Evaluating Audit Findings

Question 1

The auditor must evaluate the materiality of all misstatements found during the audit. What qualities are evaluated about the misstatement?

Answer 1

Size of a misstatement, consider the effects, both individually and in the aggregate, aggregate of known and likely misstatements approaches the materiality level, prior period misstatements, qualitative considerations, and professional judgment

Question 2

Misstatements are more likely to be considered material if they?

Answer 2

Affect trends in profitability, compliance with loan covenants, increase management compensation, affect significant financial statement elements, and can be objectively determined

Question 3

Documentation requirements for misstatements include?

Answer 3

Amount below which misstatements are clearly trivial, all misstatements accumulated during the audit and whether they have been corrected, and summary of uncorrected misstatements

Question 4

A review consists of consideration of whether?

Answer 4

Work has been performed in accordance with professional standards and applicable laws and regulations, significant findings or issues, appropriate consultations, nature, extent, and timing of the work performed is appropriate, work performed supports the conclusions, evidence obtained is sufficient and appropriate, and objectives of the engagement have been achieved

Question 5

The engagement partner should review the following significant findings or issues on a timely basis during the audit to allow resolution on or before the date of the auditor’s report?

Answer 5

Critical areas of judgment, significant risks, and other areas the engagement partner considers important

Question 6

Audit documentation should include?

Answer 6

Who performed, the date the work was completed, who reviewed, and the date of the review

Question 7

The engagement quality reviewer should do the following?

Answer 7

Evaluate the significant judgment, evaluate the engagement team’s assessment of and responses to significant risks including fraud risk, evaluate significant judgments about materiality, corrected and uncorrected misstatements, and control deficiencies, firm’s independence, engagement completion document, review the financial statements, management’s report on internal control, and the engagement report, read other information, and evaluate communications with management

Question 8

A significant engagement deficiency exists when?

Answer 8

Failed to obtain sufficient appropriate evidence, reached an inappropriate overall conclusion, report is not appropriate, and not independent