Pass Key 2 Flashcards
Predictability of the FS
P&L is more predictable
Disclaiming opinion due to client scope limitations still need to keep
Auditors responsibility and opinion paragraph
Preliminary work on FS. Identify a risk associated with a new product line
Anylise new risk with congunction with other known businesses risks
High level of control risk in revenue cycle. What situation will ride this assertion?
Sales manager doesn’t inforce client stated polices regarding authorization and approval of service transactions
When accessing internal auditor competence auditor should obtain
All information except access to information regarding relative parties
Auditor intends to use work of actuary related to client, auditor should
Access the risk than actuary’s objectivity maybe impaired
Which info is NOT true regarding audit documentation for specific audit
Audit documentation should demonstrate compliance with quality control standards
Auditors programme to examine long term debt should include steps that require
Examing bond trust indentures
In which case unmodified opinion would be inappropriate?
Material related party transaction occurred, has been accounted for but not disclosed
Primary purpose of sending a standard confirmation request to financial instituts with who business done during the year
Corroborate info regarding deposit and loan balances
Engagagement types
- Preparation, 2.Compilation, 3.Examination, 4. Agreed -upon procedures
MD&A control risk
Rik that material misstatement in MD&A will not be prevented in timely manner
What procedures not performing during planning phase of the audit?
Reviewing FS for unexpected balance
Procedure to obtain evidence about occurrence of subsequent events
Inquiry unusual adj after year end
Statement about internal control
Cost- benefit
Which is not the difference in FS audit and audit for Internal control
FS audit -report in release date, IC- 60 days. Right- vs
Not true to support a lower level of control risk
Inquiry alone
Auditor requires to communicate to those changed with governance
Significant adj and significant changes in acc policies
Standard for compliance with covenants for bank loan
Compliance attestation standard
Detect overstatement of sales
Trace acc records to source document
Audit plan cannot be finalized until
Consideration of IC was completed
Examining PO to verify autorization is conducting
Inspection
Doubt about going concern
Include in emphasis of matter only going concern if entity disclosed financial difficulties
Client’s AR turnover is lower than prior year. (AR beginning+AR ending)/2. Net Credit sales/ avg AR. This indicates
Fictious credit sale
Testing presentation and disclosure. Which assertion?
Understanding and classification
Company use IT extensively. Best course of action
Use generalized audit software to extract evidence from client base
Planning review on audit clients interim FS which procedures accountant perform to know entities business and IC
Consider the results of audit procedures performed with respect to the current year’s FS
Planning review on audit clients interim FS which procedures accountant perform to know entities business and IC
Consider the results of audit procedures performed with respect to the current year’s FS
In integrated audit auditor issues adverse opinion on the effectiveness of entities IC when
Material misstatement s exists
Proper segregation of duties reduces the opportunity to be in position of both
Perpetrate and conceal errors and fraud
Comp Service Company Payroll process payroll for schools. Drake their auditor. His report should contain
Management description of the service organizations system
CPA would most likely to perform during planning of FS Audit
Compare Fin info with nonfin operating data
As it relates to audit evidence, rights and obligations is best classified as:
The 4 assertions for account balances are 1) existence, 2) completeness, 3) rights and obligations, and 4) valuation and allocation
Auditor couldn’t get evidences
Qualified or disclamer of opinion
How A determining Management identified all accounting estimates that could be material to FS
Review lawyers letters
CPA report under US Auditing Standards doesn’t refer to
The CPA assessment of sampling risk factors
CPA ingaged to compile FS which prepared at cash basis and don’t disclose the basis of accounting used. CPA is responsible:
To disclose the basis of accounting used in compilation report
To obtain understanding of continuing client’s in planning audit business CPA would
Review prior year audit documentation and permanent file
