New Audit Items Flashcards
Mgmt Discussion and Analysis is required by ?
Not required by?
Required by SEC
Not by GAAP
How to deal with no MD & A section?
Unmodified (because it is not required by GAAP)
and Other Matter Paragraph
What language can you not have in emphasis of matter paragraph for a going concern issue?
Conditional statements like
“If X continues to happen”
How to handle accrual to cash change for prior period comparative statements?
Retrospectively, need to go back and change the numbers
Sound internal control procedures dictate that defective merchandise returned by customers should be presented initially to the
Receiving clerk
If you have missing receiving reports what is the best way to find that out?
Check open purchase orders or vendors invoices
What do comfort letters give an opinion on?
whether the audited financial statements comply in form with the accounting requirements of the SEC
When a broker-dealer or other financial intermediary, besides an underwriter or other party with a due diligence defense under section 11 of the Securities Act of 1933, requests a comfort letter but does not provide a representation letter, the accountant should:
not provide a comfort letter but may provide another form of letter.
The auditor report is required to contain either an expression of opinion regarding the financial statements taken as a whole or an assertion to the effect that an opinion cannot be expressed. The objective is to prevent…
misinterpretations regarding the degree of responsibility the auditor is assuming
What internal control is good at addressing the completness assertion for inventory?
If receiving reports are prenumbered and periodically reconciled.
The practitioner’s examination report on compliance should include what?
A statement that the practitioner believes the examination provides a reasonable basis for his or her opinion
Not a list of procedures they did, that is for agreed upon procedures
Control risk should be assessed in terms of
financial statement assertions
When audited financial statements are presented in a client’s document containing other information, the auditor should:
Read the other information to determine that it is consistent with the audited financial statements.
NOT Perform inquiry and analytical procedures to ascertain whether the other information is reasonable.
An accountant compiles the financial statements of a nonissuer and issues the standard compilation report. Although not specifically stated in this report, it is implied that:
Substantially all disclosures required by GAAP are included in the financial statements.
Name one characteristic most likely would be indicative of check kiting? And one that would not.
Low average balance compared to high level of deposits
NOT Many large checks that are recorded on Mondays. These could just be from the weekend mail.
