Be a champion Flashcards
If management makes an assertion that transactions with related parties were conducted on terms equivalent to those prevailing in arm’s-length transactions
the auditor’s report may include a qualified or adverse opinion if evidence cannot be obtained to support management’s assertion
AS #18 requires an A of an issuer to obtain an understanding of the company’s process for
Identifying related party tranx and with related parties.
authorizing and approving tranx with related parties.
Acct for and disclosing relationships and tranx with related parties in the FS.
what are the 4 conditions that must be met for the auditor to examine IC in an integrated audit under AICPA standards
Mgmt must accept resp for the effectiveness of the entitys IC
Mgmt must eval the effeticeness of the entitys IC using suitable and available criteria.
Mgmt must support its assertion about the effectiveness of the entitys IC with sufficient approp evidence.
Mgmt must provide its written assertion about the effectiveness of the entitys IC in a report that accompanies the auditors report
What should an exam report on IC over Fin reporting include?
a paragraph describing the inherent limitations of IC over fin reporting and the fact that errors or fraud may occur and not be detected and corrected as a result.
In order for a practitioner to accept an attest engagement to examine and report on an entity’s internal control over financial reporting
management must provide a written assertion about the effectiveness of internal control in a report that accompanies the auditor’s report
An engagement to express an opinion on a system of internal accounting control will generally
Be more extensive in scope than the assessment of control risk made during the financial statement audit.
Who est int’l standards on auditing
int’l auditing and assurance standards board
Who est int’l standards on accounting
Int’l acct standards board
What are the diff between US and int’l standards
Integrated audits.
12 months going concern.
Division of responsibility
What do auditors need to do before outsourcing professional services
notification and client approval
what violates the code of professional conduct
material departures from GAAP
Who owns audit documentation?
the auditor
What is a contingent fee
a fee est for the performance of any service pursuant to an arrangement in which no fee will be charged unless a specified finding or result is attained, or in which the amount of the fee is otherwise dependent upon the finding or result of such service
Can a member receive a referral fee for sending an attest client to another prof? non attest?
nein
ja
Tax accountants
can accept referral fees and commissions. they should be disclosed to the client
Can members disclose their clients names?
yes unless doing so would disclose confidential information
Who can the auditor disclose client info to?
court order or the consent of the client. or a state cpa regulatory body like a quality review board of a states CPA society requests the info
Who is a covered member?
Team Member
Person in a position to influence the attest engagement.
A partner, partner equivalent, or manager who provides more than 10 hours of nonattest services to the attest client within any fiscal year.
A partner or equiv in the same office as the lead attest partner
The firm, including the EE benefit plan
An entity whos operating, financial, or acct policies can be controlled by any of the individuals or entities described above
Network firm
two firms cooperate to enhance their capabilities to provide prof services and share a common biz strategy
What do network firms share?
A common brand
A common control
Professional resources
When must network firms be independent?
if use of the audit or review report is unrestricted
A member firm may not sign a current-year audit report if
there are unpaid fees for services provided by the firm more than a year earlier.
Systrust engagement
SOC 3
Precision
the allowance for sampling risk. Used to construct an interval around the sample results in which the true population characteristic is expected to lie. Possible error in either direction is considered
If the client refuses to let the auditor mention a going concern issue in the report what effect does this have
this is a GAAP departure. This results in the modification of the review report
what should a compilation report state?
that mgmt is responsible for the FS
how does the A control the risk of incorrect acceptance when using PPS samplinig?
by specifying a risk level when planning the sample
If an auditor discovers that an important audit procedure was not performed what should they do?
nothing, if the audit report can still be supported.
What should be included in prospective FS issued in an attestation performed in accordance with SSAE?
all significant assumptions used to prepare the FS
What are 3 types of impairments
Personal
External
Organizational
What are reviews made in accordance with?
standards est by the AICPA
What would a review report include?
All info in the FS are representations of mgmt.
Statement describing the principal procedures performed
Statement describing the auditors conclusions based upon the results of the review
When might an auditor accept a contingent fee under the Intl code of ethics for prof accts
if appropriate safeguards are est.
A typical audit inquiry is to ask mgmt..
whether there has been a change in working capital since YE.
FS should be applied within the framework of GAAP
for auditors judgment concerning the fairness of FS
