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28 Cards in this Set
- Front
- Back
- 3rd side (hint)
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What should CPA firm do to comply w/ AICPA stds? |
A qual. control sys consists of policies & pros designed, implemented, and maintained to ensure that the firm complies w/ prof. stds & approp. L/R reqs, and that any rpts issued are approp. in the circumstances *Although SOX promulgated many legal reqs, this would not be the best all inclusive answer, as there are other prof stds that must be met as well. |
Think of MR. DIM |
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What 3 things belong in EOM? |
. Quarterly fin data req'd by the SEC has been omitted . There has been a mat. chg bet periods in accting prins . The Adtr wishes to EMPHASIZE an unusually important subev. |
Adventure time has undergone major changes between seasons. Pendleton wants to emphasizea future plot detail. |
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What is related to the verbiage "Do not present fairly"? |
An ADVERSE Op, not a Qual op. |
ADVERtisers don't present their ads fairly |
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What would indicate SDGC? |
Confirming w/ 3rd parties the details of arrgmts to provide or "maintain (needed) fin supp." *Inspecting title docs provides evidence of ownership assets* |
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Ref in a grp engmt partner's rpt to the fact that part of the audit was perf'd by another Adtr most likely would be an indication of the... |
Divided resp bet the Adtrs who conducted the audits of the components of the overall FS. Ref in the rpt is not meant to recog. the quals of the other Adtr, but simply to divide the resp between the two Adtrs |
Ref to a comp Adtr = DIV OF RESP |
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T/F Scope lims are mentioned in the M. Resp para. |
FALSE! Scope lims are NOT mentioned in the M. Resp. Para. |
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Omission of a SOCF will make an Adtr express a... |
QUALIFIED OPINION Adtr cannot issue an unmod rpt if the client omits a SOCF. |
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Adtr has SDGC. If entity's disclosures concerning this matter are adequate, the Audit Rpt may include a... |
Yes, Disclaimer of Opinion No, "Except For" Qualified Opinion (Except for would be acceptable for INADEQUATE disclosures) If SDGC and the entity's disclosures are adequate, the audit rpt may be either: Unmod. w/ EOM or Disclaimed |
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When mgmt does not provide reasonable justification that a chg in accounting prin is preferable and it presents comparative FS, the Adtr should exoress a qual. opin. |
each year that the FS initially reflecting the chg are presented. |
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Adtr may issue an unmod. opin. w/ an EOM para. if... |
A departure from GAAP is justified. SDGC must be disclosed in an EOM making an unmod. opin. possible. |
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Adtr is unable to determine whether the effects of future events is reasonable, and the effect of those events is believed to be material, he should express: |
Qual/Disclaimer Can't do a unmod. w/ EOM because its a Scope Lim. |
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Which pro most likely would assist an Adtr in identifying conditions and events that may indicate SDGC? |
Inquiring of the entity's legal counsel abt litigation, claims, and assmts. Note that evaluating the entity's pros for identifying and recording RPTs is a means for the Adtr to eval FS pres and disclosure, bit it does NOT provide info abt going concern issues. |
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An Adtr rpting on the audit of FS of an issuer should indicate in the Adtr's resp that the engmt was conducted in accord w/ what std set? What should be referred to in which para? |
-PCAOB Stds -GAAP, Opin para. |
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Which of the following aud pros most likely would assist an Adtr in identifying conditions and events that may indicate there could be SDGC... -Reconcil of interest exp w/ debt outstanding -Review of compli w/ terms of debt agreements -Confirmation of ARfrom prin customers -Confirmation of bank bals |
By reviewing debt agrmts , the Adtr may discover that the entity is near or in noncompli w/ specific debt (fin) covenants. This may cast doubt on whether the entity will be able to continue as a GC |
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Client has capitalizable leases but refuses to capitalize them in the FS. Which rpting option does an Adtr have if the amts are pervasive? |
Adv op, because its a material GAAP departure that is neither necessary nor justified by the client. Both mat. & pervasive = Adverse This situation is NOT a scope lim. |
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In the first audit of a client an Adtr was unable to gather sufficient evid abt the consistent applica of accting prin between the CP & PP. The Adtr would? |
Be unable to express an op on the CP's results of operations and CFs. The Adtr could express an opin. on the stmt of Fin Pos (BS) |
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If the Adtr reissues the audit rpt at the client's request, the Adtr should use the... |
Original rpt date on the reissued rpt. Use of a subseq date implies that the Adtr has done addl' work. |
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If an Adtr has previously qual'd his op on FS' of a PP, and the PP stmts are restated to conform w/ GAAP, the Adtr should... |
express an unmod'd op. on the restated FS'. In addition, the Adtr would state the subst. reasons for the chg in op. in an EOM(or OM) para. following the opin. para. |
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If the FS' of a PP have been audited by a Pred Adtr whose rpt is not presented, the Succ should indicate in an OM para. of the audit rpt: |
1) That the FS of the PP were audited by a pred Adtr 2) The type of opin. expressed by the pred Adtr and, if the opin was modified, the reasons for the mod, 3) The nature of any EOM or OMpara included in the Pred Adtr's rpt, 4) The date of the pred Adtr's rpt. FINAL NOTE: The pred Adtr, not the client, may reissue the PP audit rpt. TL;DR Succ needs to point out in an OM: Date of Pred's rpt. Nature of Pred's EOM/OM PP was audited by a Pred Type of op expressed by the Pred. |
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When a succ Adtr does NOT present the Pred Adtr's rpt, the Succ should indicate in an OM para... |
That the Pred Adtr expressed an unmod. opin. on the PP FS'. |
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Dual Dating is used when there is a... (2 times) |
1) Subev occurring after the orig. date of the Adtr's rpt and 2) The Adtr wishes to extend resp only for the one event. It is not used for COMPARATIVE FS (Date Approp for most recent audit is used) |
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A) LT Debt that matures within ONE yr is rpt'd as... B) An Adtr revoews chgs in LT debt occurring... |
A) A Curr liab. on the BS After yr end to eval whether such debt is approply classified on the BS B) Payroll checks although recirded within the yr, often are not cashed until the subseq. per. |
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Since the mat loss affects the audit rpt and there are creditors relying on the FS, the client properly should... |
Adj. the FS'. Since they are refusing to do so, the Adtr would most likely notify the BOD of the situation in an attempt to encourage the adj. Adtr would only notify the creditors if the BOD was unable to facilitate the proper adjustment. |
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FS were adj'd WITHOUT DISCLOSURE of the event in the footnotes. When should this rpt be dated? |
Should be dated on the date which SAAE was obt'd. Dual Dating used if the event were disclosed. |
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If the omitted audit pros impair the Adtr's ability to supp the previously issued opin., The Adtr should... |
The Adtr should promptly undertake to apply (Alt. Pros) the omitted pros. |
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Define a Subsequent Event... |
Subevs are mat. events or trans occurring subseq to the BS date, but prior to the issuance of the FS, that require adj to or disclosure in the FS |
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A) What are the 2 types of SUBEVS
B) Audit rpt dated Feb 1, Yr 2. Which of the following events, occurring on Feb. 12, Yr 2 is MOST LIKELY to cause the Adtr to request that the FS be revised...
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A) Type 1: Events that occur AT ADTR'S RPT DATE REQUIRE ADJUSTMENT Type 2: Events that occur AFTER ADTR'S RPT DATE REQUIRE DISCLOSURE
B) "If an Adtr becomes aware of Mat. info existing AT THE DATE OF THE AUDIT RPT, the Adtr should advise the client to issue revised FS. In this case since the sale did not occur until Yr 2, there should have been no receivable recorded in Yr 1."
A material purchase occurring in Yr 1 is appropriately recorded in Yr 1. No revision req'd. This is due to Accrual Accounting REGARDLESS OF WHEN PMT IS MADE. The fact that a pro was omitted odes not mean that the FS are misstated. Perhaps another pro compensated for the omission, or perhaps if the Adtr applies this or an alt pro, he will still find that the FS are fairly stated Personnel chgs don't req revision of the FS.
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Which item would req adj to the FS for the yr ended Dec 31, yr 1 |
Loss on an uncollectible trade receivable recorded in yr 1 from a cust requires an adj to the FS A Trade rec existing at the BSD of the FS that subseqly becomes uncollectible because of bankruptcy of the cust reqs an adj to the FS Proceeds from a capital stock issuance in yr 2 would not req adj to the yr 1 FS, but would req disclosure in the FS. |
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