I. Ethics, Professional Responsibilities and General Principles

Question 1

Objectives of an Audit of FS according to AU-C 200

Answer 1

Obtain reasonable assurance FS are free from material error
Express an opinion
Report on the FS, communicate findings

Question 2

Account balances, at the end of the period. 6 assertions

Answer 2

Existence -
Rights and obligations - holds the rights, obligations to liab
Completeness - have been recorded
Accuracy, Valuation and allocation - appropriate amounts, adjustments
Classification - recorded in proper accounts
Presentation - understandable in context of the financial framework

Question 3

Transactions and events for period under audit. 6 assertions

Answer 3

Occurrence - actually occurred
Completeness - All transactions and events that should have been recorded have been.
Accuracy - appropriate amounts, measurements
Cutoff - recorded in proper period
Classification - recorded in proper accounts
Presentation - understandable in context of financial framework

Question 4

Yellowbook audit includes 3 reports

Answer 4

Audit report
report on internal control
report on applicable compliance with laws or regulations

Question 5

AICPA Statements on Standards for Accounting and Review engagements

Answer 5

Review - limited assurance, attest engagement
Compilation - no assurance, attest engagement
Preparation - no assurance, not attest engagement

Only for non-issuers

No reports issued for preparation engagements

Question 6

Statements on Standards for Attestation Engagements include

Answer 6

Examination
Review - different from FS review
Agreed-Upon procedures

Question 7

Basics of a review are

Answer 7

Possess knowledge of industry
Determine materiality
Design review procedures
Apply analytical procedures
Perform Inquiries of management
Obtain rep letter

Question 8

Terms for the engagement letter

Answer 8

Objective and Scope of Audit
responsibilities of auditor
responsibilities of management
Statement of inherent limitations
ID reporting framework
Reference to the expected form

Question 9

6 elements to a quality control system

Answer 9

Leadership - tone at the top
Relevant and ethical requirements - personnel policies
Acceptance/ continuance of clients, engagements
Human Resources - QC, human capital
Engagement performance - supervision
Monitoring - procedures are appropriate, relevant and operating effectively