NINJA

Question 1

What are preventative controls?

Answer 1

Are policies and procedures which are part of the process itself (IC). Are considered more Cost beneficial

Question 2

What standards only require an attorney’s letter when an auditor assesses a risk of material misstatement.

Answer 2

International Standards.

US auditing standards have a presumptive requirement to send a letter of audit inquiry to lawyers.

Question 3

What are some examples of audit objectives under the FS assertion of valuation and allocation?

Answer 3

• Inventories are properly stated at cost (except when market is lower)
• Slow-moving, excess, defective and obsolete items included in inventories are properly identified, and
• Inventories are reduced, when appropriate, to replacement cost or NRV

Question 4

What are indirect financial interest and what is an example?

Answer 4

Under the ethical standards of the profession, an investment held through a regulated mutual fund is an indirect financial interest.

Question 5

When reporting on comparative financial statements of a nonissuer, and the current-year period financial statements have been reviewed and the prior-period financial statements have been audited, the accountant has two choices. What are these two choices?

Answer 5

She can either (a) issue an appropriate review report on the current period and reissue the report on the prior period, or (b) include a separate paragraph in the current period report that describes the responsibility assumed for the financial statements of the prior period.

This separate paragraph must contain the following information:

• That the financial statements of the prior period were audited previously
• The date of the previous report
• The type of opinion expressed previously
• The reasons for an opinion that was other than unmodified
• That no auditing procedures were performed after the date of the previous report

Question 6

What is the auditor required to report on in accordance with Government Auditing Standards (the “Yellow Book”)?

Answer 6

The scope of the auditor’s testing of IC and on the scope of the auditor’s tests of compliance with laws and regulations