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AUD > Mix 2 > Flashcards

Mix 2 Flashcards

1
Q

When an auditor has expressed an adverse opinion or disclaimer of opinion on the financial statements, the auditor should issue a report on compliance only when instances of _______________________ are identified. Negative assurance is _____ provided in this report.

A

NONCOMPLIANCE ;NOT

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2
Q

Compiled financial statements that omit substantially all GAAP disclosures are not __________________ to financial statements including such disclosures. The accountant should ____ issue a report in this situation.

A

COMPARABLE; NOT

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3
Q

Attest engagements may result in reports related to compliance with ____ and regulations.

A

LAWS

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3
Q

A report on a client’s compliance with a regulatory requirement, assuming the report is prepared based on a financial statement audit of the complete financial statements, would contain ____________ use language.

A

RESTRICTED

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4
Q

The auditor is not required to classify relevant controls into one of the _____ component categories, but rather should use the component categories as a useful ____________ for identifying and evaluating controls.

A

FIVE; FRAMEWORK

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5
Q

An auditor may choose to perform tests of controls at the ______ time that he or she is obtaining an understanding of internal control, because it may be more __________ to do so.

A

TIME; EFFICIENT

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6
Q

A change in accounting principle that is inseparable from a change in estimate should be accounted for as change in _________, not a change in __________.

A

ESTIMATE; PRINCIPLE

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7
Q

Non-audit services related to internal control must be communicated to the audit committee in writing, but they are not ______________.

A

PROHIBITED

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8
Q

There is a ________ relationship between population variability and sample size, so an increase in variability results in an increase in sample size.

A

DIRECT

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9
Q

There is an __________ relationship between desired risk of incorrect acceptance and sample size, so a decrease in the desired risk of incorrect acceptance will also result in an increase in sample size.

A

INVERSE

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10
Q

Under U.S. GAAS, the group engagement partner makes reference in the audit report to the work of the component auditor when the group engagement partner is ________ to review the component auditor’s audit documentation.

A

UNABLE

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11
Q

The risk of assessing control risk too high is the risk that the assessed level of control risk based on the sample is ________ than the true risk based on the actual operating effectiveness of the control.

A

GREATER

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12
Q

The auditor should consider the methods the entity uses to process accounting information in planning the audit because such methods influence the ________ of internal control.

A

DESIGN

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13
Q

Investment income from dividends is generally recalculated by comparing recorded income with dividend record books produced by ____________ services.

A

INVESTMENT

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14
Q

Audit _______________ are the same in a computerized environment as they are in a manual environment.

A

OBJECTIVES

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15
Q
A
16
Q

All of the following penalties under the Sarbanes-Oxley Act are correct, except a maximum imprisonment of:

A. 10 years for altering a document with the intent to influence an investigation.

B. 10 years for an auditor failing to retain workpapers for 7 years.

C. 10 years for retaliating against an informant (whistle-blower).

D. 20 years for the willful certification of a statement knowing that it fails to comply with SEC requirements.

A

A. 10 years for altering a document with the intent to influence an investigation.

17
Q

The auditor must assess ________ risk before performing substantive tests.

A

CONTROL

18
Q

Inquiring about consigned inventory would be a procedure used to test for the _____________________ assertion.

A

COMPLETENESS

19
Q

The group engagement partner decides to not assume responsibility for the component auditor’s work. In this situation, the group engagement team should request that the component auditor, at a minimum, communicate matters related to:

A. Identification of the financial information of the component.

B. The nature of substantive procedures performed on revenue.

C. The number of confirmations received.

D. The extent of internal auditor use.

A

A. Identification of the financial information of the component.

20
Q

According to generally accepted auditing standards, audit documentation for nonissuers must be retained for _____ years.

A

FIVE

21
Q

The representation letter should address all financial statements and periods covered by the auditor’s report, even if current management was _____ present during all such periods.

A

NOT

22
Q

The _____________ component of the integrated framework includes the principle that deficiencies should be investigated in ongoing and separate evaluations and that deficiencies should be reported.

A

MONITORING

23
Q

In an integrated audit, the management representation letter should disclose whether _____________ deficiencies and __________ weaknesses identified and communicated to management and those charged with governance during ___________ engagements have been resolved.

A

SIGNIFICANT; MATERIAL; PREVIOUS

24
Q

To exercise due professional care an auditor should:

A. Design the audit to detect all instances of illegal acts.

B. Examine all available corroborating evidence supporting management’s assertions.

C. Critically review the judgment exercised by those assisting in the audit.

D. Attain the proper balance of professional experience and formal education.

A

C. Critically review the judgment exercised by those assisting in the audit.

25
Q

An auditor is engaged to issue a report on the client’s compliance with regulatory requirements in connection with a financial statement audit. The auditor issues a qualified opinion on the financial statements. The auditor was unable to identify instances of noncompliance. In this situation, the auditor should:

A. Only issue a report on compliance when there are identified instances of noncompliance.

B. Withdraw from the engagement.

C. Provide negative assurance on the client’s compliance with regulatory requirements.

D. Provide positive assurance on the client’s compliance with regulatory requirements.

A

C. Provide negative assurance on the client’s compliance with regulatory requirements.

26
Q

According to PCAOB standards, relevance of audit evidence depends on all of the following, except:

A. The circumstances under which the audit evidence is gathered.

B. Whether the audit procedure is meant to test for understatement or overstatement.

C. Whether the design of the audit procedure directly tests the assertion.

D. The timing of the audit procedure.

A

A. The circumstances under which the audit evidence is gathered.

27
Q

An auditor concluded that no excessive costs for idle plant were charged to inventory. This conclusion most likely related to the auditor’s objective to obtain evidence about the financial statement assertions regarding inventory, including __________________ and _______________________.

A

VALUATION; ALLOCATION

28
Q

The primary audit procedures used to test the completeness assertion are _________________, __________, and performing ________________review procedures.

A

OBSERVATION; TRACING; ANALYTICAL

29
Q

A stratified sample generally is more efficient than an unstratified sample since the population is classified in a manner that emphasizes the higher dollar value items. The result is an estimate having a desired level of ___________with a ______________sample size.

A

PRECISION; SMALLER

30
Q

An auditor should perform _________ procedures on required supplementary information.

A

LIMITED

31
Q

Tests of controls used in assessing control risk ordinarily include procedures such as _________, _________________, ________________, and __________________.

A

INQUIRY; INSPECTION; OBSERVATION; REPERFORMANCE

32
Q

The identification of misstatements in the prior-period audit may result in the auditor needing to reduce the ______________ misstatement to reduce the probability that the aggregate uncorrected and undetected misstatements exceed the materiality for the financial statements to an acceptably low level.

A

TOLERABLE

33
Q

If comparative information is presented in a nonissuer’s financial statements and the audit client asks the auditor to express an opinion on all periods presented, then the auditor should first:

A. Consider whether the information included for the prior period contains sufficient detail to constitute a fair presentation in accordance with the applicable financial reporting framework.

B. Issue a separate audit report on the prior period information with an appropriate expression of opinion.

C. Request additional written representations from management identifying the substantive reasons that the entity wants to have an opinion, including the prior period information.

D. Consider including an additional paragraph in the audit report disclosing the request by management for the auditor to express an opinion including the prior period information.

A

A. Consider whether the information included for the prior period contains sufficient detail to constitute a fair presentation in accordance with the applicable financial reporting framework.

34
Q

Quality control standards relate to the ______________ of a firm’s audit practice as a whole, and compliance with such standards would not be proved by audit documentation for one specific _________ engagement.

A

CONDUCT; AUDIT

35
Q

SSARS requires compiled financial statements to be accompanied by a ______________________ report.

A

COMPILATION

AUD (6 decks)

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