Final Flashcards
The audit objective that all transactions and accounts that should be presented in the financial statements are in fact included is related to what PCAOB assertion?
Completeness
determination of whether the client’s financial statement assertions are fairly stated is the essential purpose of the…
audit function
When auditors lack independence, they should issue what opinion on the entity’s financial statements
disclaimer of opinion
if financial statements contain a material but non-pervasive departure from GAAP, the auditors should render what opinion
qualified opinion
management determined it was probable that a pending litigation claim would result in a material loss. The loss was disclosed in the footnotes to the financial statement. If the auditors believe an accrual should be made what type of report should be issued?
qualified or adverse opinion
during the year under audit, F Corp experienced significant losses due to a pervasive fraud scheme. Because of the lack of documentary evidence and inability to perform appropriate auditing procedures, the auditors were unable to determine the total amount of the loss. What type of report should the auditors issue?
Disclaimer or qualified opinion
The responsibilities principle under GAAS includes what 4 things?
competence and capabilities, independence, due care, and professional skepticism
Planning and supervision, materiality, risk assessment, and audit evidence are part of what principle
Performance
When there is enough quantity to afford a reasonable basis for an opinion on financial statements the audit evidence is usually considered
sufficient
Which opinion is given if financial statements are not in conformity with GAAP
Adverse
What agency has ultimate authority in defining independence for public comapnies?
SEC
Pronouncements issues by the PCAOB are subject to formal approval by the
SEC
An important role of the PCAOB is to oversee the ______ of firms that audit issuers
regulation
Based on Sarbanes-Oaxley who is ultimately responsible for the independence of the external auditor?
audit committee
An auditor most likely would review an entity’s periodic accounting for the number sequence of shipping documents and invoices to support management’s financial statement assertion of
completeness
the confirmation of a cash balance provides primary evidence regarding which management assertion?
existence
Analytical procedures used in planning an audit should focus on enhancing the auditor’s understanding of the
client’s business
Inherent risk and control risk are functions of the
client and its environment
If immaterial fraud is discovered in the sales account identified during the auditor’s internal control testing what should happen
increase the assessment of control risk for sales
Comparing current-year to prior-year sales volumes is an analytical procedure performed in what stage of the audit
planning
what are the components of internal controls
Control environment, control activities, monitoring, risk assessment, information and communication
integrity and ethical values, board of directors, management’s philosophy and operating style, organizational structure, financial reporting competencies, and human resources are factors of what
control environment
When an entity will not allow legal inquiry of outside legal counsel, the auditor should issue a
disclaimer of opinion
Auditor’s judgment concerning the overall fairness of the presentation of financial position, results of operations and cash flows is applied within the framework of
GAAP
