Mix Flashcards
Typically, the __________ auditor will allow a review of audit documentation related to planning, ________ assessment, audit __________, audit results, and matters of continuing audit significance.
PREDECESSOR; RISK; PROCEDURES
The primary purposes of performing analytical procedures during the planning stage is for the auditor to identify the risks of material misstatement due to ___________.
FRAUD
Is dual dating used for comparative financial statements?
NO
Relationships among _________ statement accounts tend to be MORE predictable than _________ sheet accounts because they represent transactions over a period of time rather than at one point in time.
INCOME; BALANCE
Under U.S. auditing standards, the auditor expresses an opinion on the financial statements’ conformity with GAAP in the _________ section and the ___________ Responsibility section.
OPINION; MANAGEMENT’S
Unaudited financial statements for the prior year presented in comparative form with audited financial statements for the current year should be clearly marked to indicate their status (“unaudited”), and either the report on the prior period should be _________ or the report on the current period should include a separate __________ paragraph describing the responsibility assumed for the prior period’s financial statements.
REISSUED; EXPLANATORY
In PPS sampling, the auditor controls the risk of ____________ acceptance by specifying that risk level for the sampling plan. The inputs for PPS are __________misstatement, risk of __________ acceptance (reliability factor), and the recorded amount of the population being sampled.
INCORRECT; TOLERABLE; INCORRECT
If an auditor concludes that there is substantial doubt about an entity’s ability to continue as a going concern and that the entity’s disclosures are adequate, then the audit report may be either be __________________ with explanatory paragraph, or ____________________.
UNQUALIFIED; DISCLAIMED
An accountant who is not _____________ with respect to an entity may compile financial statements for such an entity and issue a report. However, the last paragraph of the report should disclose this _________ of ____________.
INDEPENDENT; LACK; INDEPENDENCE
As part of understanding internal control, an auditor is not required to obtain knowledge about the ____________ effectiveness of controls.
OPERATING;
The acceptable level of detection risk is _________ related to the assurance provided by substantive tests. For example, if the acceptable level of detection risk ________, more assurance is required from substantive tests.
INVERSELY; DECREASES
In compilation and review engagements, the accountant is ____ required to specifically assess fraud risk or to perform procedures designed to detect material misstatements due to fraud or noncompliance with laws and regulations.
NOT
Sample size has a _______ relationship with the expected misstatement, standard deviation (population variability), and assessed level of risk. Sample size has an ________ relationship with the tolerable misstatement and the acceptable level of risk.
DIRECT; INVERSE
“___________ presentations” are presentations of prospective financial information which would not ordinarily be appropriate for general use because they omit one or more of these essential elements.
PARTIAL
Projected balance sheets, financial forecasts and financial projections are forms of _____________ financial statements.
PROSPECTIVE
The ultimate purpose of assessing control risk is to contribute to the auditor’s evaluation of the risk that _____________ misstatements exist in the financial statements.
MATERIAL
As the acceptable level of detection risk increases, an auditor may change the __________of substantive tests from year-end to an _________ date.
TIMING; INTERIM
An auditor’s engagement letter most likely would include a statement that __________ the auditor’s ____________________ to detect errors and fraud.
LIMITS; RESPONSIBLITY
A statement referring to standards established by the _______ should be included in a practitioner’s report on the application of agreed-upon procedures.
AICPA
According to PCAOB standards, the documentation completion date is ______ days following the report release date.
45
Regardless of the assessed level of control risk, an auditor would perform some level of _________________ tests to restrict detection risk for significant transaction classes.
SUBSTANTIVE
When an auditor is not ________________ with respect to an entity, only a disclaimer of opinion may be issued.
INDEPENDENT
An appropriate response to an increase in risk of material misstatement is to perform testing at _____________.
YEAR-END
The auditor should perform tests of controls when ______________ procedures alone cannot provide sufficient appropriate audit evidence.
SUBSTANTIVE
An increase in the tolerable misstatement will result in a __________ in sample size.
DECREASE
Is independence required in agreed-upon procedures attestations?
YES
Does an auditor express an opinion on the effectiveness of internal control over compliance?
NO
There are three levels of services for SSARS engagements: P_______________, C__________________ and R_____________.
PREPARATION; COMPILATION; REVIEW
Prospective financial statements considered a financial projection would require a paragraph __________________ the use and distribution of the report.
RESTRICTING
Prospective financial statements considered a financial forecast are appropriate for ____________ use and are not required to have a paragraph that restricts the use and distribution of the report.
GENERAL
In performing a financial statement audit in accordance with Government Auditing Standards, an auditor is required to report on the entity’s compliance with laws and regulations. This report should state that the audit should be planned to obtain _____________ assurance about whether noncompliance could have a ____________ effect on the entity’s programs.
REASONABLE; MATERIAL
An increase in the assessed level of control risk means that the assessed risk of material misstatement has also ______________, and this requires a corresponding ____________ in detection risk to maintain the same (presumably low) level of overall audit risk. Increasing the extent of tests of _________ will result in a reduction in detection risk.
INCREASED; DECREASE; DETAILS
The report on pro _______ financial statements is not required to contain a restricted use paragraph.
FORMA
Would an auditor consider derivative transactions as an inherent risk factor in planning an audit?
YES
In determining the number of sample items to select in a test of controls, the auditor would also consider the likely rate of ____________. The higher the expected rate, the _____________the number of items selected.
DEVIATIONS; GREATER
The SEC has strongly ____________________ that companies establish audit committees, but does ______ require this action.
RECOMMENDS; NOT
When determining whether a risk is significant or not, the auditor should ____________ the impact of the client’s controls related to that risk.
IGNORE
A review report on the interim financial information of a publicly held company does not provide an ____________ on the financial statements.
OPINION
The PCAOB must conduct an inspection once every __________ years for registered public accounting firms that issue 100 or fewer audit reports.
THREE
