Sarbanes Oxley

Question 1

What are the 5 responsibilities of the PCAOB?

Answer 1

1. Registration of public accounting firms
2. Inspections of registered public accounting firms
3. Standard setting
4. Enforcement
5. Funding

Question 2

How many titles does Sarbanes Oxley have?

Which ones are related to Auditing?

Answer 2

11 titles. the first 4 are for auditing.

Question 3

Define audit documentation.

Answer 3

written record of the basis for the auditor’s conclusions the provides support for the auditor’s representations. It serves as a basis for the review in the quality review process.

Question 4

How long must audit documentation be retained?

Answer 4

7 years from the report release date.

Question 5

When should audit documentation be assembled by?

Answer 5

A complete set of documentation should be assembled by 45 days after the report release date.

Question 6

Define control deficiency

Answer 6

When the design or operation of a control does not allow management or employees to to prevent or detect misstatements in a timely manner.

Question 7

Define material weakness

Answer 7

A deficiency or combo of deficiencies such that there is a reasonable possibility that a material misstatement of the company’s annual IFS will not be prevented or detected on a timely basis.

Question 8

Define significant deficiency

Answer 8

A deficiency or combo of deficiencies that are less severe than a material weakness yet is important enough to merit attention by those responsible for oversight of the company’s financial reporting.

Question 9

What are the relevant assertions?

Answer 9

1. existence or occurrence
2. completeness
3. valuation or allocation
4. rights and obligations
5. presentation and disclosure

Question 10

What are the 4 tests of controls in order of least to most evidence provided?

Answer 10

1. inquiry
2. observation
3. inspection of relevant documentation
4. reperformance of a control

Question 11

Timing of tests of controls: Does testing controls over a greater period of time provide more or less evidence?

Answer 11

More evidence

Question 12

Timing of tests of controls: Does testing controls closer tothe date of management’s assessment provide more or less evidence than testing earlier in the year?

Answer 12

More evidence than testing at the beginning of the year.

Question 13

The more extensively a control is tested provides greater evidence to evaluate the effectiveness of the control. T or F?

Answer 13

True

Question 14

To who and how must the auditor communicate material weaknesses to?

Answer 14

Management and the audit committee in writing

Question 15

To who and how must the auditor communicate significant deficiencies to?

Answer 15

In writing to the audit committee

Question 16

To who and how must the auditor communicate deficiencies other than material or significants?

Answer 16

In writing to management and must inform audit committee that the communication was made.

Question 17

To who and how must the auditor communicate that the audit committee’s oversight is ineffective?

Answer 17

In writing to the board of directors