MyAUD Flashcards
An auditor report should include reference to the country of origin for
accounting principles to prepare FS and auditing standards to perform audit
Does GAAP allows Co. to use dif methods for costing inventory?
Yes, as long as for dif. inventories and disclosed
Where is reference on GAAS made and in GAAP?
GAAS is referred in the Auditors responsibility paragraph and GAAP in the Opinion paragraph
Is recurring working capital shortage an indicative of going concern doubt?
Yes. all negative trends as such
Can an unmodified opinion be express on a material departure from GAAP?
Yes, if departure is justified and properly disclosed
Discussion w/ predecessor prior to accepting a client should include:
mgmt integrity, reasons for changing auditor, disagreement b/w predecessor and mgtm
Is the auditor responsible for specialist assertion?
No. though it should obtain and understanding on the methods or assumptions for results obtained
Auditor will consider a new client method of processing acct info since it
influences on the design of internal control
Purpose of auditor understanding during planning is to
help interpreting transactions when performing the audit
When fraud is identified, even if IM consider the reliance on
mgmt. representations
lack of independent cks represents a
fraudulent risk factor relating to misappropriations of assets
if evidence is not available for specific transactions, auditor should
evaluate the risk of fraud and design alternate test for the related transactions
If fraud risk increases then auditor should
lower detection risk to perform more testing. independent from audit risk
What assurance does auditor provides on direct and indirect effect on FS for laws and regulations noncompliance?
reasonable assurance for direct effects but no assurance for indirect effects
assessing control risk could be performed
when obtaining an understanding of the entity internal control
A conclusion for a lower control risk is supported by
observation by the auditor, prior audit may be considered, audit of FS is cumulative. inquiry alone will not be sufficient
Which statement is better to perform analytical procedures?
I/S should be more consistent than B/S
Is change in capital stk consider an important subsequent event?
Yes. info may be require to be disclosed
Legal letter request is made by
client mgmt. attorney would not be able to respond to such info to outsiders will have to be requested from mgmt. inquiry should be made first to mgmt. and then legal counsel
Consultation w/ other accountants is required/not required for which types of representations?
Exit letter is required and Rep letter is not required.
Is a cpa firm required to adopt a system of quality controls?
Yes. all cpa firms must adopt a system of quality controls
Which technique is use using auditor own software?
Parallel Simulation
Can PCAOB impose monetary penalties for criminal violations?
Yes. they may not prosecute the criminals but may impose monetary penalties
Does contingent fees arrangement impairs independence?
Yes. contingent fees whether material or not impairs independence.
Mgmt refusal to allow auditor to confirm w/ outsiders is a departure from
GAAS (not GAAP) sufficient to qualify the opinion
For which 3 services is independence not required?
compilation, consulting and tax return services
In gvt audit, should the auditor should present the results of the test of controls?
Yes. scope of testing for compliance and its results
