Study Review Flashcards
0
Q
Negative assurance
A
A statement about what a CPA does not know
1
Q
Positive assurance
A
A statement to what the CPA believes.
fS presented fairly in accordance with GAAP
2
Q
What is in the permanent file?
A
Info which is needed for multiple periods.
Debt agreements
Articles of incorporation
Corporate charter
3
Q
The compilation report references what?
A
A compilation report should include references to: 1) the Statements on Standards for Accounting and Review Services issued by the AICPA;
2) management’s representations in the form of financial statements; and
3) no expression of assurance.
4
Q
What are auditors concerned about in an accounting system?
A
Information system and related controls related to financial reporting
5
Q
Auditor is not obligated to do what in consideration of internal control structure?
A
To search for significant deficiencies in the design or operation
6
Q
Auditors are only required to look at internal control procedures when?
A
When the controls are tested and used to reduce the control risk assessment or relate to significant risk areas
7
Q
Significant factors of the control environment
A
Sets tone Integrity and ethical values Commitment to competence Bod or audit committee participation Management philosophy and operating style Organizational structure Assignment of authority and responsibility Human resource policies and practices
8
Q
Documentary evidence that doesn’t exist/ undocumented should be tested by
A
Observation and inquiry
9
Q
Reasonable assurance in internal controls limited by
A
Cost benefit
10
Q
An auditor is required to obtain an understanding of the of what regarding IC?
A
Design of controls relevant to the audit and determine the controls have been placed in operation.
11
Q
Evaluating Operating effectiveness is used to
A
reduce control risk by performing tests of control
12
Q
Confirmation with outside parties and rue computation of account balances are
A
Substantive procedures designed to give evidence of fair presentation of account balances
13
Q
When Discovering a deficiency in IC the auditor should
A
Understand the potential consequence
14
Q
It is a Crime to not have IC. What are the IC components?
A
Control activities, risk assessment, information and communication, monitoring, control environment
15
Q
Auditor should document what in IC?
A
Understanding of IC.
Justification for reducing the control risk
Basis for concluding control risk
16
Q
Objective of tests of details of IC
A
Evaluate whether IC is operating effectively
17
Q
Controls that are unlikely to pertain to assertions is the same as
A
Ineffective controls or not bring efficient to reduce substantive testing
18
Q
An auditor may communicate orally significant deficiencies and material weakness; however, they are required to communicate in what form all significant deficiencies or material weaknesses?
A
Written
19
Q
Significant deficiencies are deficiencies in the design and operation of what?
A
Internal control structure
20
Q
Significant deficiencies are material weakness when?
A
high risk that a material misstatement may occur and not be detected in the financial statements under audit.
21
Q
When talking about significant deficiencies the auditor should state the purpose was to report on the FS and not provide assurance on
A
internal control
22
Q
Significant deficiencies and material weakness are reported how?
A
Separately.
23
Q
Errors and irregularities may not be detected because of inherent limitations in internal control is mentioned in the
A
Engagement letter
24
An auditor can use an internal auditor to assist with what
Understanding internal control
Performing substantive test
Performing tests of control
25
What should an auditor do to assess the internal auditors competence (8 things)?
```
obtain information about their educational background,
professional experience,
professional certification,
audit policies and procedures,
practices regarding assignment,
supervision and review,
quality of working paper documentation,
evaluation practices.
```
26
Determine the organization for which auditors report, the access to information or policies that restrict access test an internal auditors what
Objectivity
27
Internal audit work that provides direct evidence of material misstatements in assertions can reduce
The nature timing and extent of audit procedures
28
The internal auditors work is considered for understanding what
Internal control and material misstatements
29
Internal controls should be strong as iron. Procedures to perform evaluation of control risk include
inquiries of personnel;
Reperformance of the control procedure.
Observation of activities and operations; and
inspection of documents and records;
30
Prenumbering documents is good to validate what assertions?
Completeness
31
Reconciliation ensures that items are complete and accurately posted. It is least likely a control procedure used to reduce the risk of what?
Errors
32
Lapping is when a payment from one customer is used to pay another customer. This can be prevented by separating the recording and what?
Custody of cash
33
Immediately on the receipt of cash an employee should prepare what
A remittance listing
34
Fidelity bonds ensures the company against
Loss from illegal acts by employees
35
A person who receives a remittance can also do what
Prepare the daily deposit slip because both ate custodial functions.
36
Flow chart of cash receipts
Check to remittance listing
Checks to bank
Remittance advices
Cash receipts journal to general ledger
37
The initial cash receipts listing from the mail room should be compared to the total in what journal and traced where?
Cash receipts journal and traced to the bank deposit slip
38
Cash accounts should be reconciled with the
Bank statements
39
Flow chart for sales
Sales order to shipping docs to sales invoice to record in sales journal to post in general ledger
40
A person who signs a check can also
Mail the check
41
Matching reports is what type of internal control function?
Authorization function
42
Approval of POs and negotiate terms with vendors are what type of function
Authorization
43
Custodial functions are typically handled by what office?
Treasury
44
Verifying accuracy of checks and vouchers, controlling the mailing of checks to vendors, and canceling payment vouchers when paid are what IC function?
Custodial
45
A person who match vendor invoices with receiving reports should not perform which functions?
Post the accounts payable records
Reconcile the accounts payable ledger
Cancel the vendors invoices after payment
46
A debit memo advises accounting that the invoice should not be paid in full due to what?
Returned goods
47
Expenditures and disbursements flow chart
Purchase request to PO to receiver to supplier invoice
Receiver to purchases journal to general ledger
Check remittance advice to cash disbursements journal to general ledger
48
Purchasing department (authorization) are independent of what departments?
Receiving (custody) and accounting (record keeping)
49
Bank recs are handled by someone that does not have involvement in what IC functions
Handling cash receipts
Cash disbursements
Record keeping
50
Accounts payable should be independent of what IC function?
Cash disbursements
51
When an independent trust company is not used what is the best method to safeguard marketable securities?
Two company officials who have joint control over securities kept in a bank safe deposit box,
52
Internal control questionnaire regarding direct borrowings will be about proper authorization from the
Board of directors
53
Understanding IC over inventory consists of?
Make inquiries of mgt and staff
Inspecting documents and records
Observing activities and operations
54
To detect errors and irregularities in Inventory the auditor can do what IC?
Compare finish goods with counts of goods on hand
55
Objectives of IC for the production cycle
Transactions are executed in accordance with mgt general or specific authorization.
Transactions are recorded to permit preparation of the financial statements ion accordance with GAAP
Access to assets permitted with mgt authorization
Recorded accountability for assists is compared with the existing assets at reasonable intervals
56
Segregation of duties related to IC is tested by?
Inquiry and observation
57
IC involving initiation and execution of equipment transactions are
Procedures to monitor and properly restrict access to equipment
58
Auditor may refer to a specialist if the auditor
Modifies the report because of differences in specialist findings
59
An auditor is not required to obtain knowledge about the what of IC structure
Operating effectiveness
60
Predictable relationships relates to
Income statement accounts
61
No discretionary accounts are accounts not subject to change based off of
Managements decisions
62
An auditor is required to communicate?
```
Significant accounting policies
Mgt judgements and accounting estimates
Significant audit judgements
Disagreements with mgt
Consultation with other accountants
Difficulties encountered in performing the audit
Auditors responsibility under GAAS
Auditors judgements about the quality of the entity's accounting principles
```
63
Decision table
Presents conditions and actions to making a decision
64
Auditors assess control risk based on what?
The financial statement assertions
65
The entity's right to an asset or obligation for a liability is what assertion?
Rights and obligation
66
Validity of audit evidence lies in what
The auditors judgement.
67
Direct examination of evidence is more reliable than
oral and analytical procedures
68
The fact that an audit must be performed within a reasonable time period and at a reasonable cost is relevant to the what of evidence
Sufficiency
69
Accounting data by itself cannot be considered what
Sufficient evidence
70
Fill in blank. The more effective the internal control structure the greater the assurance as to the ( )of evidential matter?
Reliability
71
The auditor should obtain audit evidence by testing the accounts records by what 3 methods
Analysis
Review
Reconciliation
72
Quantity of evidence required is () related to the risk of material misstatement and () related to the quality of evidence
Directly
| Inversely
73
What is considered reliable evidence? 5 of them
1. Evidence obtained directly by auditor
2. obtained from independent sources
3. generated internally when controls are effective
4. Exists in documentary form
5. Provided by original documents
74
Cost alone is not a valid basis for
Omitting an audit procedure
75
Audit evidence is persuasive (suggestive) and rarely
Conclusive (compelling)
76
What are the 5 financial statement assertions?
1. Existence/occurrence
2. Completeness
3. Rights and obligations
4. Valuation and allocations
5. Presentation and disclosure
77
What are the three categories the assertions are related to?
1. Account balances
2. Presentation and disclosure
3. Classes of transactions and events
78
What are the assertions specific to account balances at period end?
1. Existence
2. Completeness
3. Rights and obligations
4. Valuation and allocation
79
What are the four assertions to presentation and disclosure?
1. Occurrence and rights and obligations
2. Completeness
3. Classification and understandability
4. Accuracy and valuation
80
What are the five assertions pertaining to classes of transactions during the period?
1. Accuracy
2. Occurrence
3. Completeness
4. Cutoff
5. Classification
81
The risk that material misstatements will not be detected due to early testing at interim is what?
Incremental audit risk
82
Test of details provide what level if assurance?
High level
83
What is a judge mental misstatement?
Unreasonable accounting estimates as well as inappropriate accounting policies
84
For non trivial misstatements the auditor should communicate matters to management to request what
Correction
85
What is a factual misstatement?
Misstatements for which there is no doubt
86
What are projected misstatements?
The auditors best estimate of misstatements in a population as suggested by audit sampling
87
The auditor should decide when the overall audit strategy need to be revised as an result of misstatements when?
The aggregate of accumulated misstatements considered to b material
88
Auditor should communicate what percent of misstatements accumulated during the audit?
All
89
When management corrects a misstatement in a auditor the auditor should do what regarding remaining misstatements?
Perform additional procedures to determine whether any misstatements remain
90
When management refuses to correct a misstatement the auditor should?
Obtain an understanding of managements reasons
91
What are the circumstances that affect materiality?
1. Compliance and regulatory requirements
2. Debt covenants
3. Effect on future periods
4. Effects on changes in earnings
5. Impact of ratios
6. Effects on segment info
7. Effect that increases mgt compensation
8. The omission of info important to users understanding
9. Miss classifications btw operating/ non or recurring/non items
92
The auditor should document what regarding misstatements?
1. Amount which misstatements would be viewed as clearly trivial
2. All misstatements accumulated during the audit
3. Auditors conclusion about us corrected misstatements are material
93
What is included in the permanent file of an auditors documentation?
Debt agreements
AOI
Corporate charter
94
Audit documentation should show that the accounting records agree or reconcile with what?
The financial statements
95
The representation letter is usually prepared towards?
The end of the audit
96
The working trial valance provides adjustments for?
Reclassification and adjustments
97
What is the documentation completion date?
Assemble the final audit file no later than 60 days after the report release date. PCAOB 45 days
98
The auditor may add or delete documentation up to the
Documentation completion date
99
What are the audit documentation retention records?
5 years from the report release date
| 7 PCAOB
100
The auditor may add audit documentation
Before the end of the retention period. Must document materials added, by whom, when, reasons for change, and the effect
101
The use of negative accounts receivable confirmations requires?
1. Low risk of material misstatement
2. A large number of small balances
3. An expected very low exception rate
4. No reason to believe that the recipients of the confirmations would not review them properly
102
Unreturned negative confirmation requests yield what type of evidence?
Implied not explicit
103
Sufficient refers to the ( ) of evidence and appropriate refers to the quality of evidence in terms of ( )
Quantity
| Quality related to relevance and reliability
104
More assurance is obtained from consistent evidence obtained from different sources (corroborating) than from info considered what?
Individually
105
```
Management assertions (Percv occca occa)
Perceive Orange County ca
```
Account balances (presentation and disclosure, existence, rights and obligations, completeness, valuation and allocation.
Transactions and events (occurance classification completes cutoff accuracy)
Presentation and disclosure (occurance completeness classification and understandability accuracy and valuation)
106
What are some substantive audit procedures?
1. Inspection of records
2. Inspection of tangible assets
3. Observation
4. Inquiry
5. Confirmation
6. Recalculation
7. reperformance
8. Analytical procedures
107
Confirmation of accounts receivable rarely provides reliable evidence related to the completeness assertion because
Customers may not be inclined to report under statements of errors in their accounts
108
Positive confirmation requests require?
A response whether or not the party agrees with the recorded amount
109
An auditor must perform alternative procedures for positive confit has with what?
No responses
110
Negative confirms only requires response when there is a what?
Disagreement with the balance
111
Confirmations are not performed for accounts receivable when?
The overall account balance is immaterial
External conformations are inefficient
Assessed level of RMM is low
112
When evaluating the reasonableness of an accounting estimate the auditor concentrates on what factors?
1. Significant to the accounting estimate
2. Sensitive to variations
3. Deviations from historical patterns
4. Subjective and susceptible to misstatement and bias
113
What should the auditor document in regards to accounting estimates?
The basis for the auditors conclusions about the reasonableness
Any possible management bias
114
3 factors affecting nature of estimation uncertainty?
Nature of the accounting estimate
Extent to which there is an accepted method used
Subjectivity of assumptions
115
Basic rein divinity for auditing estimates
Evaluate the reasonableness and related disclosures
116
Audit procedures to assess accounting estimates?
Inquire of management
Review and test management processes
Develop an independent expectation for comparison
Review subsequent events for additional evidence
117
What is estimation uncertainty?
Accounting detonates and disclosures that lack precision in measurement
118
Further substantive procedures to respond to significant risks?
How management addressed estimation uncertainty
Significant assumptions are reasonable
Management has the intent and ability to carry out specific actions
119
Risk of material misstatement increases when there is a high what (regarding estimates)
Estimation uncertainty
120
The existence of published quotations is the best audit evidence for
Fair value
121
Examples of FV estimates?
```
Complex financial instruments
Share based payments
Property held for disposal
Certain assets and liabilities acquired in a business combination intangibles
Non monetary exchange assets
```
122
Observable inputs
Assumptions market participants use for pricing an assets or liability based on market data from independent sources
123
Unobservable inputs
Entity's own judgements about what about what assumptions market participants may use.
124
The auditor may consider the need for a specialist when there is
No observable market
125
A taxing authority could impose an assessment on an entity related to tax matters. This can be used to identify what?
Litigation claims and assessments
126
Management is the primary source of information, claims, and assessments not the
Clients lawyer who corroborates info
127
The auditor and management should reach and understanding about what that is communicated to the lawyer for minuted responses.
Materiality
128
To corroborate management responses to the auditors inquiries the auditor should
Examine the charges to the related expense account and vouch to the appropriate underlying invoices.
129
When there are no pending litigations or claims the auditor may include
A specific statement of fact in the managements representation letter stating that the entity had no legal counsel to address litigation issues
130
What are asserted claims?
When someone has already filed a claimed or at least announced the intention to make a claim. (Pending or threaten litigation)
131
Lawyer cannot inter the auditor of omissions of unasserted claims since
The intention to sue has not been announced
132
Unasserted claims must be disclosed when what two conditions exist?
Probable the claim would b asserted
| Least reasonably possible that a material unfavorable outcome will occur.
133
The completeness and availability of minutes and The plans to merge with other entities would most likely be included in
Managements representation letter
134
One purpose of the management representation letter is to reduce the possibility of a
Misunderstanding concerning managements responsibility for the FS
135
Management representations should include representations regarding the FS and what else
Completeness of info
Recognition
Measurement
Disclosure issues
136
Management must acknowledge in the representation letter it's responsibility for the design and implementation of
Internal controls
137
The management representation letter should cover
All periods covered by the auditors report
138
The management representation letter states that management has no knowledge of any fraud or
Suspected fraud involving management
139
Materiality limits would not apply when obtaining representation involving what?
Management irregularities
140
Materiality limits are imposed concerning related
Party transactions
141
When irregularities are identified the client representation do not include
Materiality levels on irregularities
142
Managements representation letter corroborate management verbal response to
Auditors inquiries
143
Name Management representations regarding the financial statements
1. Mgt responsibility for the fairness of FS
2. mgt responsible for IC over financial reporting
3. Mgt responsible for IC to prevent and detect fraud
4. Significant assumptions used for any acct estimates are reasonable
5. Related party transactions have been properly accounted for and disclosed
6. Subsequent events properly accounted fo
7. Us corrected misstatements immaterial
8. Effects of litigation properly accounted for
144
Representations involving info are
1. All relevant records and personnel available
2. All transactions have been recorded
3. Management made available the results of their assessment if fraud risks.
4. No fraud involving management
5. No knowledge of fraud by employees
6. Disclosed all instances of noncompliance
7. No undisclosed litigations
8. Related party transactions (all)
145
Related party transactions the auditor is concerned with
Adequacy of disclosure
146
When there are material misstatements after the report had been released the auditor should perform
Alternate substantive procedures to determine whether the FS are fairly stated
147
When the auditor dual dates the audit report to recognize a significant event the auditor Is
Limiting responsibility to the events occurring subsequent to the audit report to the specific event reference
148
Type II subsequent events occur after the balance sheet date and do not
Require adjustment but disclosure and no modification to the report
149
When a subsequent events occurs after the audit report date but does not require disclosure, the report should be dated at the date when the auditor obtains
Sufficient appropriate evidence
150
When obtaining evidence about subsequent events the auditor would inquire about changes in what
Capital stock
Long term debt
Working capital
151
During the review of subsequent events the auditor would perform what procedures
Read the latest interim financial statements
BOD minutes
Inquire legal counsel concerning litigation claims and assessments
Make specific inquiries of management
Scan journals and ledgers after year end for unusual items
152
Events that did not exit it year end but arose after year end require
Disclosure
153
In regards to subsequent events the predecessor auditor should perform specific procedures to determine whether
The previously issued report is still appropriate
154
Subsequent events requiring adjustment provides
New or better info about the FS as of the BS date
155
When handling going concern the auditor responsibly is to consider the possible effects on the
FS and adequacy of disclosure. The auditor should include an emphasis of matter paragraph
156
Mitigating factors for going concern
1. Dispose assets
2. Plans to borrow money or restructure debt
3. Plans to reduce or delay expenditures
4. Plans to increase ownership equity
157
Examples of conditions and events that cause an auditor to have doubts about the entity going concern
1. Recurring capital losses
2. Working capital deficiencies
3. Negative cash flows from operating activities
4. adverse key financial ratios
158
In planning a sample test of subsequent cash receipts the ( ) would be considered
Preliminary judgements about materiality levels
159
A regular bank statement that is prepared by the bank for a shorter period than normal is a
Cut off bank statement
160
A cutoff bank statement is used to verify the components of the client's
Bank reconciliation
161
The transfer of money between banks with immediate withdrawals
Check kiting
162
What is the purpose of a bank confirmation?
Corroborate info regarding deposit and loan balances
163
Materiality levels dan be used in planning a sample of subsequent
Cash receipts
164
When receiving a cut off statement the auditor may trace the prior years checks to the
Outstanding checklist
165
I recorded sales at year end would most likely be detected in the
Client sales cut-off
166
Examining shipping records and sales invoices are alternate procedures to responding to
Non response accounts receivable
167
Negative form of accounts receivable used when what four conditions.
1. Risk of material misstatement is low
2. Large number of small balances
3. Very low exception rate
4. No reason to believe recipients are unlikely to give them consideration
168
When positive confirmations are not answered it is ok to have the client
Contact the customers to have the receivables returned
169
The completeness assertion
Trace from the source document to the accounting records
170
When inventory is in public warehouses the auditor would test the inventory existence by
Inspection
171
Inspection of loan agreements to determine whether inventories are pledged test for
Rights and obligation
172
Reduction in inventory turnover rate may indicate problems with
Obsolete inventory
173
Equity method requires an investment to be valued by reflecting changes in the
Investee's equity
174
Publicly traded stock is commonly held by
A custodian
175
Analytical procedures in testing long term investments are used to ascertain the reasonableness of the completion of
Recorded investment income
176
The objective in analyzing repairs and maintenance expense accounts is to discover expenditures that were expensed should have been
Capitalized
177
The auditor should inspect the records then tour the clients facilities when searching for
Unrecorded retirements of fixed assets
178
Debits that appear in the repairs and maintenance expense account have not been
Capitalized
179
Looking at the repairs and maintenance account helps the auditor to determine if major repairs
Should have been capitalized
180
Looking at cash disbursements recorded just after year end is useful for identifying
Unrecorded liabilities
181
The completion assertion is primarily focused on an auditors evaluation of
Accounts payable
182
A note payable that is renewed after the balance sheet date would be examined to endure that is was properly
Presented at the balance sheet and the related disclosures were adequate.
183
Confirmation of accounts payable would be least likely performed before the balance sheet date because
It focus on completion and would have to b repeat formed if fine before the balance sheet date
184
An auditors program for examining Long term debt would consist of correlating
Interest expense recorded
185
Restricted retained earnings deals with what assertion?
Presentation and disclosure
186
When a company does nit maintain its own stock records the auditor should confirm from the transfer agent the number of
Shares issued and outstanding
187
When there are overpayments discovered when performing payroll the auditor would
Extent substantive tests of payroll
188
An auditor would compare payroll coats with standards or budgets when
Auditing payroll
189
Confirmation procedures applicable to assets address what assertion?
Existence
190
The possibility that a sample is not truly representative of the population of interest is
Sampling risk
191
The possibility of selecting audit procedures that are not appropriated achieve a specific objective is (mistakes by the auditor)
Non sampling risk
192
Statistical sampling allows an auditor to
Design an efficient sample
Measure the sufficiency of the evidential matter obtained
Evaluate the sample results
193
A population with highly variable recorded amounts that cover a wide range would be what
Stratified
194
Precision of an estimate is
The width of a confidence interval (possible error in either direction).
195
No statistical sampling is
Judge mental sampling
196
Statistical sampling benefits relate to
Objectivity
197
Statistical sampling does not eliminate judgement it makes it
More explicit
198
Attributes sampling relates to
Internal controls
199
Variables sampling relates to
Account balances
200
When the sample rate of deviation plus the allowance for sampling risk exceeds the tolerable rate
The planned reliance in the control should be reduced
201
The maximum rate of deviations from prescribed controls that would support the planned assessed level of control risk.
Tolerable rate of deviations
202
The likely rate of deviations is the
Expected population error rate
203
In test of controls the auditor compares the tolerable rate to the
achieved upper precision limit (max definition rate)
204
When selecting sample size for test of controls the auditor considers
The tolerable deviation rate
Allowable risk of assessing control risk too low
Expected deviation rate
205
The achieved upper precision limit less the sample error rate equals
The allowance for sampling risk (margin added to the actual sample error rate to obtain the achieved upper precision limit
206
The rate of occurrence of a given characteristic in a population refers to
Attributes sampling
207
Deviations of internal controls at a given rate ordinarily result in
Misstatements at a lower rate
208
The dollar differences between the sample audit values and applicable book values
Difference estimation
209
Ratio estimation is used when the differences between audit and book values is expected to be
Proportional to the book values
210
Mean per unit estimation
Is useful when difference or ration can't be used
211
The sampling unit to be individual dollar associated with the financial statement element involved is
PPS Sampling
212
Does not work well with negative balances or zero balances is a disadvantage of
PPS sampling
213
Sample size for PPS is based on what 3 things
Reliability factor (table)
Population BV
Tolerable misstatement
214
PPS formula
N = reliability factor (tables) x book value / tolerable misstatement, net of misstatements
215
PPS upper limit
Basic precision + projected misstatement+ incremental allowance
216
Basic precision to PPS
Reliability factor x sample interval
217
Projected misstatements - when the BV greater than or equal to sample interval
Actual misstatement is used
218
Projected misstatements - BV is less than the sample interval
Apply a tainted percentage ( BV - AV/BV) percentage times sample interval
219
Difference estimation calculation
aV - BV / sample = dollar amount
Dollar amount * population = pop audit value
Pop BV + av
220
Ration estimation calculation
aV/BV = ratio
| Ratio x BV
221
Mean per unit estimation
av/sample = per unit
| Per unit x population
222
In internal control for computers which controls should be separated?
Systems analysis, programming, computer operations, transaction authorization, library functions, data control
223
The process of determining which elements in the entity's computer system correspond to the standard data elements is
Mapping
224
A source code comparison program is used to test the presence of
Unauthorized EDP program changes
225
Maintaining an audit trail for computer system provides
A deterrent to irregularities facilitates monitoring and enables queries to be answered
226
Distributed data would be more concerned with access controls because
Because each microcomputer has access to the central computer
227
Test data are used by auditors to test the controls
Over data processing
228
Generalized audit software allows auditors to perform common audit tasks
Footing file sorting extracting and summarizing
229
Test data is useful for
Computations and missing numbers
230
Test data are dummy transactions developed by the auditor to
Test processing by client programs
231
Embedded audit monitors require the auditor to
Continuously monitor transaction activity and collect data on auditor designated transactions
232
A computer assisted auditing technique in which an auditor written or auditor controlled program is used to process data
Parallel simulation
233
Hypothetical transactions that include valid and invalid data is
Test data
234
Use of auditor data and the clients program is a
Integrated test facility
235
A program inserted into the clients system to capture designated transactions.
Embedded audit module
236
When using audit software to view computerized inventory the auditor views
Warehouse location date of last purchase and quantity sold
237
A computer assisted audit technique that permits an auditor to insert the auditors version of a client program to process data
Parallel simulation
238
Generalized software is
Used to access the clients test files
239
Customized audit software are specifically written to
Access the files of a particular client
240
Data mining software
Commercially available software (ACL and IDEA).
241
Test data integrated test facility and parallel simulation test
How well the clients systems work
242
Tagging embedding audit modules and audit hooks
test the working if the system while processing takes place
243
To gather evidences out EDP controls the auditor can use
Inquiry observation and inspection
244
What international board oversees IFAC's and ethical related standard setting activities for the purpose of protecting the public interest?
Public interest oversight board
245
Division of responsibility is not permitted under
International standards of auditing
246
Analytical procedures used to ascertain the reasonableness of long term investments if for the
Completeness of recorded income
247
A scope limitation is shown in an
Explanatory paragraph and a modified opinion
248
When limiting tests of sales transactions when control risk is assessed low for existence and occurrence assertion most supportive evidence is
Cash receipts and accounts receivable
249
Giver auditing standards require communicating significant deficiencies to
Legislative and regulatory bodies under GAS
250
When using a special firm of accounting include a separate explanatory paragraph after the opinion paragraph that
Refers to the note to the financial statements that describes the basis of accounting
251
A company is allowed to use different inventory methods for different inventories so the auditor would issue a
Unqualified or Unmodified opinion
252
Accounting principles utilized in preparation of financial statements should
prepared according to financial reporting framework
Be appropriate in circumstances
Provide info about matters that affect use understanding and interpretation
Classify and summarize info
Reflect transactions in a manner that presents the financial position
253
Unaudited financial statements of a non public company presented with audited financial statements in the subsequent year should
Report on unaudited financials be reissued or
| Include a separate paragraph describing the responsibility assumed
254
The principle auditor can elect to take full responsibility of the financial statements if
The auditor is satisfied with the independence professional reputation and competence of other CPA
255
Emphasis of matter is required when
Going concern
Inconsistency in accounting principles
Special purpose frameworks
256
Except for qualified opinion may be issued for a
Scope limitation and an unjustified accounting change
257
The choice between a qualified opinion and a disclaimer of opinion arises when a
Scope limitation has occurred
258
A qualified opinion should include the word
Except
259
A qualified opinion is material but
Not pervasive
260
A disclaimer opinion is material and
Pervasive
261
To present financial position and results of operation this is located in the
Statement of cash flows.
262
When there is a GAAP departure what type of opinion is issued?
Qualified or adverse
263
For an adverse opinion the appropriate language is
Because of the significance of the matter discussed in the basis for adverse opinion paragraph
264
When issuing a disclaimer of opinion the audit omits the
Scope paragraph
265
If an auditor is unable to determine the amounts of a fraud scheme the auditor would issue what type of opinions
Qualified or disclaimer
266
A change in accounting principle creates a
Consistency modification
267
A change in depreciation or estimate does not need to be disclosed and does not affect the
Opinion
268
An explanatory paragraph is required for a change in
Accounting principle
269
When beginning inventory balances are missing the auditor can issue an unqualified opinion on the bs but a disclaimer opinion on the
Income statement
270
For material inconsistencies identified prior to the report release date and management refuses the auditor may
Include an other matter paragraph
Withhold the auditor report
Withdraw from the engagement
271
When material inconsistencies with other info is discovered after the report release date the auditor should
Inform those charged with governance and take the appropriate action (advice from legal counsel)
272
Certain limited audit procedures should be applied to what
Supplementary information required by FASB or GASB
273
When so report is based on criteria suitable to a limited number of users or matters are presented in a by product the auditor should
Restrict the auditors report
274
A report on the condensed financial statements should include
The auditor has audited and expressed an opinion on the completed FS
The date of the auditors report
Type of opinion expressed
Info is consistent in all material respects with the audited FS.
275
The basis for reporting whether material modifications should be made for such info to conform to the applicable financial reporting is the objective for what.
A review of interim financial info
276
Negative assurance is provided in what type of engagement?
Review engagement
277
Internal control and the entities business still needs to obtained during a
Review engagement
278
When updating an auditors knowledge of an entity's business the auditor should
Consider the results of any audit procedures performed with respect to the current year FS
279
The report on a specific transaction should include
A statement that the engagement was conducted with applicable standards
A description of the transaction and accounting principles to be applied
A statement indicating that responsibility for proper acct treatment rest with the prepare refs of FS
A statement that any differences in the facts circumstances or assumptions may change the report
