Flashcards 3
Auditor expresses adverse opinion, the opinion paragraph should include…
A direct reference to separate paragraph disclosing basis for the opinion.
What circumstances requires modification of the accountant’s report on a review of interim financial information of a publicly held entity prepared on the basis of generally accepted accounting principles?
Lack of adherence to generally accepted accounting principles and a lack of adequate disclosure
An auditor performs a search for unrecorded liabilities to ascertain that all payables have been recored in the proper period. The search may be performed in each of the following areas.
- Unmatched invoices and unbilled receiving reports.
- Significant payments subsequent to the end of the
period. - Unbilled professional fees at the end of period.
What best describes a difference between a compilation of prospective financial statements and an examination of prospective financial statements?
A compilation does not contemplate the auditor providing any form of assurance whereas an examination does include assurance
For all types of engagements under SSAE (Statements on standards for Attestation Engagements)
The CPA needs to be independent
What is a requirement for accepting an attestation engagement to report on the controls of a service organization?
The service auditor has the competence and capability to perform the engagement.
What of the following should be included in the workpaper documentation if risk factors are identified as being present?
Those risk factors identified
If an auditor of a non-issuer discovers an unexpectedly high number of deviations during procedures performed on a sample to test management’s review and approval of time sheets, then the auditor would most appropriately:
Increase the assessed risks of a material misstatements
Management should address written representation about a firm’s annual audit to the:
Auditor.
A written representation is a (written) statement by management provided to the auditor to confirm certain matters or to support other audit evidence
If a non-issuer refuses to give permission to the auditor to communicate with its external legal counsel, then the auditor should modify the…
The opinion in the auditor’s report. They would issue a disclaimer of opinion. Alternatively decide to withdraw from the audit.
A non-issuer engaged a practitioner to perform agreed-upon procedures on specific matters. The date of the report would ordinarily be determined by the occurrence of what event…
The completion of the agreed-upon procedures.
An accountant should add an other-matter paragraph in the review report…
when the accountant considers it necessary to communicate a matter that is not presented or disclosed in the financials
An accountant should add an emphasis-of-matter paragraph in the review report…
when the accountant considers it necessary to communicate a matter that is presented or disclosed in the financials
An auditor who is unable to form an opinion on a new client’s operating inventory balances may issue an unmodified opinion on the current year’s…
Balance Sheet only.
Its at a point in time and can count the ending inventory whereas the Income statement is missing Beg. Inventory to calculate COGS
- Must be communicated to management and the Audit Committee?
- Results in an Adverse Opinion of the Effectiveness of Internal Controls?
- Both significant deficiencies and material weaknesses.
2. Material weakness but not significant deficiencies.
