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CPA Exam Review > Auditing > Flashcards

Auditing Flashcards

1
Q

No audit work=

A

Disclaimer of Opinion

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2
Q

Obtaining written management representations regarding the required supplementary information is what?

A

Limited procedure on required supplementary information

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3
Q

Comparative financial statements use what date?

A

Report date for the most recent audit

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4
Q

Materially Misstated=

A

GAAP

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5
Q

Inability to Obtain Sufficient Appropriate Audit Evidence=

A

GAAS

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6
Q

What paragraph is used when their is a going concern, justified change in accounting principle or change in audit opinion?

A

Emphasis of Matter

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7
Q

Paragraph that refers to matters other than those presented or disclosed in the financial statements?

A

Other-Matter Paragraph

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8
Q

What paragraph refers to required supplementary information?

A

Other-Matter Paragraph

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9
Q

Significant going concern uncertainty can also be what opinion?

A

Disclaimer

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10
Q

What does ISA require the auditor to obtain regarding plans for future action of going concern?

A

written representations from management

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11
Q

What opinion is use when there is an inadequate disclosure of going concern?

A

Qualified or Adverse

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12
Q

Corrections of an error in accounting principle affect what?

A

Consistency and require an emphasis of matter paragraph

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13
Q

Auditors Responsibility paragraph is modified when?

A

When the auditor expresses a qualified or adverse opinion due to material misstatement of the financial statements (GAAP) or disclaimer

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14
Q

Basis for Modification paragraph is placed before what paragraph?

A

Opinion paragraph

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15
Q

Lack of Independence leads to what opinion?

A

Disclaimer (GAAS)

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16
Q

material and pervasive management imposed scope limitation=

A

disclaimer or withdraw

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17
Q

In a comparative form the auditor should include the date of the prior period report, the service performed in prior period, description of material modifications, statement that service was less in scope than an audit, in what paragraph?

A

Other-matter

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18
Q

What should the auditor do if the prior period statements are not audited, reviewed or compiled?

A

Include in other-matter paragraph that the auditor assumes no responsibility for prior period FS

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19
Q

Recognized (Type 1) Event=

A

Financial Statement Adjustment

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20
Q

Nonrecognized (Type 2) Event=

A

Footnote disclosure

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21
Q

Period between the date of the FS and the date of the auditor’s report

A

Subsequent period (auditor has active responsibility)

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22
Q

What opinion should the auditor express if the auditor believes that the financial statements need to be revised to reflect a subsequent event and management does not make the revision?

A

Qualified or adverse opinion (GAAP issue)

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23
Q

Extend responsibility only for the particular subsequent event=

A

Dual Dating

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24
Q

If other information requires revision for a material inconsistency and management refuses to make the revision the auditor should:

A

notify those charged with governance and include material inconsistency in other-matter paragraph, withhold use of report, withdraw from engagement

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25
Q

Auditor’s report on the supplementary information for nonissuers may either be presented as an _ or _

A

Other-Matter Paragraph or Separate Report

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26
Q

Auditor’s report on the supplementary information for issuers may either be presented as an _ or _

A

auditor’s report on the financial statements or issue a separate report

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27
Q

Date of the auditor’s report on the supplemental information should not be earlier than

A

date of the auditor’s report and date on which the auditor obtained sufficient audit evidence

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28
Q

Auditor is prohibited from expressing an adverse or disclaimer of opinion on the supplementary information for who?

A

Nonissuers

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29
Q

What paragraph should report deficiencies/omissions and opinion about the supplementary information?

A

Other-Matter Paragraph

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30
Q

Who is not required to be independent of the entity

A

Reporting accountant

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31
Q

What paragraph states the special purpose framework is a basis of accounting other than GAAP?

A

Emphasis-of-Matter

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32
Q

What paragraph restricts the use of the auditor’s report? (Also used for special purpose FS)

A

Other-Matter

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33
Q

What should the auditor’s report include if the auditor reports on an incomplete presentation that is otherwise in accordance with GAAP?

A

Emphasis-Of-Matter Paragraph

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34
Q

What paragraph is the report on compliance that is included in the auditor’s report in?

A

Other-Matter

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35
Q

Nothing came to our attention=

A

negative assurance

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36
Q

Must have done what to accept an engagement?

A

Audited the FS

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37
Q

What two opinions may the auditor issue on the summary of financial statements?

A

Unmodified or Adverse

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38
Q

When should the auditor withdraw from the engagement to report on the summary financial statements?

A

When the auditor’s report on the FS contains an adverse or disclaimer of opinion

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39
Q

What do all SSARs engagements require?

A

Engagement Letter

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40
Q

Report on a review engagement should include:

A

Statement that a review is less in scope than an audit

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41
Q

Where should the accountant indicate the degree of responsibility of supplementary information?

A

Other-matter paragraph or separate report

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42
Q

Should a change in engagement (that is justified) report refer to the original engagement, any procedures performed, or any scope limitation?

A

NO

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43
Q

Audit may be changed due to what?

A

Change in client requirements or misunderstanding as to the nature of the service to be rendered

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44
Q

When accountants have reviewed prior year but compiled current year, what can they do?

A

Issue a compilation report and add a paragraph to the report on the current year or reissue the prior year

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45
Q

The predecessor accountant should read the new FS and obtain a rep letter from the new accountant when?

A

When they are asked to reissue their prior report

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46
Q

For a review of interim financial information the auditor should:

A

Obtain an understanding of internal control

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47
Q

Is inquiry of the entity’s lawyer regarding litigation, claims and assessments required?

A

NO..but use judgment

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48
Q

Comfort letter=

A

negative assurance on unaudited interim FS, required to perform a review

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49
Q

What statement must a comfort letter include?

A

Restricted Use

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50
Q

When there are material misstatements or deviations from the criteria, what should happen?

A

Report should be modified or withdraw

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51
Q

Scope Restrictions: Examination=

A

Positive assurance (qualified or disclaimer of opinion)

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52
Q

Scope Restrictions: Review=

A

Negative assurance (“nothing came to our attention”, withdraw)

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53
Q

Engagement in which the practitioner is engaged by a client to issue a report of findings based on specific agreed-upon procedures (mutual fund performance)

A

Agreed-Upon Procedure Engagement

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54
Q

Should the practitioner be independent in an agreed-upon engagement?

A

YES

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55
Q

Is use of the report restricted in an agreed-upon procedure engagement?

A

YES

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56
Q

Financial forecast=

A

general & limited use

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57
Q

financial projection=

A

limited use only

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58
Q

Is a review of prospective financial statements allowed?

A

NO

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59
Q

A practitioner may not issue a compilation report if the entity fails to _____________ that are used in the prospective financial statements

A

disclose a summary of the significant assumptions

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60
Q

Examination of Prospective FS=

A

Express an opinion

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61
Q

In an agreed-upon procedure, the prospective FS must include what?

A

Summary of significant assumptions

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62
Q

Pro forma financial statements may be?

A

Examined or Reviewed

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63
Q

If the auditor reissues the audit report at the client’s request and does not restate FS or revise the wording, the auditor should do what?

A

use the original report date on the reissued report

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64
Q

Financial statements prepared in accordance with a comprehensive basis of accounting other than GAAP that are not suitably titled require what?

A

Qualified opinion with a basis for modification paragraph?

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65
Q

An accountant’s standard report on a compilation of a projection should not include a statement that?

A

The hypothetical assumptions used in the projection are reasonable in the circumstances

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66
Q

When reporting on financial statements prepared on the same basis of accounting used for income tax purposes, the auditor should include in the report a paragraph that?

A

States that the income tax basis of accounting is a basis of accounting other than generally accepted accounting principles

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67
Q

When financial statements include supplementary information which is outside the basic financial statements, but required by GAAP, the auditor may choose to do what?

A

Express negative assurance on the information, if review procedures have been appropriately performed

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68
Q

If the client is an issuer, what must the auditor perform?

A

Integrated audit of the client’s FS and IC

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69
Q

In an initial audit, is it mandatory to make inquires of the predecessor auditor?

A

YES (client permission needed)

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70
Q

Do you need to review the predecessor auditor’s engagement letter?

A

NO

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71
Q

Who is responsible for planning the audit, supervising the work of engagement team members and compliance with relevant auditing standards?

A

Engagement Partner

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72
Q

Touring client facilities, reviewing the financial history of the client, obtaining an understanding of client accounting, and inquiring of client personnel allows the auditor to what?

A

Obtain knowledge of the client’s business

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73
Q

Factors that determine the focus of the audit (nature) include:

A

Preliminary evaluations of materiality, audit risk, and internal control

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74
Q

Tests of controls are used to evaluate the operating effectiveness of internal controls in _____ or ______ material misstatements

A

preventing or detecting

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75
Q

Tests of details and analytical procedures are what?

A

Substantive Procedures-Used to detect MM

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76
Q

Is a written audit plan required for every audit?

A

YES

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77
Q

The internal audit function is considered to be part of what?

A

Monitoring component of internal control

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78
Q

The risk that the auditor may unknowingly fail to appropriately modify the opinion on financial statements that are materially misstated (essentially issue wrong opinion)

A

Audit risk

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79
Q

The susceptibility of a relevant assertion to a material misstatement, assuming there are no related controls

A

Inherent Risk (assessed by auditor)

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80
Q

Risk that a material misstatement that could occur in a relevant assertion will not be prevented and detected on a timely basis by the entity’s internal control

A

Control Risk (assessed by auditor)

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81
Q

Risk the auditor will not detect a material misstatement that exists in a relevant assertion?

A

Detection Risk (controlled by auditor)

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82
Q

When auditor determines the risk of material misstatement is high, detection risk should be set at what level?

A

LOW

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83
Q

The auditor can change the level of detection risk by doing what?

A

Varying the nature, extent and timing of audit procedures

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84
Q

What is always necessary for all relevant assertions when the assessed risk of material misstatement is low?

A

Substantive procedures

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85
Q

Greater risk requires what?

A

More persuasive evidence, larger sample size, shift from interim to year-end testing

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86
Q

It is the auditor’s responsibility to ______ the audit to obtain_______ about whether the FS are free of MM

A

plan and perform, reasonable assurance

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87
Q

Analytical Procedures are required during what?

A

Planning and Final Review Stage

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88
Q

Any indication of fraud should be discussed with an appropriate level of management, at least ___ level above those involved

A

one

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89
Q

Complete documentation of the auditor’s risk assessment and response is ____

A

required

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90
Q

Is the auditor responsible for preventing noncompliance and are they expected to detect noncompliance with all laws and regulations?

A

NO

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91
Q

Acceptable level of _____ risk is used to determine the nature, extent and timing of further audit procedures

A

detection

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92
Q

Objective of analytical procedures used during planning is:

A

Enhance auditor’s understanding and identify unusual transactions and events

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93
Q

Is the test of operating effectiveness of controls required?

A

NO

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94
Q

Significant risk exists when inherent risk is:

A

Exceptionally high

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95
Q

Risk assessment should be done by whom?

A

Management

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96
Q

Process that assesses the quality of internal control performance over time

A

Monitoring

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97
Q

Assigning different people the responsibilities of authorizing transactions, recording transactions, and maintaining custody of related assets

A

Segregation of Duties

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98
Q

The auditor must document the understanding of the _____ and _____ of the entity’s internal controls

A

design, implementation

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99
Q

Documentation may include an item the auditor can FIND:

A

Flowchart, Internal Control Questionnaire, Narrative, Documentation from Client

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100
Q

Service Auditor Design of Controls (Type 1) Report

A

Does not provide the user CPA with a basis for reducing the assessment of control risk

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101
Q

Service Auditor Design and Operating Effectiveness of Controls (Type 2) Report

A

May provide evidence that would allow a reduction in the assessed level of control risk

102
Q

Auditor may test risk at interim date if the controls are

A

strong

103
Q

Auditor may test risk at period end (test whole year) if the controls are

A

weak

104
Q

Use only substantive procedures when:

A

control risk is assessed at maximum (weak controls)

105
Q

Tests of controls may be required when:

A

business uses IT or audit evidence is obtained in electronic form, controls are operating effectively, less risk of MM

106
Q

Use both substantive procedures and (more) test of controls when:

A

controls are operating effectively (strong controls), less risk

107
Q

Controls that are tested only during an interim period should be supplemented by additional evidence for the ____

A

remaining period

108
Q

Testing dollar balances, analytical procedures and ratios are what?

A

substantive procedures

109
Q

Use substantive interim testing only if ____ is low

A

Risk of material misstatement

110
Q

Collusion, human error, and management override are examples of what?

A

Inherent limitations of internal controls

111
Q

The audit plan usually cannot be finalized until the:

A

Consideration of the entity’s internal control has been completed

112
Q

As part of understanding internal control, an auditor is not required to:

A

Obtain knowledge about the operating effectiveness of internal control

113
Q

An auditor who uses the work of a specialist may refer to the specialist in the auditor’s report if the:

A

Auditor modifies the report because of the difference between the client’s and the specialist’s valuations of an asset

114
Q

Hierarchy of Audit Evidence:

A

AEIO

115
Q

Audit evidence must persuade the auditor that the ending balances in the FS are what?

A

Fairly Presented

116
Q

Analytical procedures should be based on what kind of relationships?

A

Predictable

117
Q

Directional Testing, External Confirmation, Standard Auditing Procedures, Review of Relevant Assertions, Selecting Items for Testing to Obtain Audit Evidence and Matching Auditing Procedures to Specific Assertions are all what?

A

Tests of Details

118
Q

Is an oral response an external confirmation?

A

NO-not direct written response

119
Q

What assertion does examination/inspection support?

A

Existence

120
Q

What duties should be segregated in the revenue cycle?

A

Credit approval, shipment, and billing/accounting

121
Q

Incoming mail must be opened by a person who does not have access to what?

A

Accounts receivable ledger

122
Q

Positive confirmations are best when?

A

Large $ amounts, expect errors/disputes, weak internal control

123
Q

Negative confirmations (not as good as positive) are best when?

A

Low risk, small balances, expect customer attention

124
Q

Two exceptions to confirmations are what?

A

Timing Differences, Misstatements (Must investigate both)

125
Q

The bill is paid by whom to establish good segregation of duties? (Also prepares, signs and mails checks)

A

Treasurer

126
Q

Who records the payable, approves the invoice for payment and records the payment after it’s paid?

A

Accounting Department

127
Q

What is the auditor doing when they select cash disbursements made subsequent to year-end and examining the supporting documentation?

A

Searching for Unrecorded Liabilities

128
Q

Today’s cash receipts cover yesterday’s theft=

A

Lapping

129
Q

Cash is recorded two places at once=

A

Kiting

130
Q

The auditor inspects date checks are deposited vs. when the receivable was credited to detect what?

A

Lapping

131
Q

What is one of the best methods to guard against lapping?

A

Lock box system

132
Q

What is useful for detecting kiting?

A

Bank Transfer Schedule

133
Q

Is the observation of the beginning and ending physical inventory count required by GAAP?

A

YES

134
Q

The client ____ the inventory and the auditor ____ the inventory

A

counts, observes

135
Q

Auditor should ascertain that consigned inventory on hand is excluded from the physical inventory count tests what assertion?

A

Rights and Obligations

136
Q

Auditor should search for unrecorded purchases of securities by examining transactions for a few days after year-end tests what assertion?

A

Completeness in the Investment Cycle

137
Q

Confirmations should be requested from the custodian for securities that are in the possession of third parties tests what assertion?

A

Existence

138
Q

Performing analytical procedures to test the reasonableness of dividend and interest income to determine all investment income has been recorded tests what assertion?

A

Completeness

139
Q

Auditor reviews the repair and maintenance account to locate items that should have been capitalized and to test for what?

A

Completeness of Asset Additions

140
Q

Auditor should inquire of management and review loan agreements and minutes to determine whether fixed assets have been pledged as collateral to test what assertion?

A

Rights and Obligations and Occurrence (Disclosures)

141
Q

Payroll department should NOT have the authority to do what?

A

Initiate changes in hours or rates, sign checks

142
Q

All stock issuances, dividend declarations, and treasury stock purchases must be authorized by who?

A

Board of Directors

143
Q

Auditor should review board minutes for evidence of new debt tests what assertion?

A

Completeness (Balances)

144
Q

The auditor should confirm notes or bonds directly with creditors tests what assertion?

A

Existence (Balances)

145
Q

Reviewing interest expense for payments to debt holders not included in the debt listing and examining lease agreements for proper classification as operating or capital tests what assertion?

A

Completeness (Transactions)

146
Q

What is the primary source of evidence is the client does NOT use a stock transfer agent?

A

Stock Certificate Book (Completeness)

147
Q

Vouching transactions recorded during the current period to board minutes tests what assertion?

A

Existence and Occurrence

148
Q

When the auditor identifies related party transactions that management didn’t identify or disclose, the auditor should?

A

Perform appropriate substantive procedures

149
Q

FMV, Impairment, and Revenue Recognition are all examples of what?

A

Accounting estimates

150
Q

The susceptibility of an accounting estimate to an inherent, lack of precision in its measurement is what?

A

Estimation uncertainty

151
Q

To evaluate the reasonableness of an estimate, the auditor must first do what?

A

Obtain an understanding of how management developed its estimate

152
Q

Where market prices are not available, appropriate ______ should be used to estimate fair value

A

Valuation Methods

153
Q

Management should identify and support any _____ used

A

Significant assumptions

154
Q

Determine whether management’s significant assumptions provide a ______ for fair value measurements

A

reasonable basis

155
Q

Litigation, claims and assessments are all examples of what?

A

Contingencies

156
Q

Who is the primary source of information regarding contingencies and who is responsible to identify and account for contingent liabilities?

A

Management

157
Q

If the lawyer refuses to respond to the letter of inquiry, what opinion should be issued?

A

Qualified or Disclaimer

158
Q

If the client refuses to permit inquiry of the attorney, what opinion should be issued?

A

Disclaimer or Withdraw

159
Q

What do PCAOB standards require for all audits of issuers and for each engagement to review the interim financial statements?

A

Engagement Quality Review and Concurring Approval of Audit Report Issuance

160
Q

What procedures would be most appropriate for testing the completeness assertion as it applies to inventory?

A

Performing cutoff procedures for shipping and receiving

161
Q

To determine whether internal control relative to the revenue cycle of a wholesaling entity is operating effectively in minimizing the failure to prepare sales invoices, an auditor most likely would select a sample of transactions from the population represented by the

A

Shipping document file

162
Q

An accountant who is conducting a review of the unaudited financial statements of a nonissuer in accordance with Statements on Standards for Accounting and Review Services would be required to

A

Obtain a management representation letter

163
Q

When an accountant examines a financial forecast that fails to disclose several significant assumptions used to prepare the forecast, the accountant should describe the assumptions in the accountant’s report and issue a (an:

A

Adverse

164
Q

An auditor ordinarily sends a standard confirmation request to all banks with which the client has done business during the year under audit, regardless of the year-end balance. A purpose of this procedure is to:

A

Seek information about contingent liabilities and security agreements

165
Q

Tracing copies of computer-prepared sales invoices to copies of the corresponding computer-prepared shipping documents provides evidence that:

A

Sales billed to customers were actually shipped.

166
Q

What is the only area where the CPA does not use judgement?

A

Deciding which items will be selected

167
Q

What sampling is primarily used for testing internal controls?

A

Attribute sampling (Deals with Yes/No ?s)

168
Q

What sampling is primarily used in substantive testing (Dollar values) of account balances?

A

Variables sampling

169
Q

Using inappropriate audit evidence and improperly evaluating the results are examples of what?

A

Nonsampling Risk

170
Q

If the auditor wants less risk, the sample size should be:

A

Larger

171
Q

If the auditor can accept more risk, the sample size should be:

A

Smaller

172
Q

If the auditor wants less deviation (tolerable deviation rate) the sample size should be:

A

Larger

173
Q

If the auditor can accept more deviation (tolerable deviation rate) the sample size should be:

A

Smaller

174
Q

If the auditor expects less deviation, the sample size should be:

A

Smaller

175
Q

If the auditor expects more deviation, the sample size should be:

A

Larger

176
Q

Sample Deviation Rate + Allowance for Sampling Risk =

A

Upper Deviation Rate

177
Q

If Upper Deviation Rate

A

Rely on the control

178
Q

If Upper Deviation Rate > Tolerable Deviation Rate, the auditor may:

A

NOT rely on the control

179
Q

Variable sampling=

A

Misstatements

180
Q

Attribute sampling=

A

Deviations/errors

181
Q

The chance of an item being selected is proportionate to its dollar amount and if no errors are expected, it requires a smaller sample than other methods is an advantage of what?

A

PPS Sampling

182
Q

Tolerable misstatement/Reliability factor=

A

Sampling Interval

183
Q

Recorded amount of the population/sampling interval=

A

Sample size

184
Q

When are dual-purpose samples used?

A

When the auditor believes there is an acceptably low risk that the deviation rate in the population exceeds the tolerable rate

185
Q

Does the absence of monetary misstatements imply that controls are operating effectively?

A

NO

186
Q

Is an integrated audit of internal control required for public companies?

A

Yes-by SOX

187
Q

A missing control or when an existing control doesn’t achieve the desired objective is what?

A

Deficiency in Design (Key word: Inadequate)

188
Q

When a control doesn’t operate as designed, or is performed by an inappropriate person is what?

A

Deficiency in Operation

189
Q

Ineffective oversight by those charged with governance is an example of what?

A

Material Weakness

190
Q

Whose responsibility is it to evaluate and address control deficiencies for a nonissuer?

A

Management

191
Q

What must be included in the auditor’s written communication of internal control to management?

A

Restricted Use Wording

192
Q

Management must provide a written assertion about the effectiveness of the entity’s internal control in a report that accompanies the auditor’s report for whom?

A

Issuers and Nonissuers

193
Q

When is benchmarking of automated controls okay?

A

Low risk situations and if automated controls have not changed from one year to the next

194
Q

What should the auditor do if management’s report is incomplete or improperly presented?

A

Modify their report to discuss the situation

195
Q

Reporting on internal control for nonissuers must follow what?

A

SSAEs (Attestation Engagement)

196
Q

If separate reports are issued what should each report contain?

A

Explanatory paragraph making reference to the other report

197
Q

Presence of a material weakness in internal control results in what kind of opinion?

A

Adverse

198
Q

Is the use of another auditor okay in private or public companies?

A

Private

199
Q

Examination of effectiveness of internal control=

A

Express an Opinion

200
Q

Consideration of internal control in an audit of financial statements (GAAS)=

A

Enable the auditor to plan the audit to determine NET

201
Q

Who selects and appoints the independent auditor and sets the audit fee?

A

Audit committee

202
Q

Auditors of issuers report to and are overseen by who?

A

Audit committee

203
Q

The client representation letter should be dated the same date as what?

A

Auditor’s report

204
Q

If the auditor concludes that written representations are not reliable the auditor should:

A

consider the possible effect on the audit opinion

205
Q

The variability in the population (generally represented by the standard deviation), the acceptable level of risk (i.e., the risk of incorrect acceptance), the tolerable misstatement, and the expected misstatement all affect:

A

Sample size in a variables sampling application

206
Q

Which of the following statements is correct concerning statistical sampling in tests of controls?

A

Deviations from specific control activities at a given rate ordinarily result in misstatements at a lower rate.

207
Q

What applies to all services rendered?

A

Objectivity

208
Q

What applies to attestation services (audits, special reports, and reviews)?

A

Independence

209
Q

When can the member disclose confidential information without the consent of the client?

A

Subpoena or summons, quality (peer) review, inquiry made by AICPA or disciplinary board, legal defense team

210
Q

Adverse interest threat=

A

Objectivity

211
Q

Advocacy Threat=

A

Compromised

212
Q

Familiarity Threat=

A

Sympathetic

213
Q

Management Participation Threat=

A

Acting as Management

214
Q

Self-Interest Threat=

A

Benefit

215
Q

Self-Review Threat=

A

Evaluate your own work

216
Q

Undue Influence Threat (Pressure)=

A

Subordinate Judgment

217
Q

How long does the PCAOB require audit documentation to be kept?

A

Seven Years

218
Q

Is the auditor’s independence impaired when the audit committee fails to administer the engagement?

A

YES

219
Q

Who is the only society that can suspend or revoke a CPA’s license?

A

State Boards of Accountancy

220
Q

Audit documentation should:

A

Show the accounting records reconcile with the financial statements

221
Q

SAS rules require that audit documentation be retained for how long from the report release date?

A

Five Years

222
Q

PCAOB rules require that audit documentation be retained for how long from the report release date?

A

Seven Years

223
Q

SAS rules require the final audit documentation file to be assembled within how many days following the report release date?

A

60 days

224
Q

PCAOB rules require the final audit documentation file to be assembled within how many days following the report release date?

A

45 days

225
Q

Significant audit findings may result in what?

A

Modification of the auditor’s opinion or the inclusion of an emphasis-of-matter paragraph

226
Q

If a client processes its data without any paper documentation, audit tests should be performed on a what basis?

A

Continuous

227
Q

When is auditing around the computer (manual audit procedure) appropriate?

A

Simple batch systems

228
Q

Emphasis on Input and Processing Stages (Auditing through the computer)=

A

CAAT

229
Q

Client personnel are not informed when what test is being run?

A

Integrated Test Facility

230
Q

Client’s system used to process the auditor’s data, off-line, while still under the auditor’s control is what?

A

Test Data

231
Q

Advantage of using GASPs is what?

A

Test high percentage of transactions, require little technical knowledge and reduce audit time

232
Q

To obtain sufficient evidence to form an opinion on whether the entity complied with compliance requirements is an objective of what?

A

Compliance Audits (Required by GAAS)

233
Q

Auditor can change detection risk of noncompliance by varying what?

A

Nature, extent and timing of audit procedures

234
Q

The audit organization performing audits in accordance with GAGAS is required to have a peer review at least once ever _____ years

A

3

235
Q

A report on internal control for GAGAS includes what?

A

Descriptions of the scope of the auditor’s testing of internal control

236
Q

For reporting on internal control under GAGAS, must an auditor communicate ALL significant deficiencies noted during the audit?

A

YES

237
Q

A written report on the auditor’s understanding of internal control and the assessment of control in all risk audits is required by whom?

A

GAGAS

238
Q

Independence Standards for GAGAS require the auditor to document what?

A

Threats to independence, safeguards, consideration, auditor’s understanding

239
Q

What are the two main objectives of a single audit?

A

Audit of the entity’s FS and Compliance Audit

240
Q

Entities that expend equal to or in excess of $750,000 in a fiscal year must have an audit performed in accordance with what act?

A

Single Audit Act-requires separate evaluation of materiality for each major program

241
Q

Program specific audits do not include reports on the ______ ______ of the organization taken as a whole

A

financial statements

242
Q

Both the auditor and the auditee must retain audit documentation for ___ years after issuance and receipt of single audits

A

3

243
Q

For low-risk auditees, auditor must test ____ percent of federal awards expended

A

20

244
Q

For other auditees, auditor must test ____ percent of federal awards expended

A

40

245
Q

Six elements of quality control=

A

Human Resources, Engagement, Leadership responsibilities, Performance of the engagement, Monitoring, Ethical requirements

246
Q

SOX requiring a second partner “preissuance” review of the audit documentation falls under what quality control element?

A

Monitoring

247
Q

Does failed quality control mean failed GAAS?

A

NO

248
Q

____ relates to the conduct of each individual audit engagement

A

GAAS

249
Q

____ _____ standards relate to the conduct of all professional activities

A

Quality Control

250
Q

The engagement quality control review should be completed ____ the engagement partner releases the audit report

A

Before

CPA Exam Review (4 decks)

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