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Yaeger AUD > Quiz Mods 1-3 > Flashcards

Quiz Mods 1-3 Flashcards

0
Q

Entity level controls include:

Controls related to…

A

Control environment

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1
Q

Regarding the company’s annual stockholder meeting is…

A

Not an entity level control

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2
Q

Entity level controls include:

Controls over…

A

Management override

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3
Q

Entity level controls include:

The company’s…

A

Risk assessment process

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4
Q

Entity level controls include:

Centralized processing and…

A

Controls, including shared service environments

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5
Q

Entity level controls include:

Controls to monitor…

A

Results of operations

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6
Q

Entity level controls include:

Controls to monitor other controls including activities to monitor…3

A

1 internal audit function

2 audit committee

3 self assessment programs

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7
Q

Entity level controls include:

Controls over the…

A

Period end financial reporting process

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8
Q

Entity level controls include:

Policies that address…2

A

Significant business control and risk management practices

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9
Q

Additions may be made to audit documentation…

A

After report release date

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10
Q

Deletions and discarding of audit documentation are…

A

Not allowed after report release date

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11
Q

Any additions made to audit documentation must include…3

A

1 date info was added

2 name of person who prepared the additional documentation

3 the reason for the addition

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12
Q

The purchase and cash disbursements cycle requires that…3

A

1 procurements are properly authorized
2 goods and services actually received
3 invoice details regarding vendor, price, quantities, terms and
Arithmetic are correct

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13
Q

The purchase and cash disbursements cycle requires that
1 procurements are properly authorized
2 goods and services actually received
3 invoice details regarding vendor, price, quantities, terms and
Arithmetic are correct

This is best accomplished by having the accounts payable department…

A

Establish the agreement of the vendor’s invoice with the receiving
Report and purchase order

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14
Q

Accounts receivable department establishing agreement with vendors invoice

A

Invoice details are correct

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15
Q

Accounts receivable department establishing agreement with receiving report

A

Goods and services actually received

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16
Q

Accounts receivable department establishing agreement with purchase order

A

Procurements are properly authorized

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17
Q

Rather than the accounts payable department, the person preparing and signing checks (usually treasurer) would…

A

Cancel supporting documentation

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18
Q

The purchasing department would verify that…

A

Requisitions are properly completed and authorized

As well as sending copies of purchase order to receiving
department

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19
Q

Disclosure of fraudulent activities to parties other than the client’s senior management and those charge with governance is…2

A

1 Not ordinarily part of auditor’s responsibility

2 normally not permitted due to confidentiality

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20
Q

Under what circumstances is the auditor required to disclose information to outside parties 4

A

1 comply with legal/regulatory requirements
2 subpoenaed
3 to respond to successor auditor
4 with grant requirements when client’s receive governmental
Assistance

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21
Q

The auditor should communicate to those charged with governance all fraud…

A

Involving senior management and fraud that causes material

Misstatement

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22
Q

The auditor should report to those charged with governance and management…

A

Any significant deficiencies due to risk of material misstatement
Due to fraud

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23
Q

Auditor should inform the appropriate level of management of…

A

Evidence that fraud has occurred, even if matter is inconsequential

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24
Q

AU 339 Audit Documentation entitled “Providing Access to or Copies of Audit Documentation to a Regulator” does not apply to…5

A

1 request from IRS
2 firm practice monitoring programs to comply with AICPA
3 state professional requirements (peer or quality reviews)
4 proceedings related to alleged ethics violations
5 subpoenas

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25
Q

The vouchers payable department should not account for…

A

Unused prenumbered purchase orders and receiving reports

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26
Q

Accounting for unused prenumbered purchase orders and receiving reports is the responsibility of…

A

Purchasing and receiving departments respectively

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27
Q

If vouchers payable employee had access to unused purchase orders and receiving reports this would…

A

Be inadequate segregation of duties

28
Q

If vouchers payable employee had access to unused purchase orders and receiving reports they could…3

A

1 write a fake purchase order

2 confirm receipt of the nonexistent goods

3 authorize payment to themselves

29
Q

Vouchers payable department should match…

A

Vendor’s invoice with the related receiving report, which ensures
Goods billed were received

Ex. The voucher is valid

30
Q

Vouchers payable department should approve…

A 
Vouchers for payment by having an authorized employee sign
The vouchers (authorization)
31
Q

Vouchers payable department should indicate…

A

The asset and expense accounts to be debited (ensuring proper
Classification)

32
Q

The purpose of an engagement letter is to…

A

Help avoid misunderstanding with respect to the engagement

33
Q

The engagement letter serves as…

A

The contract between client and accountant regarding terms

Of engagement

34
Q

The engagement letter helps avoid…

A

Legal liability claims that the auditor did not perform work as
Promised

35
Q

While an engagement letter is not required by GAAS, it is…

A

Strongly recommended that such a letter be obtained for all types
of engagements

36
Q

While the successor auditor must obtain permission from the client to communicate with the predecessor auditor, this is not done in…

A

The engagement letter

37
Q

Assurances from management regarding assertions in the financial statements are contained in…

A

The client representation letter

38
Q

The engagement letter is not designed to…

A

Release auditor from liability for errors and irregularities not
Detected by the audit

39
Q

5 interrelated components of internal control

A 
1 control environment
2 risk assessment 
3 information and communication 
4 control activities
5 monitoring
40
Q

Materiality is not…

A

An interrelated component of internal control

41
Q

Control environment

A

Sets tone of the organization

42
Q

Risk assessment

A

Entity’s identification and analysis of relevant risks to achievement
Of its objectives

43
Q

Information and communication systems support the…

A

Identification, capture and exchange of info in form and timeframe

That enable people to carry out their responsibility

44
Q

Control activities

A

Policies and procedures that help ensure that management

Directives are carried out

45
Q

Monitoring

A

Process that assesses the quality of internal control performance
Over time

46
Q

The quality control system of GAO auditor’s should address…

A

Human resource policies and procedures

47
Q

External peer review of GAO auditors is required…

A

Once every 3 years

48
Q

Auditor’s understanding of the entity and its environment consists of an understanding of the following aspects 5

A

1 industry, regulatory and other external factors
2 nature of the entity
3 objectives and strategies and the related business risks that may
Result in material misstatement of financial statements
4 measurement and review of entity’s financial performance
5 internal control, which includes selection and application of
Accounting policies

49
Q

Entity’s accounting policies and procedures does…

A

Not fit into the category of industry, regulatory and other external factors

50
Q

Relevant industry, regulatory and other external factors include industry conditions such as…3

A

1 competitive environment

2 supplier and customer relationship

3 technological developments

51
Q

Regulatory environment encompasses…3

A

1 Relevant accounting pronouncements

2 political environment

3 environmental requirements affecting industry and entity

52
Q

Factors that influence auditor’s reliability of data 5

A 
1 origin of data
2 independence of data source
3 strength of controls in system used to develop data
4 audited status of data
5 number of sources used to develop data
53
Q

The PCAOB has the authority to enforce Section 303 of SOX in…

A

Civil proceedings

54
Q

Examples of discrepancies in accounting records that could be used to assess the risk of material misstatement due to fraud include:

Transactions that are not recorded in…

A

A complete or timely manner

55
Q

Examples of discrepancies in accounting records that could be used to assess the risk of material misstatement due to fraud include:

Transactions that are not recorded in a complete or timely manner or are improperly recorded as to…4 choices

A

1 amount
2 accounting period
3 classification
4 or entity policy

56
Q

Examples of discrepancies in accounting records that could be used to assess the risk of material misstatement due to fraud include:

Unsupported or…

A

Unauthorized balances or transactions

57
Q

Examples of discrepancies in accounting records that could be used to assess the risk of material misstatement due to fraud include:

Last minute adjustments that…

A

Significantly affect financial results

58
Q

Examples of discrepancies in accounting records that could be used to assess the risk of material misstatement due to fraud include:

Evidence of employees’ access to…

A

Systems and records inconsistent with that necessary to perform
Their authorized duties

59
Q

Examples of discrepancies in accounting records that could be used to assess the risk of material misstatement due to fraud include:

Tips or…

A

Complaints to the auditor about alleged fraud

60
Q

AU standards for fraud planning include…

A

Brainstorming among team members and importance of

maintaining proper state of mind

61
Q

Examination of client records documenting use of EDP programs is an example of…

A

Examining records that could provide auditor info to determine if control activities are operating as designed

62
Q

An auditor may chose to rely or not rely on the work of another auditor, in either case, the auditor should…

A

Inquire as to the reputation of the other auditor

63
Q

A GAO structural threat is…

A

The threat that an audit organization’s placement within a
government entity, in combination with structure of government
Entity being audited

Will impact audit organization’s ability to perform work and report
Results objectively

64
Q

What 7 circumstances has GAO identified that could lead to threats of independence?

A 
1 self interest
2 self review
3 bias
4 familiarity
5 undue influence
6 management participation
7 structural threats
65
Q

An auditor most likely perform in planning a financial statement audit would be…

A

Comparing the financial statements to anticipated results

66
Q

Inquiring with client’s legal counsel, examining computer generated exception reports to verify effectiveness of internal controls and searching for unauthorized transactions are all…

A

Part of obtaining sufficient appropriate evidence through inspection,
Observation, inquiries and confirmations

67
Q

Mailing monthly statements to all customers with outstanding balances is the internal control, that if implemented properly, could…

A

Assist the client in preventing or detection misappropriation of
A customer’s check

68
Q

The customer provides an independent check on the customer account balance and is a…

A

Source of information which is external to organization

Yaeger AUD (38 decks)

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