Day 16 Flashcards
When the auditor increases the assessed level of control risk bc control activities were determined to be ineffective, the auditor would increase what?
Extend of tests of details
CR increases = DR decreases
To get a decrease in DR, greater assurance is needed from substantive tests. Thus increasing the extend of tests.
True or False: Analytical procedures performed in the overall review stage require specific documentation.
False
MCQ-02311
True or False: When an auditor uses Analytical procedures as the principal substantive test of a significant FS assertion, the auditor is required to document both the auditor’s expectation and the factors considered in developing that expectation.
True
MCQ-02311
What is the PRIMARY purpose of sending standard confirmations to financial institutions
To provide corroborating information on deposits and loan balances
MCQ-02937
An Auditor has been engaged to report on supplementary information that accompanies audited FS. What stmt should be included in the report?
A stmt that the supplementary information has been subjected to audit procedures
MCQ-00048
The auditor discovered that AR turnover is substantially lower in the CY compared to PY. Why?
Fictitious credit sales have been recorded during the CY
MCQ-02383
What type of service is a Preparation Engagement?
Non-attest and not required to be independent
MCQ-12573
What will result in Mgmt refusal to furnish a Rep. Letter?
Disclaimer of Opinion or Withdraw
Name the procedures used to test the DESIGN effectiveness of Internal Control?
- Inquiry
- Observation
- Inspection
- Walk-Throughs
Name the procedures used to test the OPERATING effectiveness of Internal Control?
- Inquiry of appropriate personnel
- Observations of the company’s operations
- Inspection of relevant documents
- Reperformance of the control
True or False: Materiality limits apply to violations of State Labor Regulations?
True
MCQ-05359
What happens to Sample Size?
Increase in Tolerable Misstatement
Decrease in Sample Size
MCQ-02599
What happens to Sample Size?
Increase in Assessed Level of Control Risk
Increase Sample Size
MCQ-02599
A CPA is required to comply with what provisions when engaged to:
Issue a letter for an underwriter, also known as a comfort letter, to a broker or dealer of securities.
Statements on Auditing Standards
MCQ-08410
A CPA is required to comply with what provisions when engaged to:
Provide assurance on investment performance statistics prepared by an investment company on established criteria.
Statements on Standards for Attestation Engagements
MCQ-08410
Define: Attest Engagements
When a CPA is engaged to issue an Examination, a Review, or an Agreed-Upon Procedures report on a SUBJECT MATTER
Define: Financial Forecast
Expected financial results of future periods based on EXPECTED Conditions and EXPECTED course of action.
Define: Financial Projection
Based on HYPOTHETICAL assumptions
“WHAT-IF” type of scenarios
LIMITED USE
Developing an Audit Plan
“NET”
The Nature, Extent, and Timing of the procedures to be performed
What is the ultimate purpose of assessing Control Risk?
To contribute to the auditor’s evaluation of the risk that Material Misstatements may exist in the FS
MCQ-02485
What is the ultimate purpose of assessing Control Risk?
To contribute to the auditor’s evaluation of the risk that Material Misstatements may exist in the FS
MCQ-02485
What should an independent auditor do when issuing an audit report for a governmental entity and plans to issue a separate report on Internal Controls over financial reporting and Compliance with laws and regulations?
State in the audit report that separate reports will be issued
Agreed-Upon Procedures:
“I AM SURE”
Independence of practitioner
Agreement of the parties
Measurability and Consistency
Sufficiency of the procedures
Use of the report can be General or Restricted
Responsibility for the subject matter = client
Engagement to perform agreed-upon procedures on Prospective FS
