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Auditing > Completing the Audit > Flashcards

Completing the Audit Flashcards

1
Q

Reclassifying items that should be deferred or contra-assets or liabilities to miscellaneous or other revenues and expenses, especially at the end of a quarter or year is referred to as

A

Earnings management

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2
Q

The auditor’s report on the entity’s financial statements covers all events that occur up to the

A

date of the auditor’s report

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3
Q

Potential warranty payments, tax disputes with the IRS and debt guarantees on behalf of another party are all examples of

A

contingent liabilities

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4
Q

adjustments made to meet analysts’ profit expectations

A

Earnings management

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5
Q

Auditors must rely on the attorney to inform Blank______ if an unasserted claim must be disclosed.

A

the client

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6
Q

Management’s refusal to provide written representations

A

should cause auditor skepticism

constitutes a scope limitation

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7
Q

When no formal lawsuit or other action has been filed or threatened, but circumstances could result in an action in the future, a(n)
blank blank exists.

A

unasserted claim

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8
Q

A proposed adjustment to the financial statements that the client decides not to make is called a(n

A

uncorrected misstatement

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9
Q

Subsequently discovered facts become known to the auditor after the

A

date of the auditor’s report

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10
Q

When subsequently discovered facts that would result in either the revision of the auditor’s report or the financial statements are discovered after the audit report release date and individuals are continuing to rely on the statements, the Blank______ should notify the individuals that the statements should not be relied on.

A

client

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11
Q

For public entities, the communication of all significant internal control deficiencies must be made to the client in writing

A

prior to the audit report release date

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12
Q

For nonpublic entities, the communication of all significant internal control deficiencies must be made to the client in writing

A

no later than 60 days after the audit report release date

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13
Q

Management acknowledgment of its responsibility for the fairness of the financial statements in accordance with U.S. GAAP is included in (blank) audit written representation

A

all

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14
Q

A list of pending or threatened litigation, claims, or assessments currently outstanding against the client is/is not included in audit written representation

A

is not

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15
Q

A description of recommendations that allow the client to improve the efficiency and effectiveness of its operations is/is not included in audit written representation

A

is not

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16
Q

Availability of all financial records and related data is included in (blank) audit written representation

A

all

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17
Q

Information related to the presentation and disclosure of items within the financial statements is included in (blank) audit written representation

A

all

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18
Q

Disclosure of all significant deficiencies and material weaknesses in internal control is included in (blank) audit written representation

A

public entity

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19
Q

Information concerning fraud involving management and employees who have significant roles in internal control is included in (blank) audit written representation

A

all

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20
Q

Auditors’ judgment about the quality of the client’s accounting principles is/is not included in audit written representation

A

is not

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21
Q

A statement that the financial statements are prepared according to U.S. generally accepted accounting principles is/is not included in audit written representation

A

is not (Written representations indicate that management has fulfilled its responsibility for the preparation and presentation of financial statements according to GAAP. However, written representations should not express an opinion on the financial statements)

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22
Q

Working papers are reviewed at ______ supervisory level(s) of a CPA firm.

A

every

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23
Q

Managers and partners typically review at the _____ of the engagement timeline.

A

end

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24
Q

Concurring partners are often concerned with _____ control standard compliance.

A

quality

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25
Q

Reviewers are concerned that the ________ all tie together.

A

working papers

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26
Q

Reviewers are concerned if immaterial past misstatements have a ______ material effect.

A

cumulative

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27
Q

conditions that have come into existence after the balance sheet date are a type ___ subsequent event

A

2

28
Q

a flood damaging a significant portion of the operating facility after year-end is a type ___ subsequent event

A

2

29
Q

additional evidence about conditions that existed at the balance sheet date is a type ___ subsequent event

A

1

30
Q

during the audit, a customer with a large A/R balance at year-end declaring bankruptcy is a type ___ subsequent event

A

1

31
Q

a lawsuit that was in progress as of year-end being settled shortly thereafter is a type ___ subsequent event

A

1

32
Q

The CPA’s opinion on the ______of the financial statements may be changed by subsequent events.

A

fairness

33
Q

Many subsequent events may involve the settling of ________.

A

litigation

34
Q

Type 2 subsequent events come into existence _____ the balance sheet date.

A

after

35
Q

Subsequent events need to be disclosed in the financial statements; otherwise, the financial statements would be_______.

A

misleading

36
Q

Type 1 subsequent events require the financial statements to be _______ if needed.

A

adjusted

37
Q

Type 2 subsequent events occur after the balance sheet date but ____ the completion of fieldwork.

A

prior to

38
Q

Type 1 subsequent events come into existence due to new ______becoming available.

A

evidence

39
Q

Interim testing is done prior to year end for efficiency purposes and when overall risk of material misstatement is (blank)

A

low

40
Q

Procedures used to allow auditors to extend their conclusions to the end of the year under audit are referred to as:

A

roll-forward work

41
Q

Procedures used by auditors near the end of the audit to identify unusual or unexpected relationships not previously identified during the audit are referred to as:

A

analytical procedures

42
Q

Omitted procedures are discovered before/after the audit report release date

A

after

43
Q

What is typically the auditors’ initial procedure performed to identify litigation, claims, and assessments?

A

Inquire of the entity regarding the existence of litigation, claims, and assessments.

44
Q

The attorney’s expert opinion as to the probability of an unfavorable judgment against the entity is/is not included in the attorney letter

A

is not

45
Q

What audit documentation review is focused on ensuring that the quality of audit work and reporting is consistent with the quality standards of the firm?

A

Review of work by second (reviewing) partner - aka engagement quality review

46
Q

Roll-forward procedures are performed before/after the date of the financial statements

A

after

47
Q

Auditors must review accounting estimates for these two things

A
  1. management’s process for developing estimates
  2. reasonableness
48
Q

Attorney letters are requested by the ____, prepared by the ______, sent by the ______, filled out by the attorney, and returned to the ____.

A

auditor, client, auditor, auditor

49
Q

Written representations are provided by _____ to ______.

A

management to auditors

50
Q

Written representations are dated using the date of the

A

auditor’s reports (audit completion date)

51
Q

Rollover method of materiality considers the (blank blank) income effect(s) of misstatements

A

current period

52
Q

Iron curtain method considers the (blank blank) of the materiality adjustments on the entity’s balance sheet

A

aggregate effect

53
Q

all adjustments and misstatements must be communicated to the

A

audit committee/individuals charged with governance

54
Q

Near the end of the audit, (blank blank) identify unusual or unexpected relationships not previously identified

A

analytical procedures

55
Q

Reviewing and scanning for unusual/large transactions in accounts for “miscellaneous,” “other,” and “clearing” may assist in identifying (blank blank)

A

earnings management

56
Q

With respect to reasonableness, auditors should ensure estimates are consistent with these three things

A

one another, historical data, industry data

57
Q

facts that become known to auditors after the date of the auditor’s report that may have caused the auditors to revise their report are called

A

subsequently discovered facts

58
Q

Reading minutes of meetings held after the date of the financial statements and reviewing the entity’s latest interim financial statements are two procedures that can be performed specially to identify the existence of material (blank blank)

A

subsequent events

59
Q

An overall review of the reasonableness of accounting estimates is similar in nature and purpose to the role of
(blank) procedures conducted near the end of the audit.

A

analytical

60
Q

True or false: If management refuses to provide written representations, the auditor must withdraw from the engagement.

A

False, a qualified or disclaimer of opinion may occur

61
Q

Auditor recommendations for adjustments to the financial statements are considered to be
(blank) to indicate management’s responsibility for the financial statements.

A

proposed

62
Q

The auditors have gathered sufficient, appropriate evidence on which to base their report at the date of

A

the auditor’s report

63
Q

Significant events occurring between the date of the audit report and the audit report release date may result in a(n) (blank blank) report

A

dual date

64
Q

Attorneys should encourage clients to disclose unasserted claims to auditors if the assertion of a claim is remote/probable/possible

A

probable

65
Q

For public entities, the communication of all significant internal control deficiencies must be made to the client in writing prior to the (blank) date

A

audit report release

66
Q

Management letters ______.

A

are delivered to and discussed with the client

can make the client aware of other business services offered

Auditing (10 decks)

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