11Aud - Planning Activities - Miscellaneous Planning Topics

Front 1

When a specialized measurement or valuation is required for an engagement, what may the CPA firm do?

Back 1

Hire a specialist

Front 2

When is the need for the work of a specialist determined?

Back 2

At the planning stage

Front 3

What AU and SAS No discusses the Work of a Specialist?

Back 3

AU336 and SAS 73

Front 4

What is the title of AU336, SAS 73?

Back 4

Using the Work of a Specialist

Front 5

Give examples of specialists.

Back 5

Actuaries, appraisers, engineers, geologists, and attorneys

Front 6

When is the expertise of a specialist needed?

Back 6

When there are audit issues related to valuation, quantity or quality, or interpreting technical requirements.

Front 7

What should be considered when selecting a specialist?

Back 7

Professional credentials, reputation, and any relationship to the client (prefer unrelated parties!).

Front 8

How is the specialist referenced in the auditor's report when giving an unqualified opinion?

Back 8

a. Usually, do not refer to the specialist (might be misunderstood), since a "division of responsibility" is not permitted.

b. However, the auditor may choose to add an explanatory paragraph that references the report or findings of the specialist, if that will facilitate the readers' understanding.

Front 9

How is the specialist referenced in the auditor's report when giving a modified opinion, qualified, adverse, or disclaimer?

Back 9

May reference the report or findings of the specialist, if that will facilitate the readers' understanding of the reason(s) for the modified opinion.

Front 10

What AU and SAS No. relates to communication with those charged with governance?

Back 10

AU380 and SAS 114

Front 11

What is the title of AU380 and SAS 114?

Back 11

Communication With Those Charged With Governance

Front 12

Who are "those charged with governance"?

Back 12

The person(s) with responsibility for overseeing the strategic direction of the entity and obligations related to the accountability of the entity (encompasses the term "board of directors" or "audit committee" used elsewhere in the auditing standards).

Front 13

Who is management?

Back 13

The person(s) responsible for achieving the objectives of the entity and who have the authority to establish policies and make decisions by which those objectives are to be pursued.

Front 14

What is the auditor's basic responsibility?

Back 14

The auditor must communicate those matters that are significant and relevant to the responsibilities of those charged with governance in overseeing the financial reporting process.

Front 15

Is the auditor required to perform specific procedures to identify such matters to communicate with those charged with governance?

Back 15

No

Front 16

Can the auditor may choose to discuss matters with management before communicating them with those charged with governance?

Back 16

Yes, unless it's inappropriate such as discussing management competence or integrity

Front 17

Can the auditor discuss matters with the internal auditor(s) before communicating with those charged with governance?

Back 17

Yes

Front 18

What matters can be communicated with those charged with governance?

Back 18

1. Auditor's responsibilities under GAAS

2. The planned scope and timing of the audit

3. Significant findings from the audit

Front 19

How many the auditor's responsibilities under GAAS be communicated?

Back 19

By an engagement letter

Front 20

Explain what is meant by communicating the planned scope and timing of the audit.

Back 20

1. How the auditor plans to address the significant risks of material misstatement

2. The general approach to internal control relevant to the audit;

3. The factors considered in determining materiality;

4. The auditor's use of the internal audit function and how they can best work together.

Front 21

What are 7 significant findings that can be communicated to governance by the auditor?

Back 21

1. Qualitative aspects of the entity's significant accounting policies

2. Significant difficulties encountered during the audit

3. Disagreements with managment over accounting and auditing matters

4. Uncorrected misstatements

5. Management consultations with other accountants

6. Significant issues discussed (or subject to correspondence) with management in connection with the audtior's retention

7. Independence issues

Front 22

What is meant by Qualitative aspects of the entity's significant accounting policies?

Back 22

the acceptability of significant accounting practices.

Front 23

What significant difficulties can be encountered during the audit?

Back 23

1. Significant delays caused by management,

2. Unreasonable time pressure

3. Unavailability of expected information, etc.

Front 24

Disagreements with management over accounting and auditing matters should be discussed with governance whether or not it is satisfactorily resovlved. T or F

Back 24

True

Front 25

What is meant by uncorrected misstatements that should be communicated to governance?

Back 25

Those that have been identified by the auditor

Front 26

What should be discussed with governance concerning management consultations with other accountants?

Back 26

may represent possible "opinion shopping" activities by management, so discuss the matters that were subject to consultation.

Front 27

What communicaton should be discussed with governances in regards to Independence issues?

Back 27

Circumstances or relationships potentially affecting independence, which the auditor considere in concluding that independence is not impaired.

Front 28

How should communication with governance take place?

Back 28

Orally or written, in a manner determined by the auditor's judgement

Front 29

When oral communication of significant findings are inadequate, how should the findings be communicated?

Back 29

In writing

Front 30

What should the auditor do when a significant matter is discussed with an individual member of those charged with governance?

Back 30

Evaluate whether the matter should be summarized in a subsequent communication to all those charged with governance

Front 31

What is important about timely communications of the auditor to those in governance?

Back 31

Communicate on a timely basis so appropriate action can be taken.

Timing may vary due to circumstance

Front 32

The auditor should evaluate whether the two-way communication has been adequate for purposes of the audit. T or F

Back 32

True

Front 33

What may an inadequate two-way communication suggest?

Back 33

An unsatisfactory control environment, which the auditor should consider

Front 34

What should the auditor do if the two-way communication is inadequate?

Back 34

1. Consider whether a scope limitation may exist

2. Consider the possible effect on the assessment of the risks of material misstatement

(this might warrant modification of the opinion, or even withdrawal

Front 35

How should communication between the auditor and governance be documented?

Back 35

1. When communication is oral, document in writing

2. When communication is in writing, keep a copy of that communication

Front 36

Other Stms on Auditing Standards require that certain specific matters be communicated with those charged with governance. What are they?

Back 36

1. Illegal Acts
2. Going Concern Issues
3. Fraud
4. Communicating internal control matters identified in an audit

Front 37

What illegal acts should be communicated with those charged with governance?

Back 37

Those that come to the auditor's attention

Front 38

What should the auditor communicate to governance concerning going concern issues, after considering management's strategy?

Back 38

(1) the nature of the conditions identified;

(2) the possible effect on the financial statements and disclosures; and (

3) the effects on the auditor's report.

Front 39

What should the auditor communicate to governance concerning fraud?

Back 39

(1) Inquire of the audit committee about the risks of fraud and the audit committee's knowledge of any fraud or suspected fraud;

(2) Communicate any fraud discovered involving senior management and any fraud that causes a material misstatement (whether or not management is involved);

(3) Obtain an understanding with those charged with governance regarding communications about misappropriations committed by lower-level employees.

Front 40

What should the auditor communicate to governance concerning internal control?

Back 40

Any identified significant deficiencies (including material weaknesses).