Ch1 & 2

Question 1

What is Auditing?

Answer 1

Auditing consist of 90% writing & 10% financial.

Question 2

To work as an Auditor

Answer 2

You don’t have to know any accounting. However, you must have knowledge in Financial Accounting.

Question 3

What is the writing aspects of Auditing?

Answer 3

Documentation

Question 4

How many stages are there in the Auditing Cycle? (Name each stages).

Answer 4

1. Plan Audit
2. Gather Evidence
3. Perform Final Review
4. Issue Opinion Letter

Question 5

Who uses the Independent Auditor’s Report?

Answer 5

Board of Directors & Shareholders.

Question 6

What are the 3 basic Standard Auditors Report?

Answer 6

1. Introductory paragraph
2. Scope paragraph
3. Opinion paragraph

Question 7

Explain the Introductory paragraph.

Answer 7

The auditors expressed their opinion based on the audit of F.S. provided by management. Also list the attest services.

Question 8

Explain Scope paragraph.

Answer 8

Private entities follows GAAS.
Public entities follows PCAOB.
Uses Test basis on simple population.

Question 9

Explain Opinion paragraph.

Answer 9

Is the end result of the audit, which the findings are presented fairly.

Question 10

In order to preform an audit, the auditor has to be _______.

Answer 10

Independent.

Question 11

Who uses an audit?

Answer 11

The audit is used by management and both internal/external users.

Question 12

True/False: An Audit Report has to be absolute.

Answer 12

False - the report has to be presented fairly.

Question 13

Why do the auditor’s report appear in Material Respect?

Answer 13

The users depends on the report to make financial decisions. It Materiality can influence the user’s decisions.

Question 14

What is Variance based on?

Answer 14

Sufficient- quantity of evidence.

Appropriate- quality of evidence.

Question 15

True/False: An auditor will do their job with preconceived notion.

Answer 15

False - the auditor must have an open mind or Professional Skepticism.

Question 16

GAAS has how many standards? How many section(s)?

Answer 16

GAAS have in total of 10 standards. 
Total of 3 sections:
1. General Standards (3)
2. Standards of Fieldwork (3)
3. Standards of Reporting (4)

Question 17

I. General Standards

Answer 17

1) Auditors must have adequate technical training.
2) Auditors must be Independent.
3) Perform audit with Due Professional Care.

Question 18

II. Standards of Fieldwork

Answer 18

1) Work must be adequately planned & everyone must be supervised.
2) Must obtain a sufficient understanding of internal control as it affects the F.S.
3) Obtain Standard Sufficient & Appropriate.

Question 19

III. Standards of Reporting

Answer 19

1) Report must follow GAAP.
2) Must state what management change on the ACCT Principles.
3) Notes must state adequate disclosure.
4) Express opinion or if unable, is due to not able to obtain evidence.

Question 20

3 types of Attest functions

Answer 20

1. Audit
2. Review
3. Agreed-upon Procedure