Chapter 6 Flashcards
Do you provide assurance in preparation?
no
Do you provide assurance in compilation?
no
do you provide assurance in a review?
limited
what happens with the issuance of the report when a accountant performs more than one service?
issue the report to highest service rendered
Under DOL rules when is independence impaired?
- direct financial interest/material indirect financial interest in the plan or plan sponsor
- connection to the plan as promoter, underwriter, investment advisor, voting trustee, director, officer, or employee
- member of firm maintains financial records
Under DOl rules when is independence not impaired?
- former officer/employee is employed by the firm and individual dissacosciates and does not audit the plan covering their employment period
- actuary rendered services to the plan
- accountant was engaged by the plan sponsor during the period of professional engagement with the plan
What is a self interest threat?
financial or other interest with influence auditor
What is a self review threat?
auditor has provided non audit services and will not appropriately eval judgements made abt non audit services
What is a bias threat?
auditor will as a result of political, ideological , social or other convictions take a position that isnt objective
What is familiarity threat?
relationship with personnel of audited entity will make them not objective
What is undue influence threat?
external influences will impact the auditors ability to be objective
What is mgmt participation threat?
auditor taking role of mgmt on behalf of entity undergoing audit
What is structural threat?
audit orgs placement in a gov entity in combo with the structure of the gov entity being audited will impact auditors objectivity
What are safeguards
reduce acceptable levels of threats to independence
Who was the PCAOB est by?
SOX Act
How often must the lead and concurring partner rotate off the engagement ?
5 years
How often must the other partners rotate off the engagement ?
7 years
What services so not need to be preapproved by the audit comittee
non audit services that do not exceed 5% of total rev
What are the permissible non audit services
- tax compliance
- tax planning
- tax advice
The PCAOB must conduct annual inspections of registered public accounting firms that regularly provide audits to more than how many issuers?
100
What must the auditor report to the audit comittee when providing non audit services?
- critical accounting principles and practices used
- alternative accounting treatments discussed with mgmt
- material written communications between audit firm and mgmt
What does section 404 of SOX act require
- annual report of an issuer to include mgmts assessment of the effectiveness of internal controls
- external auditors to attest to mgmts assessment
How often should the PCAOB inspect a registered public accounting firm that regularly issues audit reports to 50 issuers
every 3 years
PCAOB consist of how many CPA’s
2
