Day 1

Question 1

What are the ethical principals that guide auditors under government auditing standards?

Answer 1

• Serving the public interest
• Integrity
• Objectivity
• Proper use of government info, resources, & position
• Professional behavior

Question 2

When will an auditor decrease the acceptable level of risk?

Answer 2

When the additional cost and effort of selecting more = LOW

Question 3

What assertion? Reviewing numerical sequence of shipping documents and invoices?

Answer 3

Completeness

Question 4

MGMT Rep Letter: what is MGMT responsible for concerning Fraud?

Answer 4

• design, implement, maintain controls to detect/prevent fraud
• Disclose suspected and actual fraud to auditor
• MGMT disclosed it’s results of MGMT risk assessment of fraud
• Disclose all allegations of fraud

Question 5

When to communicate significant deficiencies - FS audit vs Internal Control Audit - nonissuer?

Answer 5

FS audit = 60 days of report release date

Internal Control Audit = by report release date

Question 6

What should the auditor do if MGMT has hedged oil derivatives?

Answer 6

GAAP states to qualify for hedge treatment the entity must demonstrate and disclose a number of transaction features including risk exposure

Auditor would examine contacts for risk exposure and the need to recognize possible loss

Question 7

“I believe the plaintiff will have problems establishing any liability”

Answer 7

Request further clarification

Question 8

“I believe that the action can be settled for less than the damages claimed”

Answer 8

Request further clarification

Question 9

What assertion? Vouching a sample of entries from the voucher register to the supporting documents

Answer 9

Occurrence

Question 10

Client’s accounts receivable turnover is substantially lower than last year, why?

Answer 10

There was an improper cutoff of sales at the year end

Question 11

What should be included in the Auditors report when: Reporting on Required supplementary Information - Nonissuer

Answer 11

The auditor should include a separate section explaining the the following

• Requires supplementary info - auditor applied the required procedures
• Supplementary info is committed
• Material departures
• Not able to complete the required procedures
• Unresolved doubts

Question 12

What stmt is included in the Accountants report when engaged to compile a financial projection?

Answer 12

Engagement does not include an evaluation of the support for the underlying assumptions in the projection