Exam review Flashcards
Pro rata shares are
a direct financial interes
If a company agrees to fix the mistatenebt then
An unmodified opinion is issued
What happens when a company uses multiple methods of reporting its inventory for example LIFO and FIFO both
Nothing meanwhile it is properly disclosed unmodified opinion is issued
What is not something that auditors look at when relating to related party transaction
Determine which of the client’s related party transactions were not completed on an arm’s length transactions basis.
What entity-level control is specifically identified in the professional standards as a control of importance that should be evaluated
Period-end financial reporting controls
When do we reference the work of as specialist
When a modification of the report occurs
Any report issued on significant deficiencies noted during an audit should
Claim the restriction of the use of the report
Include the definition of significant deficiencies
Indicate that the purpose of the audit was to report on the financial statements and not to provide assurance on internal control,
What do governmental audits state that GAAP does not
Report describing the scope of the auditor’s testing of compliance and of internal control.
What should an auditor do when a client claims that the cost of correcting the weaknesses would exceed the benefits
Disclaim an opinion as to management’s cost-benefit statement.
During a recession what should adustiors focus on
Allowance for credit losses.
When do we make reference wo a service auditor
When there is a modification of the engagement because of it
Notice this is not a group where more than one audit team works on the same audit
When an unmodified report is issued on the compliance of a company what happens when subsequent information of noncompliance is discovered
The report stays the same since compliance is only being tested for the specific time frame of the report, not for subsequent events.
Only if the auditor assumes that it is of such nature and significance that its disclosure is needed to prevent report users from being misled, the auditor may add an other-matter paragraph in the report to describe the nature of the noncompliance.
Which of the following would not have a direct impact in determining the sufficiency of evidence gathered during an audit?
The cost-benefit relationship of obtaining the audit evidence.
A written client representation letter most likely would be an auditor’s best source of corroborative information of a client’s plans to:
Discontinue a line of business.
Things that affect recognition, measurement, and disclosure.
What type of opinion is rendered if no adequate information is used to inform readers about the companies ability to continue as a goign concern
Qualified (except for) or adverse opinion, depending on the level of materiality.
Luis the obejective of the audit is not affected
What is audit risk
The failure of an auditor to detect a material mistatement
Best way to confirm dividends
Records produced by investment services.
Stock ledgers maintained by independent registrars.
indicate how many shares of stock are issued and outstanding, and identify the shareholders of record, but they do not contain information concerning dividends.
Which of the following would a successor auditor ask the predecessor auditor to provide after accepting an audit engagement?
Matters that may facilitate the evaluation of financial reporting consistency between the current and prior years.
What are the entity objectives
O effectiveness and efficiency of Operations
Reliability of FS Reporting
Compliance with laws and regulations
Coso farimwork
Control environment
Risk assessment
Information an communication
Monitoring activities
Existing control activities
