Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

ACCT 425 > Lec 18 > Flashcards

Lec 18 Flashcards

1
Q

what is the association framework

A

it is a term used to indicate that a public accountant is involved with the financial information issued by that enterprise

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

what are the 2 scenarios when a PA is associated with F/S

A
  • when you consent the use of your firm’s name in connection to the statements
  • you have prepared or performed some other services - even if not audit or name not on F/S, you are still associated
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

why is association important

A

it is important because it subjects you to the rules of professional conduct

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

what 3 things discussed in class can make a PA associated

A
  • statements produced on PA’s letterhead
  • statements result from bookkeeping services performed by PA
  • documents released by company identify PA as auditor
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

do PAs know every time that they are associated

A

not necessarily

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

what are the 2 synonyms related to high assurance

A

audit assurance and positive assurance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

what are the 2 synonyms related to medium assurance

A

review assurance and negative assurance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

what is a synonym related to no assurance

A

complication assurance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

what is done in no assurance/complication

A

no attempt was actually made to verify accuracy or completeness of information

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

why is standard wording important in reporting

A

because it helps users identify exceptions

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

what are the 5 basic segments of an unmodified auditor’s report

A
  • opinion segment
  • basis for opinion segment
  • key audit matters (KAM) segment
  • management and governance responsibility segment
  • auditor responsibility segment
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

who is the traditional addressee in the report title

A

the shareholders

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

what is contained in the opinion segment and what does the first paragraph indicate and identify

A
  • indicates that an audit report was conducted and identifies F/S audited
  • state whether they have an unqualified, qualified, disclaimer or adverse opinion
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

what is contained in the opinion explanation segment

A

contains the fact that auditors believe that disclosure is adequate (implicit assertion) through obtaining SAAE

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

what is contained in the KAM segment and described and what is it an exception of

A
  • why was it determined to be a KAM
  • how was it addressed in the audit
  • reference to disclosure in F/S
    it is an exception to the fact that audit methodology should not be known or how testing was technically conducted
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

what are specific examples of KAM (3)

A
  • valuation of GW and LT assets
  • valuation of F/S
  • management discretion of revenue recognition
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

why is KAM needed for users of F/S

A

because users do not have the sufficient knowledge to figure this out themselves and the KAM section highlights it for them

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

what is KAM NOT (4)

A
  • not a substitute for disclosure in F/S
  • not a substitute for auditor to express modified opinion
  • not a substitute for reporting any matters relating to going concern
  • not a separate opinion on an individual matter
19
Q

what is contained in the management responsibility segment (3 main points)

A
  • preparation and fair representation of F/S in accordance with GAAP
  • design and implement I/C
  • going concern of the company - kinda ties in with the fact that they should ensure operations are streamlined
20
Q

what is contained in the wording of auditors responsibility segment

A

the auditors objective in obtaining sufficient reasonable assurance and the definition of materiality which is misstatements having the magnitude to influence the economic decisions of users

21
Q

what are the 2 reasons for which a reservation in unqualified opinions exists

A
  • departure from GAAP in disclosure
  • scope limitation
22
Q

why is a departure in GAAP bad for disclosure

A

because it leads to inadequate disclosure

23
Q

why is a scope limitation bad for disclosure

A

because it leads to not enough SAAE being collected

24
Q

depending on materiality of the misstatement, what opinions are issued for a GAAP departure

A

qualified opinion and adverse opinion

25
Q

depending on materiality of the misstatement, what opinions are issued for a scope limitation

A

qualified opinion and disclaimer of opinion

26
Q

when is a qualified opinion issued for GAAP departure

A

when the F/S have overall been presented fairly but one or two accounts are materially misstated due to this departure

27
Q

“except for” is the beginning of a paragraph that talks about what

A

a qualified opinion on the departure from GAAP

28
Q

when is an adverse opinion issued for GAAP departure

A

when the departure is so pervasive that F/S are completely materially misstated and are not fairly presented because of a departure from GAAP

29
Q

“statement do not present fairly” is a sentence for what kind of GAAP departure

A

a pervasive departure

30
Q

when is a qualified opinion given for scope limitation

A

when there is a lack of SAAE for one or two accounts

31
Q

what is an account and issue in which a qualified opinion would be given based on scope limitation

A

a potential misstatement on COGS due to a scope limitation on the opening inventory

32
Q

when is a disclaimer of opinion given for scope limitation

A

where a severe limitation arises on the scope of audit examination

33
Q

what would change in the auditors responsibility section of the disclosure section if an opinion cannot be issued

A

it would reflect that an audit cannot be conducted

34
Q

disclaimed of opinion is the same as d…….

A

denial of opinion

35
Q

what are 2 examples that a refusal of opinion would be given based on a severe scope limitation

A
  • all records being destroyed in some sort of natural disaster and no audit trail being left
  • management refusing to sign the
    client/management representation letter
36
Q

what is the role that materiality plays in the issuing of an opinion

A

in giving an opinion an auditor considers whether the matter under consideration is immaterial, material but not pervasive, material and pervasive such that the overall fairness of the F/S is in question

37
Q

what is the difference between pervasiveness when it comes to materiality

A

an account that is material and not pervasive is limited to one or two accounts
when an issue is material and pervasive it likely affects many accounts and will ultimately affect the ability to stay in operations

38
Q

what is negative assurance and when is it used

A

assurance given on the accuracy on a particular set of facts due to the fact that the auditor did not find any contrary evidence
often used in review engagements and prospectuses

39
Q

before relying on their work, what must auditors do when it comes to specialists’ work?

A

they must assess the specialist’s qualifications

40
Q

who takes responsibility for the auditor’s opinion and whose name is used

A

the primary auditor for both

41
Q

what must be considered when giving an unqualified opinion

A

additional information such as
- consistency
- uncertainty
- emphasis paragraphs
- going concern

42
Q

what is an unqualified opinion with explanation or modification

A

when the wording deviates from the standard unqualified report
the audit results are still satisfactory, but the auditor believes it is necessary to provide additional information

43
Q

what are 3 examples of unqualified opinion given with extra explanation or modification

A
  • when there is non-GAAP F/S that are still in accordance with regulatory legislation or contractual obligations
  • reporting differences between USA and Canada
  • changes in GAAP or their applications

ACCT 425 (21 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions