Day 5

Question 1

Requirements for Compliance Examination

Answer 1

1. Perform risk assessment
2. Design response to above
3. Determine if supplements audit requirements exist
4. Obtain written Representations
5. Prepare reports
6. Prepare required documentation

Question 2

When do you use classical variable sampling?

Answer 2

To determine the inventory quantities on hand

Question 3

Agreed Upon Procedures - IAMSURE

Answer 3

Independence of practitioner
Agreement of parties
Measureability and Consistency
Sufficiency - client takes responsibility
Use of report = general OR restricted OR specified parties
Responsibility = client
Engagement = summary of significant assumptions

Question 4

PCAOB: what tax services can be provided while auditing a public company?

Answer 4

Reviewing proposed transaction and informing client of tax consequences

CANNOT do individuals TR if they have a financial oversight role

Question 5

A procedure to determine going concern

Answer 5

Inquire with lawyer

Question 6

What should the auditor consider: going concern

Answer 6

MGMT’s plans to liquidate assets

Question 7

What’s included in nonissuers written communication of significant deficiencies?

Answer 7

1. Definition
2. Description
3. Explanation of potential effects
4. Sufficient information for MGMT and those charges with governance to understand
5. Restriction regarding the use of the communication

Question 8

What would provide the least assurance on the operating effectiveness of a control activity?

Answer 8

Preparation of a Flow chart of controls