Homework 1 Flashcards
Which of the following best describes the relationship between attestation services and audit services?
A) Auditing is a subset of attestation and focuses on providing companies with advisory services and decision support.
B) Attestation is a subset of auditing that improves the quality of information for decision makers.
C) Auditing is a subset of attestation that involves the issuance of an opinion regarding the fairness of financial statements.
D) Attestation is a subset of auditing that provides more assurance than does an audit engagement.
Auditing is a subset of attestation that involves the issuance of an opinion regarding the fairness of financial statements.
An independent audit adds value to the communication of financial information because the audit
A) Assures the readers of financial statements that any fraudulent activity has been corrected.
B) Lends credibility to the financial statements.
C) Confirms the exact accuracy of management’s financial representations.
D) Guarantees that financial data are fairly presented.
Lends credibility to the financial statements.
What is the correct order of an audit?
1) Plan the Audit
2) Obtain and understanding of the client and its environment, including internal control.
3) Assess the risks of misstatement and design further audit procedures.
4) Perform further audit procedures.
5) Complete the audit.
6) Form an opinion and issue the audit report.
Audit _______ begins with determining the requirements for the engagement.
Planning
_____ assessment procedures are performed when obtaining an understanding of the client.
Risk
______ risk is the risk of material misstatement of an assertion without considering internal control.
Inherent
Test of controls are performed to determine whether key controls operate ______.
Effectively
The final step of an audit is issuing the audit ______
Report
Which of the following statements relating to attest and assurance services is not correct?
A) In performing an attest service, the CPA determines the correspondence of the subject matter (or an assertion about the subject matter) against criteria that are suitable and available to users.
B) Assurance services can be performed to improve the quality or context of information for decision makers.
C) Financial statement auditing is a form of attest service but it is not an assurance service.
D) Independence is an important attribute of assurance service providers.
Financial statements auditing is a form of attest service but is not an assurance service.
Which of the following statements best describes what is meant by an unqualified audit opinion?
A) An unqualified auditor’s opinion indicates that in the auditor’s opinion the client’s financial statements are fairly presented in accordance with agreed-upon criteria, with no need for the inclusion of qualifying phrases.
B) An unqualified auditor’s opinion indicates that in the auditor’s opinion the client’s financial statements are not fairly enough presented in accordance with agreed-upon criteria to qualify for a clean opinion.
C) An unqualified auditor’s opinion indicates that the auditor is expressing different opinions on each of the basic financial statements regarding whether the client’s financial statements are fairly presented in accordance with agreed-upon criteria.
D) An unqualified auditor’s opinion indicates that the auditor is not qualified to express an opinion that the client’s financial statements are fairly presented in accordance with agreed-upon criteria.
An unqualified auditor’s opinion indicates that in the auditor’s opinion the client’s financial statements are fairly presented in accordance with agreed-upon criteria, with no need for the inclusion of qualifying phrases.
What is the correct order of the components of a standard auditors’ report?
1) Title
2) Addressee
3) Opinion on the Financial Statements
4) Basis for Opinion
5) Critical Audit Matter
6) Critical Audit Matter and Auditor Response
7) Name, Service Period, and Address of Audit Firm or Auditor
8) Date
The ___________ is (are) responsible for the financial statements.
Management
The auditor’s report is the __________ of an audit.
End Product
An audit report includes a title, addressee, the financial statements audited, the auditor’s ___________ on the financial statements, the basis for the opinion, and the critical audit matters and responses.
Opinion
An opinion indicates that the financial statements are presented __________.
Fairly
