Aud 1 Retake

Front 1

What is the objective of the auditor's examination?

Back 1

to express an opinion on the financial statements (expression takes the form of an audit report)

Front 2

What are the responsibilites of company's management?

Back 2

Financial statements and internal control.

Front 3

What are the responsibilites of the auditors?

Back 3

Expression of opinion

Front 4

The auditor must be independent and an expert as to what?

Back 4

1) as to accounting (GAAP)
2) as to auditing (GAAS)
3) as to industry (particular business

Front 5

What does professional skepticism mean?

Back 5

the auditor neither assumes management is dishonest nor assumes unquestioned honesty.

Front 6

Audits are preformed for the benefit of whom?

Back 6

primary benefit of the stockholders, but also for any other interested outside parties.

Front 7

When the auditor reports his findings based upon the evidence examined, the primary assertion is:

Back 7

whether the statements are "presented fairly" in accordance with GAAP

Front 8

The AICPA defines "fair presentation" as:

Back 8

the financial statements reflect the underlying transactions of the company in a manner that represents the financial statements within a range of acceptable limits.

Front 9

What are Statements on Auditing Standards (SASs).

Back 9

interpretations of GAAS issued by the Auditing Standards Board (ASB) of the AICPA.

Front 10

Which audits do SASs apply to?

Back 10

All audits of nonissuers and to the audits of issuers to the extent not superseded by PCAOB Auditing Standards.

Front 11

Audits of gov orgs should be conducted in accordance with _____.

Back 11

Generally Accepted Government Auditing Standards

Front 12

Who are "issuers"?

Back 12

entities subject to the rules of the SEC (primarily public companies)

Front 13

Who are the members of the PCAOB?

Back 13

5 full time members. 2 cpas, 3 non cpas. cpa can be a chair of the board only if not practiced for the past 5 years.

Front 14

What kinds of payments can members of the PCAOB receive frompublic accounting firms?

Back 14

only fixed continuing payments, such as retirement payments.

Front 15

In order to audit a public company, accounting firms must:

Back 15

register with the PCAOB

Front 16

Firms registered with the PCAOB are subject to:

Back 16

board inspection, disciplinary proceedings and sanctions.

Front 17

ASB is to AICPA as:

Back 17

IAASB isto IFAC

Front 18

Do ISAs issued by the IAASB override the local laws and regulations?

Back 18

no

Front 19

What are the two standards for engagements other than audits?

Back 19

SSAE - standards on attestation engagements
SSARS - standards for accounting and review services

Front 20

What is the point of the ACIPA Code of Professional Conduct?

Back 20

Provide members with guidelines for behavior in the conduct of their professional affairs. provides assurance to the public that the profession intends to maintain high standards and to enforce compliance with these standards by its members.

Front 21

The ACIPA Code of Professional Conduct requires firms providing auditing, attestation, and accounting and review services to adopt a system of ____ control.

Back 21

quality

Front 22

The SEC publishes their regulations in:

Back 22

-the accounting series releases
-regulation s-k

Front 23

Final standards adopted by the PCAOB do not become effective until they are:

Back 23

approved by the SEC

Front 24

The ______, a standard setting board of the IFAC, establishes the IFAC Code of Ethics for Accountants

Back 24

(IESBA) International Ethics Standards Board for Accountants

Front 25

What are the three levels of auditing guidance? (the GAAS hierarchy)

Back 25

1. AICPA Statements on Auditing Standards (SASs) and PCAOB Auditing Standards
2) Interpretive publications
3) Other Auditing Publications

Front 26

How should the auditor apply interpretive publications?

Back 26

consider the guidance provided by these publications in performing an audit and be able to explain any departures, and how compliance with standards was otherwise achieved.

Front 27

what are examples of interpretive publications?

Back 27

-SAS Interpretations
-appendices to the SASs
-AICPA Audit and Accounting guides
-AICPA auditing Stmts of position

Front 28

what are examples of "other auditing publications"

Back 28

auditing articles in the Journal of Accountancy
Auditing articles in the AICPA CPA Letter
CPE materials
textbooks
etc.

Front 29

What are the 10 GAASs?

Back 29

Training
Independence
Professional Care

Planning and Supervision
Internal Control, Entity, and Environment
Evidence

Accounting = GAAP
Consistency
Disclosure
Express Opinion

Front 30

What are the three General Standards of GAAS?

Back 30

Training
Independence
Professional Care

Front 31

Which GAAS is considered the "cornerstone of the profession"?

Back 31

Independence

Front 32

Due professional care imposes a responsibility upon each person within an independent auditor's organization to:

Back 32

observe the standards of fieldwork and reporting.

Front 33

The exercise of due professional care implies that the auditor will obtain sufficient appropriate audit evidence to:

Back 33

limit audit risk to a low level

Front 34

the high level of assurance expected to be obtained is referred to as:

Back 34

"reasonable assurance"; absolute assurance is not possible

Front 35

the exercise of due professional care implies that the auditor will obtain _____ _____ evidence to limit audit risk to a low level

Back 35

sufficient appropriate

Front 36

______ can be defined as the maintenance of an objective attitude throughout the audit, including a questioning mind and a critical assessment of audit evidence

Back 36

professional skepticism

Front 37

what is professional skepticism?

Back 37

the auditor neither presumes management dishonesty nor presumes unquestioned management honesty

Front 38

what is often called the "Average auditor" concept?

Back 38

professional skepticism

Front 39

professional skepticism is a component of what general standard of GAAS?

Back 39

professional care

Front 40

what are the three standards of fieldwork under GAAS?

Back 40

1. Planning and supervision
2. internal control,entity, and environment
3. evidence

Front 41

what do strong controls imply for the auditor?

Back 41

auditor will require less evidence from substantive procedures

Front 42

what do weak controls imply for the auditor?

Back 42

auditor will require more evidence from substantive procedures

Front 43

all specific audit work is performed in order to:

Back 43

gather evidence

Front 44

the auditor must obtain sufficient appropriate audit evidence by performing audit procedures to afford a reasonable basis for:

Back 44

an opinion regarding the financial statements under audit. (support auditor opinion, not f/s)

Front 45

what are the four standards of reporting under GAAS?

Back 45

1. Accounting = gaap
2. Consistency
3. Disclosure
4. Express opinion

Front 46

which reporting standards are explicit?

Back 46

accounting is gaap
express opinion

Front 47

which reporting standards are implicit?

Back 47

consistency and disclosure

Front 48

the objective of which standard or GAAS is to prevent misinterpretation of the degree of responsibility the auditor is assuming when his name is associated with the financial statements?

Back 48

express opinion

Front 49

Can an auditor have differing opinions for different financial statements?

Back 49

yes

Front 50

can an auditor report on one financial statement and not the others?

Back 50

yes, as long as access is not limited to info underlying the financial statement

Front 51

What must be included in the report title?

Back 51

"independent" (auditor's report)

Front 52

who is the auditor's report generally addressed to?

Back 52

the company, it's stockholders, and/or board of directors. generally not addressed to management.

Front 53

the introductory paragraph of the audit report contains the following:

Back 53

1. statement that the financial statements as identified in the report were audited
2. statement that the fin stmts are the RESPONSIBILITY of management and that the auditor's RESPONSIBILITY is to express an opinion

Front 54

the opinion paragraph of the report contains the following:

Back 54

1. statement referring to the f/s specifically identified in the intro paragraph
2. opnion
3. stmt regarding conformity with u.s. GAAP

Front 55

when should the report be dated by?

Back 55

on or after the date on which appropriate audit evidence, sufficient to support the opnion, has been obtained

Front 56

sufficient appropriate audit evidence includes evidence that:

Back 56

1. audit documentation has been reviewed
2. f/s have been prepared
3. mgmt has taken responsbility for the f/s

Front 57

what does the report date signify?

Back 57

the final date of the auditor's responsbility

Front 58

where is GAAS referenced in the audit report?

Back 58

scope paragraph

Front 59

where is GAAP referenced in the audit report

Back 59

opinion paragraph

Front 60

what are the 3 major differences between the audit report under u.s. and international?

Back 60

1. ISA includes expanded descriptions of responsibilities
2. ISA is addressed as required by circumstances of the engagement, and should name location where auditor practices
3. can refer to both national audition standards and IAS only if no conflicts.

Front 61

An adverse opinion means there is a very material ____ problem

Back 61

GAAP

Front 62

A disclaimer of opinion means that there is a significant _____ problem

Back 62

GAAS

Front 63

What does an adverse opinion state?

Back 63

the financial statements do not present fairly the financial position, results of operations, or cash flows of the entity in conformity with U.S. GAAP

Front 64

What does a Disclaimer of opinion state?

Back 64

the auditor does not express an opinion on the financial statements bc he was not able to perform an audit sufficient in scope to render an opinion

Front 65

what is management's responsibility regarding uncertainties?

Back 65

if the uncertainties are probably and reasonably estimated, then record. if they are probably and cannot estimate, disclose.

Front 66

what is the auditor's responsibility regarding uncertainties?

Back 66

assessment of whether audit evidence is sufficient to support management's assertion regarding the uncertainty

Front 67

when would you have a modified unqualified opinion with modified wording?

Back 67

in a division of responsibility, where the auditor's opinion is based in part on the report of another auditor

Front 68

in a modified unqualified opinion, when can the explanatory paragraph be placed either before or after the opinion paragraph?

Back 68

1. justified GAAP departure
2. emphasis of a matter

Front 69

Where does the principle auditor mention a division of responsibility in the audit report?

Back 69

in all three paragraphs

Front 70

in a division of responsibility, the name of the other auditor is not mentioned unless:

Back 70

that auditor gives express permission and the report of the other auditor is presented.

Front 71

If the principal auditors decide to have an assumption of responsibility when there is another auditor involved, they must assure themselves of the ____, _____, and _____ of the other auditor.

Back 71

independence, professional competency, and reputation

Front 72

what additional steps should the auditor take when they choose an assumption of responsibility of another auditor's work in the audit?

Back 72

they should:
1) visit with the other auditor and discuss the audit procedures
2) review audit program, documentation, and evaluation of internal control performed by auditor

Front 73

what should the explanatory paragraph of a necessary/justified departure from gaap say?

Back 73

description of the departure, its effects, and the reasons why adherence to gaap would make the f/s misleading

Front 74

what is the auditor's time period for consideration of going concern in the U.S.?

Back 74

evaluate aggregate audit evidence for substantial doubt for reasonable period of time that should not exceed one year from the date of the f/s being audited

Front 75

what is the auditor's time period for consideration of going concern for ISA?

Back 75

auditor uses same period that was used by mgmt. must be at least, but not limited to, 12 months from balance sheet date.

auditor also required to inquire mgmt regarding conditions beyond period of assessment that may cast doubt on going concern

Front 76

what are the differences between ISA and US with how to approach the going concern assumption?

Back 76

ISA says the auditor should consider the going concern assumption throughout the engagement (when planning and performing audit procedures and in evaluating the results of audit procedures)

U.S. don't have specific procedures, but require auditor to consider whether results of the audit procedures performed identify conditions

Front 77

what are the differences between U.S. and ISA on managements responsibility for going concern analysis?

Back 77

ISA says that mgmt has responsibility to assess it, and requires the auditor to evaluate that assessment.

U.S. don't have these reqs, and only require auditor to evaluate mgmt's plans to deal with the adverse conditions that led to the conclusion of doubt of going concern

Front 78

what type of opinion should you use for a going concern?

Back 78

modified unqualified, although the auditor is not precluded from choosing to disclaim an opinon incases involving uncertainties.

Front 79

What specific terms should the explanatory paragraph about a going concern include in U.S. vs ISA?

Back 79

"substantial doubt" for U.S.

"signficant doubt" for ISA