Wiley

Question 1

In the USA, who issues auditing standards applicable to audits of private companies and other entities known as nonissuers?

Answer 1

AICPA’s Auditing Standards Board

Question 2

In the USA, who issues auditing standards applicable to audits of public companies (also known as issuers)?

Answer 2

Public Company Accounting Oversight Board (PCAOB)

Question 3

In the USA, who issues auditing standards applicable to audits of government entities?

Answer 3

US Government Accountability Office (GAO)

Question 4

What is meant by generally accepted auditing standards (GAAS) under the clarified auditing standards?

Answer 4

The Statements of Auditing Standards issued by the AICPA’s Auditing Standards Board

Question 5

Identify the four primary themes associated with the AICPA’s seven principles for audit standard setting.

Answer 5

1. Purpose/premise 2. Responsibilities 3. Performance 4. Reporting

Question 6

Identify the topics associated with each of the AICPA’s seven principles for audit standard setting.

Answer 6

1. Purpose 2. Premise 3. Responsibilities 4. Reasonable assurance 5. Performance requirements to achieve reasonable assurance 6. Inherent limitations 7. Reporting

Question 7

Identify the topics associated with the three general standards formerly known as generally accepted auditing standards (GAAS), which are still applicable to the PCAOB’s auditing standards.

Answer 7

1. Training 2. Independence 3. Due professional care

Question 8

Identify the topics associated with the four reporting standards for generally accepted auditing standards (GAAS), which are still applicable to the PCAOB’s auditing standards.

Answer 8

1. GAAP 2. Consistency 3. Disclosure 4. Opinion

Question 9

List the six elements of a quality control system

Answer 9

1. Leadership responsibilities for quality within the firm 2. Relevant ethical requirements (especially independence) 3. Acceptance and continuance of client relationships 4. Human resources 5. Engagement performance 6. Monitoring

Question 10

What are some considerations that must be given by the auditor during the planning phase of the audit?

Answer 10

1. Determine whether to accept or continue the audit engagement. 2. Assess the risk of material misstatement 3. Evaluate requirements for staffing and supervision 4. Prepare the required written audit program (also called the “audit plan”)

Question 11

What matters should be covered in the (successor) auditor’s inquiry of the predecessor auditor?

Answer 11

1. Facts related to management’s integrity.
2. Significant accounting or auditing disagreements.
3. Any communications with the audit committee (or others charged with governance) about fraud, illegal acts, and significant deficiencies in internal control matters
4. Predecessor’s understanding of the reason(s) for the client’s change in auditors

Question 12

What matters are typically addressed in an engagement letter?

Answer 12

1. The objective and scope of the audit
2. The auditor’s responsibilities
3. Management’s responsibilities
4. A statement about the inherent limitations of an audit
5. A statement indentifying the applicable financial reporting framework
6. Reference to the expected content of any reports to be issued
7. Other matters, as warranted (e.g. feeds, etc)