinion.
Auditing standards do not use the word in ______ describing the requirements for audit evidence; the term is _____ appropriate audit evidence
1) adequate
2) sufficient
Auditing standards use the word reasonable to describe
the type of assurance gained by the auditor as the basis for the opinion, and not to describe a specific requirement for audit evidence.
Auditing standards do not use the word disconfirming in describing
the requirements for audit
evidence.
Best describes what is meant by the term generally accepted auditing standards?
Measures of the quality of the auditor’s performance
To obtain reasonable assurance, an auditor should
plan the work and properly supervise assistants, as well as determine and apply appropriate materiality levels, identify and assess risks of material misstatement
Because of the risk of material misstatement, an audit of financial statements in accordance with generally accepted auditing standards should be planned and performed with an attitude of
professional skepticism
Which term used in Statements on Auditing Standards indicates a presumptively mandatory requirement?
The term “Should” it indicates a presumptively mandatory requirement, which must be followed in all cases in which the requirement is relevant,
The term must indicates
an unconditional requirement, which must be followed in all cases in which the requirement is relevant.
The term could would indicate
explanatory material that does not impose a professional requirement for performance.
The phrase “U.S. generally accepted accounting principles” is an accounting term that
Encompasses the conventions, rules, and procedures necessary to define U.S. accepted accounting practice at a particular time
statements correctly defines the term reasonable assurance?
A high, but not absolute, level of assurance to allow an auditor to detect a material misstatement.
An auditor of a nonissuer exercising professional skepticism with respect to the risks of material misstatement due to fraud will most appropriately:
Consider the reliability of information to be used as audit evidence.
Which of the following best describes what is meant by the term generally accepted auditing standards?
Measures of the quality of the auditor’s performance.
Before accepting an audit engagement, a CPA should evaluate whether conditions exist that raise questions as to the integrity of management. Which of the following conditions most likely would raise such questions?
The CPA will not be permitted to have access to sensitive information regarding the salaries of senior management.
A successor auditor most likely would make specific inquiries of the predecessor auditor regarding:
Disagreements with management as to auditing procedures.
The primary objective of an auditor when considering the acceptance of an initial audit engagement of a nonissuer is to:
Establish whether the preconditions for an audit are present.
Before accepting an engagement to audit a new client, a CPA is required to obtain:
The prospective client’s consent to make inquiries of the predecessor auditor.
A successor auditor should request the new client to authorize the predecessor auditor to allow a review of the predecessor’s:
1) Engagement Letter: NO
2) Working Papers: YES
In connection with an audit of a nonissuer, the auditor would ordinarily use an engagement letter to:
Specify any arrangements concerning the involvement of the company’s internal auditors on the audit.
Which of the following is an element of a CPA firm’s quality control system that should be considered in establishing its quality control policies and procedures?
Assigning personnel to engagements.
Compliance with laws and regulations falls under
the Code of Professional Conduct.
If an audit firm determines that a quality control review is required, but it has not yet been performed, what should an audit engagement partner do?
Refrain from issuing the audit report until after the quality control review has been completed.
The nature and extent of a CPA firm’s quality control policies and procedures depend on:
1) CPA Firm Size
2) Nature of the CPA Firms Practice
3) Cost Benefit Considerations