Other AUD Materials

Question 1

10 GAAAS - WHAT ARE THEY?

Answer 1

GENERAL TIP, FIELD PIC, REPORT ACDE (3,3,4)

T - TRAINING & PROFICIENCY
I - INDEPENDENCE
P - DUE PROFESSIONAL CARE

P - PLANNING & SUPERVISION
I - INTERNAL CONTROL
C - CORROBORATIVE AUDIT EVIDENCE

A - ACCT PRINCIPLES IN ACCORDANCE WITH GAAP (EXPLICIT)
C - CONSISTENCY YOY (IMPLIED)
D - DISCLOSURES (IMPLIED)
E - EXPRESS OPINION (EXPLICIT)

Question 2

IF TESTS OF CONTROLS = HIGH (STRONG), HOW ARE SUBSTANTIVE TESTING, EVIDENCE, AND RMM AFFECTED?

Answer 2

HIGH RELIANCE ON I/C = LESS SUB TESTS & LESS EVIDENCE NEEDED & LESS RMM

Question 3

IF TESTS OF CONTROLS = LOW (WEAK), HOW ARE SUBSTANTIVE TESTING, EVIDENCE, AND RMM AFFECTED?

Answer 3

LOW RELIANCE ON I/C = MORE SUB TESTS & MORE EVIDENCE NEEDED & HIGH RMM

Question 4

DO WEAK INTERNAL CONTROLS = FS MISTATED?

Answer 4

NO, MEANS NEED MORE TO SUPPORT OPINION

Question 5

GAAS

Answer 5

GENERALLY ACCEPTED AUDITING STANDARDS

Question 6

AUDITING:
WHAT?
WHY?
WHEN?
WHO?
HOW?
WHERE?

Answer 6

WHAT: EXAMINATION OF F/S
WHY: EXPRESS OBJ OPINION IF F/S FAIRLY STATED
WHEN: MGMT PROVIDES F/S IN GAAP
WHO: AUDITOR FORMS OPINION
HOW: USING GAAS FOR AUDIT PROCEDURES
WHERE: RESULTS ARE PRESENTED IN AUDIT REPORT

Question 7

TYPES OF AUDIT REPORT OPINIONS

Answer 7

UNMODIFIED = CLEAN
QUALIFIED “EXCEPT FOR” = FISHY
ADVERSE = SHITTY
DISCLAIMER = NO OPINION

Question 8

11 ATTESTATION STANDARDS

Answer 8

(GENERAL) TKCID (FIELD) PE (REPORTING) NCRL

T - TECHNICAL TRAINING
K - KNOWLEDGE OF SUBJECT MATTER
C - CRITERIA TO EVALUATE AGAINST
I - INDEPENDENCE
D - DUE PRO. CARE

P - PLANNING & SUPERVISION
E - EVIDENCE

N - NATURE OF ENGAGEMENT (EXAM|REVIEW|AUPs)
C - CONCLUSIONS
R - RESERVATIONS, STATE THEM
L - LIMITED USE REPORTS (AUPs)

Question 9

AUDIT RISK =

Answer 9

AR = IR X CR X DR

Question 10

WITHIN AR, WHAT CAN AND CANT AN AUDITOR CONTROL?

Answer 10

IR OR CR = CANT CONTROL

DR = CAN CONTROL

Question 11

Control activities in a strong system of internal control

Answer 11

PAID TIPS

P - Prenumbering Documents
A - authorization of Transactions
I - independent checks to maintain asset accountability
D - documentation

T - Timely and Appropriate Performance Budget vs Act.
I - Info Processing Controls – transactions are valid
P - Physical controls for safeguarding assets
S - Segregation of Duties

Question 12

Segregation of Duties

Answer 12

A - Authorizing transactions
R - Recording transactions
C - Custody of Assets

Question 13

Going Concern Mnemonics

Answer 13

ADMITS

A - Analytical Procedures
D - Debt Compliance
M - Minutes
I  - Inquiry of client's counsel
T - Third parties confirmation
S - Subsequent event review

Question 14

What is not covered under Attest engagements? AND

How is different from GAAS?

Answer 14

ACRAPO

A - Audits
C - Compilations and Reviews
R - Return Prep
A - Advocation ( litigation Services )
P - Providing consulting /Advisory services
O - Operational Audits normally performed by Internal Auditor

No reference to FS
No reference to GAAP
Assurance below GAAS Audit
Limited Use when Agreed upon Procedures
Limited Use when subject matter and written assertion not present

Question 15

What are the three conclusions possible for Attestation services?

Answer 15

ERA

E - Examination – Positive Assurance
R – Review – Negative Assurance
A – Agreed upon Procedures – No assurance

Question 16

What are the 6 interrelated elements of quality control?

Answer 16

HELP ME

H - Human resources;
E - Engagement/client acceptance and continuance;
L - Leadership responsibilities;
P - Performance of the engagement; Monitoring;
E - Ethical requirements

Question 17

14 audit procedures used in every audit?

Answer 17

FIVE CARROT CARS

F - Footing;
I - Inquiry;
V - Vouching;
E - Examination;

C - Confirmation; 
A - Analytical procedures; 
R - Reperformance; 
R - Recon; 
O - Observation; 
T - Tracing; 

C - Cut-off review;
A - Auditing related accounts simultaneously;
R - Representation letter;
S - Subsequent events review

Question 18

Explain the difference between auditing standards and auditing procedures.

Answer 18

Auditing standards measure the quality of the performance of the audit.

Auditing procedures are the acts to be performed during the audit.

Question 19

Which standards provide the most authoritative US auditing guidance for nonissuers and issuers and who issues those standards?

Answer 19

Nonissuers: Statements on Auditing Standards (SASs), issued by the AICPA Auditing Standards Board

Issuers: Auditing Standards (ASs), issued by the Public Company Accounting Oversight Board (PCAOB) plus all SAS adopted by the PCAOB

Question 20

How is a lack of consistency handled in the auditor’s report?

Answer 20

An emphasis of matter paragraph is added (following the opinion paragraph) describing the change and referring the reader to the appropriate note in the financial statements.

If GAAP is followed, the opinion is unmodified. If GAAP is not followed (no reasonable justification, change to a principle not conforming to GAAP, or an unacceptable method of accounting for the change), either a qualified or adverse opinion, depending on materiality, is required. Basis for paragraph is used before the opinion.

Question 21

Risk of Material Misstatement

Answer 21

risk that the financial statements are materially misstated

IR x CR

Question 22

Auditor should assess RMM at two levels:

Answer 22

(1) at the financial statement level and (2) at the assertion