Pass Key 2

Question 1

Predictability of the FS

Answer 1

P&L is more predictable

Question 2

Disclaiming opinion due to client scope limitations still need to keep

Answer 2

Auditors responsibility and opinion paragraph

Question 3

Preliminary work on FS. Identify a risk associated with a new product line

Answer 3

Anylise new risk with congunction with other known businesses risks

Question 4

High level of control risk in revenue cycle. What situation will ride this assertion?

Answer 4

Sales manager doesn’t inforce client stated polices regarding authorization and approval of service transactions

Question 5

When accessing internal auditor competence auditor should obtain

Answer 5

All information except access to information regarding relative parties

Question 6

Auditor intends to use work of actuary related to client, auditor should

Answer 6

Access the risk than actuary’s objectivity maybe impaired

Question 7

Which info is NOT true regarding audit documentation for specific audit

Answer 7

Audit documentation should demonstrate compliance with quality control standards

Question 8

Auditors programme to examine long term debt should include steps that require

Answer 8

Examing bond trust indentures

Question 9

In which case unmodified opinion would be inappropriate?

Answer 9

Material related party transaction occurred, has been accounted for but not disclosed

Question 10

Primary purpose of sending a standard confirmation request to financial instituts with who business done during the year

Answer 10

Corroborate info regarding deposit and loan balances

Question 11

Engagagement types

Answer 11

1. Preparation, 2.Compilation, 3.Examination, 4. Agreed -upon procedures

Question 12

MD&A control risk

Answer 12

Rik that material misstatement in MD&A will not be prevented in timely manner

Question 13

What procedures not performing during planning phase of the audit?

Answer 13

Reviewing FS for unexpected balance

Question 14

Procedure to obtain evidence about occurrence of subsequent events

Answer 14

Inquiry unusual adj after year end

Question 15

Statement about internal control

Answer 15

Cost- benefit

Question 16

Which is not the difference in FS audit and audit for Internal control

Answer 16

FS audit -report in release date, IC- 60 days. Right- vs

Question 17

Not true to support a lower level of control risk

Answer 17

Inquiry alone

Question 18

Auditor requires to communicate to those changed with governance

Answer 18

Significant adj and significant changes in acc policies

Question 19

Standard for compliance with covenants for bank loan

Answer 19

Compliance attestation standard

Question 20

Detect overstatement of sales

Answer 20

Trace acc records to source document

Question 21

Audit plan cannot be finalized until

Answer 21

Consideration of IC was completed

Question 22

Examining PO to verify autorization is conducting

Answer 22

Inspection

Question 23

Doubt about going concern

Answer 23

Include in emphasis of matter only going concern if entity disclosed financial difficulties

Question 24

Client’s AR turnover is lower than prior year. (AR beginning+AR ending)/2. Net Credit sales/ avg AR. This indicates

Answer 24

Fictious credit sale

Question 25

Testing presentation and disclosure. Which assertion?

Answer 25

Understanding and classification

Question 26

Company use IT extensively. Best course of action

Answer 26

Use generalized audit software to extract evidence from client base

Question 27

Planning review on audit clients interim FS which procedures accountant perform to know entities business and IC

Answer 27

Consider the results of audit procedures performed with respect to the current year’s FS

Question 27

Planning review on audit clients interim FS which procedures accountant perform to know entities business and IC

Answer 27

Consider the results of audit procedures performed with respect to the current year’s FS

Question 28

In integrated audit auditor issues adverse opinion on the effectiveness of entities IC when

Answer 28

Material misstatement s exists

Question 29

Proper segregation of duties reduces the opportunity to be in position of both

Answer 29

Perpetrate and conceal errors and fraud

Question 30

Comp Service Company Payroll process payroll for schools. Drake their auditor. His report should contain

Answer 30

Management description of the service organizations system

Question 31

CPA would most likely to perform during planning of FS Audit

Answer 31

Compare Fin info with nonfin operating data

Question 32

As it relates to audit evidence, rights and obligations is best classified as:

Answer 32

The 4 assertions for account balances are 1) existence, 2) completeness, 3) rights and obligations, and 4) valuation and allocation

Question 33

Auditor couldn’t get evidences

Answer 33

Qualified or disclamer of opinion

Question 34

How A determining Management identified all accounting estimates that could be material to FS

Answer 34

Review lawyers letters

Question 35

CPA report under US Auditing Standards doesn’t refer to

Answer 35

The CPA assessment of sampling risk factors

Question 36

CPA ingaged to compile FS which prepared at cash basis and don’t disclose the basis of accounting used. CPA is responsible:

Answer 36

To disclose the basis of accounting used in compilation report

Question 37

To obtain understanding of continuing client’s in planning audit business CPA would

Answer 37

Review prior year audit documentation and permanent file