Becker A1-A6 Flashcards
According to SOX II, Auditor Independence, the lead audit partner and concurring partner must rotate off the audit every______ year(s).
5 Years
According to SOX Title I, Public Company Accounting Oversight Board, audit documentation must be maintained for_______ year(s).
7 years
According to the SEC, other audit partners should rotate off the audit engagement after no more than______year(s).
7 years.
(after 7 cycles of the audit engagement, like 7 dispensations of the earth, other audit partners should rotate off the audit engagement after no more than 7 years.)
According to the SEC, lead partners and concurring partners are subject to a _____year “time-out” period before returning to an engagement.
5 years.
(Like how the lead audit partners and concurring partners must rotate off the audit every 5 years, they must have a “time-out” period of 5 years to avoid reveiwing their own past audit work.)
Under SEC rules, covered persons include the audit engagement team and individuals within the audit chain of command. This includes any other partner, principal, shareholder, or managerial employee of the firm who provided______ or more hours of non-audit services.
10 hours.
(you would think it would have to be more than 10 hours, but nope, as soon as you hit double digits you qualify as a covered individual.)
A cool-off period of _____year(s) is required before a member of an issuer’s audit engagement team may begin working for a registrant in a key position.
1 year.
(to avoid something like a familiarity threat, there must be at least 1 years time between working on an audit engagement, to working in a key position at the audit client.)
The PCAOB will conduct annual inspections of registered public accounting firms that regularly provide audit reports for more than_____issuer(s).
100 issuers.
(idk this is the answer, but its kinda like a company that hits 100 employees must then provide medical insurance.)
Independence is considered impaired if a covered member’s aggregate outstanding balance from consumer loans has a balance greater than $____ after payment of the most recent monthly statements made by the due date or within any available grace period.
$10,000
In which situation would an auditor who is rendering an audit opinion on the financial statements of an employee benefit plan that will be filed with the Department of Labor be considered independent?
A member of the auditor’s firm was a voting trustee of the plan in a prior year but has since disassociated from the plan and did not participate in auditing the financial statements of the plan.
(it was important that the firm member was disassociated from the plan to prevent a familiarity threat, and as well for them to not audit the financial statements to prevent the self review threat.)
when communicating internal control related matters noted in a financial statement audit of a nonissuer, one of the things an auditor’s report issued on significant deficiencies should indicate is….
That the purpose of the audit was to report on the financial statements and not to provide assurance on internal control.
(it is important that the users of the audited financial statements understand exactly what was done so as to not confuse whats going on when the auditor is giving their opinion.)
An auditor may achieve audit objectives related to particular assertions by:
Performing analytical procedures.
(an auditor may use analytical procedures when evaluating actual vs expectations.)
10/MCQ-05004
The missing invoice should be counted as a deviation, resulting in a 2% sample deviation rate. However, this information alone is not sufficient to determine whether the control can be relied upon. The auditor would also need to know the upper deviation rate(or the allowance for sampling risk, which would allow the auditor to calculate the upper deviation rate). It is the upper deviation rate that needs to be compared to the tolerable rate in making decisions.
What would NOT be considered an analytical procedure?
Projecting an error rate by comparing the results of a statistical sample with the actual population characteristics.
Analytical procedures used in the planning phase of an audit should focus on:
Enhancing the auditor’s understanding of the transactions and events that have occurred since the last audit.
When there has been a change in accounting principles, but the effect of the change on the comparability of the financial statements is not material, the auditor should:
Not refer to the change in the auditor’s report.
(The change didn’t make any material difference, like a red dot being put on a slightly redder car, why worry about it? The normal user wouldn’t notice a difference anyways.)
