Sim Exam 1 Reinforcement Flashcards
what must the predecessor auditor do prior to reissuing its report on previous financial statements?
perform limited procedures:
read the current statements
compare the current and prior statements
obtain representation letters from management and successor auditor
overdue audit fees only impair independence if they are overdue by how long?
more than one year
a change in the nature of substantive tests from a less effective to a more effective procedure would likely result from a decrease in what?
the acceptable level of detection risk
what type of assurance is provided on compliance with contractual or regulatory requirements related to audited financial statements?
negative
when is an audit that complies with the provisions of the Single Audit Act required?
when an entity expends more than $750,000 in federal financial assistance
what is least likely to be affected when a client makes extensive use of information technology?
the audit objectives with respect to evaluating IC
a user auditor may assume that the controls of a service organization are operating effectively if the service auditor does what?
provides a report on controls placed in operation and tests of operating effectiveness
when conducting a review of interim FS, what is the auditor required to obtain an understanding of?
internal controls
according to the Department of Labor’s independence guidelines, would a direct financial interest in the plan impair independence?
yes, regardless of its material or immaterial
what is required before a comfort letter may be issued and what type of assurance does a comfort letter provide?
a review of interim financial information/negative
is an accountant required to comply with SSARS when preparing FS prior to audit or review by another accountant?
yes!
which of the following should be restricted?
a report on a nonissuer’s internal control based on an audit of internal control
a report on internal control matters noted during an audit
the second type of report should include a restricted use paragraph
what element of a firm’s quality control does analytical review belong to?
it doesn’t!
when inventory is stolen, what journey entry should be made to account for it?
COGS (or other expense account)
Inventory
