Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Audit & Assurance > Auditor Independence > Flashcards

Auditor Independence Flashcards

1
Q

three independence standard setters

A

SEC, PCAOB, AICPA

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

AICPA rules apply to…

A

all attest services including f/s audit and review

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

SEC and PCAOB rules apply to..

A

audits of SEC registrants

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

two other organizations for specialized audits

A

GAO for government, DOL for employee benefit plan audits

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

auditor must be both independent in ____ and ____

A

appearance and in fact

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

independence in fact means the auditor is actually….

A

unbiased

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

independence in appearance is…

A

what a third party would perceive as being independent

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

most independence rules stem from independence in…

A

appearance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

all covered persons must be…

A

independent

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

covered persons include…

A

audit engagement team, “chain of command”, partners & managers providing more than 10hours of non audit services, all other partners located in the office that the partner in charge is located

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

chain of command refers to…

A

anyone who overseeing partner on the case

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

partners in charge rotate…

A

every 5 years

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

a covered employee cannot..

A

be employed by the client

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

if someone takes a position with the client, they must…

A

remove themself from the engagement during negotiations, one year cooling off period before taking a FROR

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

when a client takes a position with public accounting firm, one cannot..

A

be on the attest engagement for however many years they will be on the f/s

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

from PCAOB to accounting firm, you have to…

A

apply to a one year cooling off period

17
Q

who is considered immediate family?

A

spouse and dependent children

18
Q

immediate family mist follow all rules as a covered person except…

A
  1. can be employed by a client (but not FROR)
  2. limited provisions in participation in employee stock ownership and equity compensation plans
19
Q

who is considered close relatives?

A

parents, siblings, non dependent children

20
Q

independence for close relatives is generally impaired if..

A

individual is employed as FROR at client or has an investment that is material to his/her net worth or enables significant influence over client

21
Q

a covered person and immediate family members are not permitted to have…

A
  1. direct financial interest in an attest client (both material and immaterial) Includes beneficial ownership interests
  2. material indirect financial interest in the client
22
Q

for a material indirect financial interest in the client, must not…

A

be able to participate in the intermediary’s investment decisions

23
Q

for SEC clients, material indirect financial interest in the client investments cannot exceed…

A

20% of the intermediary’s total investments

24
Q

after identifying an independence violation, must…

A

dispose of any proscribed investments immediately

25
Q

bank accounts are allowed if..

A

an uninsured portion is immaterial to covered persons net worth

26
Q

bank account FDIC limit is

A

$250000

27
Q

brokerage accounts are allowed if…

A

the risk of loss is immaterial to the covered persons net worth

28
Q

brokerage account SIPC limit is

A

$500000

29
Q

what loans are allowed?

A

auto loans/lease, loans fully secured with insurance policy, mortgages that are grandfathered, and loans fully secured by cash deposits at the same institution

30
Q

credit card balances are permitted if…

A

current balance is less than $10000

31
Q

insurance policies are permissible provided…

A

covered person did not receive preferential treatment in obtaining the policy (for public entities)

32
Q

does SEC allow joint business ventures between covered and client?

A

no

33
Q

does AICPA allow joint business ventures between covered and client?

A

yes

34
Q

primary concern of non attest services

A

self-audit threat to independence in fact

35
Q

AICPA is more ____ to non-attest services

A

lenient

36
Q

what fees are prohibited for f/s audits and reviews?

A

contingent fees and commissions

37
Q

unpaid prior-year professional fees..

A

impair independence

38
Q

cannot start current year audit until last years is paid because…

A

there cannot be leverage against auditors

39
Q
A

Audit & Assurance (12 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions