Integrated Audit and I/C communications

Question 1

Internal Standards on Auditing (ISA) does not

Answer 1

define the term Material Weakness

Question 2

The SEC

Answer 2

Strongly recommends (NOT Require) that companies have Audit Committees

Question 3

Auditor should disclaim an opinion on management’s report if

Answer 3

Management’s report contains a cost benefit statement

Question 4

As of date of management’s assurance

Answer 4

should match date of F/S

Question 5

SOC Requires what to be communicated to the audit committee

Answer 5

1) All critical accounting policies
2) All Material GAAP Accounting Treatments
3) Significant communications with Management
4) Schedule of Unadjusted Differences

Question 6

Top Down Approach

Answer 6

1) Evaluate overall risks at the F/S Level
2) Consider controls at the entity level
3) Focus on accounts/disclosures/assertions for reasonable possibility of MM

Question 7

When must audit of internal control be completed by

Answer 7

Report Release Date

Question 8

A Material weakness in I/C

Answer 8

leads to Adverse opinion

Question 9

Entity Level controls

Answer 9

1) Consists of Control Environment & Period end financial reporting
2) have a pervasive effect on I/C

Question 10

What controls are identified with professional standards as items of importance that should be evaluated

Answer 10

Period end financial reporting process controls

Question 11

Operating effectiveness of effectiveness of controls can be tested by

Answer 11

Recalculation

Reperformance

Question 12

Examples of Deficiency in the Operations of Controls

Answer 12

Deviation Rate exceeds Auditor’s expected rate

Question 13

Design effectiveness of controls can be tested by

Answer 13

Inquiry
Observation
Inspection

Question 14

List some deficiencies in the design of I/C

Answer 14

1) Lack of appropriate qualifications or training of personel
2) Inadequate Documentation of I/C components
3) Insufficient control consciousness
4) Inadequate design of IT controls
5) Lack of segregation of duties

Question 15

Management written rep letter during integrated audit should include

Answer 15

1) Significant changes to I/C after the as-of-date of the report
2) Performed evaluation on effectiveness of I/C
3) Management did not rely on auditor procedures as a basis for it’s assertion
4) Describing fraud resulting in material misstatement from key employees and Sr. Management