Audit Standards and Engagement Planning

Question 1

Compliance Audits

Answer 1

Verifies that you are following laws and regulations. Done by IRS and other governmental units. Can also be done by a CPA to see if bond covenants have been violated.

Question 2

Operational Audits

Answer 2

Effectiveness/Efficiency/Economy. Audit a department or division of a corporation to see if meeting organizational goals.

Question 3

Financial Statement Audits

Answer 3

Examination for purpose of giving an objective opinion as to the fairness of financial statement presentations

Question 4

Who determines the level of materiality?

Answer 4

the auditor

Question 5

Items within the scope of the audit

Answer 5

items that exceed the level set for materiality.

Question 6

AFRF

Answer 6

Applicable Financial Reporting Framework

Question 7

Clarity Standards relate to what type of clients

Answer 7

Non-Issuers (Non-public companies)

Question 8

Unconditional Requirement

Answer 8

Contains the words “must” or “is required to”

Question 9

Presumptively mandatory requirement

Answer 9

contains the words “should”. If you do not to it then you must document why you did not do it

Question 10

10 Generally Accepted Auditing Standards

Answer 10

(TIPPICANOE) or (PID-PIE-GAACDO)
3 General Standards
3 Fieldwork Standards
4 Reporting Standards

Question 11

TIPPICANOE

Answer 11

Training & Proficiency
Independence
Professional & Due Care

Planning and Supervision
Internal Controls
Corroborative Audit Evidence

Accounting Principles in conformity with GAAP
No new accounting principles used- Consistency
Omitted Informative Disclosures-NONE
Expression of opinion

Question 12

PID-PIE-GAACDO

Answer 12

Proficient
Independent
Due professional care

Planning
Internal Controls
Evidence

GAAP
Consistency
Disclosures
Opinion

Question 13

GAAS measures what?

Answer 13

Overall quality of the auditors performance

Question 14

Auditor must be independent for what types of work?

Answer 14

Attestation engagements (CARES)

Compilations (unless lack of independence is indicated)
Agreed-upon procedure engagements
Reviews
Examinations
Special Reports

Question 15

Auditor need not be independent for?

Answer 15

Compilations (when lack of independence is indicated)
Taxes
Consultations
Other non-attest services such as payroll

Question 16

Engagement Letter

Answer 16

FACSMILE

Fees
Auditors Responsibilities 
Confirmation of Engagement
Scope & Objective of Engagement
Internal Control
Managements Responsibilities

Irregularities
Illegal Acts
Errors

Question 17

For planning purposes, materiality is measured using…

Answer 17

smallest aggregate levels

Question 18

Steps in Planning the Audit

Answer 18

BRAIN STOPS
Basics Discussions with Client
Review of Audit Documentation
Ask about recent developments
Interim financial statements
Non-audit personnel
Staffing
Timing
Outside assistance
Pronouncements
Scheduling with the client

Question 19

Audit Standards Vs Audit Procedures

Answer 19

Audit standards deal with measures of the quality of the auditors performance. Audit Procedures related to acts to be performed.