New Flashcards
When assessing the competence of an internal auditor, the auditor should obtain info about
the quality of the internal auditors working paper documentation
Which of the following auditor concerns most likely could be so serious that the auditor concludes that a financial statement audit cannot be performed?
if he/she determined that a substantial risk of intentional misapplication of accounting principles existed.
The key word is “intentional” as the risk of management override is an inherent limitation of any internal control system. Management can override the system to make material misstatements in the financial statements and the auditors may not be able to detect such entries.
If management is believed to be intentionally misapplying accounting principles, the financial statements are likely to contain material misstatements that may be extremely difficult, if not impossible, to detect. Thus, the auditors would withdraw from the engagement.
A written engagement letter is required for…..
Audits
Reviews
Compilations
What is under the Statement on standards for accounting and review services
Compilation
Review
The auditor must asses what type of risk?
Inherent risk
Control risk
The auditor makes decisions that result in some level of ___ risk
detection
How does one increase or decrease detection risk
by adjusting the nature, timing, and extent of the auditors substantive audit procedures.
What is included under the Mgmt’s Resp for the FS (2nd paragraph) paragraph of the auditors report?
One sentence - states that mgmt is responsible for the fair presentation of the FS and the design and implementation of internal control
3rd section of auditors report - Auditors Resp. consists of 3 paragraphs - what does the first paragraph include
Responsibility to express an opinion
Conducted in accordance with GAAS
Plan & perform the audit to provide reasonable assurance
When is an EOM paragraph required?
When A has substantial doubt about the entitys ability to continue as a going concern.
Inconsistency in accounting principles.
When FS are prepared in accordance with special purpose frameworks
When is an Other Matter paragraph included?
Relevant to users understanding of the audit
Relevant to users understanding of the auditors responsibilities or the auditors report
What kind of opinion is a scope limitation?
Qualified or Disclaimer
What type of opinion is a material but NOT pervasive misstatement?
Qualified
What type of opinion is a material and pervasive misstatement?
Adverse
A commission may be received if it is not from a client for which the CPA provides any of the following services:
Audit Review Compilation Examination of prospective Fin info. Preparing an initial or amended tax return
AFS report issued for a PUBLIC company should state that it was performed in accordance with ____?
PCAOB
The susceptibility of a financial statement assertion to a MM assuming there are no related controls
Inherent risk
Attribute sampling
Whether an attribute exists or does not exist in a particular circumstance
PPS sampling
the auditor controls the risk of incorrect acceptance by specifying the risk level for the sampling plan.
Before reissuing a reprot which was previously issued on the FS of a prior period, a predecessor auditor should
obtain a letter of representation from the successor auditor
When controls are not operating as anticipated,
the ROMM will be greater than the planned assessed level of control risk
AN examination report on prospective FS should include
Caveat that the results may not be achieved.
Practitioner assumes no resp to update the report
Practitioner’s resp to express an opinion
Performed in accordance with attestation standards ests by the AICPA (not GAAS)
What is included in attestation services
Reviews
Examinations
AUP
What kinds of services DO NOT require independence?
Tax prep
Consulting
Compilations
FS prep
What services require independence?
Audit
Review
Examinations
Agreed UP
SSARS relate to services that include
Prepping FS
Compiling FS
Reviewing FS