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37 Cards in this Set

  • Front
  • Back
Bank loan interest determination takes into account...
risk free rate, information risk, business risk.
Types of evidence.
CRAPOID.
ACDO?
Standards of Field Reporting. Accordance with GAAP, id circumstances where gaaprinciples not Consistently observed, adequate information Disclosures, Opinion.
What is information risk?
The risk that information upon which a business decision is made is inaccurate.
IIO?
integrity, independence, objectivity
Modifications to clean unqualified?
LASER.
The type of audit that provides a measure of management of performance in meeting organizational goals is...
an operational audit.
Are all for-profit business entities are required to have an annual independent audit?
No.
PIE?
Standard of Field Work. adequate Planning and supervision; sufficient understanding of Internal controls; SCEM IIOC Evidence.
Types of reports.
Five - qualified, unqualified, qualified with explanatory, disclaimer, adverse.
Five reasons for an unqualified opinion with explanatory paragraph / modified wording:
-) lack of consistent application of GAAP
-) substantial doubt about going concern
-) auditor agrees with departure from promulgated accounting principles
-) emphasis of a matter
-) reports involving other auditors
The level of information risk associated with small, privately held companies is usually lower than the level of information risk associated with large, publicly held companies. True or False?
True.
M?
monitoring to be sure other four elements of quality control are being "effectively applied."
What are the definitions and differences between auditing, attestation, and assurance services?
Assurance services are independent professional services that improve the quality of information for decision makers.

Attestation services are a type of assurance servces in which the CPA firm issues a report about the reliability of an assertion that is the responsibility of another party.

Auditing is the accumulation and evaluation of evidence about information to determine and report on the degree of correspondence between the information and established criteria.
A+C of C+E?
Acceptance and continuation of clients and engagements?
The possibility that a company will not be able to repay a loan because of economic or business conditions is known as...
business risk.
All but which reports entail an extra paragraph added (a new paragraph apart from any of the three paragraphs in the unqualified standard report)?
All but the clean unqualified and unqualified shared report with auditors have a fourth paragraph added (though the disclaimer due to scope has the scope paragraph eliminated for an ending total of three paragraphs).
What are the management assertions?
Existence or occurance
Completeness
Valuation and Allocation
Rights and Obligations
Presentation and Disclosure
Auditing is...
...the accumulation and evaluation of evidence about information to determine and report on the degree of correspondence between the information and established criteria.
What type of audit is made for the purpose of evaluating efficiency and effectiveness?
An operational audit.
SCEM IIOC?
Sufficient Compentent evidential matter to be obtained through inspection, inquiries, observation, and confirmations. A subset of PIE.
If the audited company fails to follow GAAP, what type of opinion must the auditor express?
If the failure doesn't impede the overall fair statement of financial statements, then a qualified opinion can be issued. Otherwise, an adverse opinion must be submitted.
What two types of reports affect only the opinion paragraph and have a fourth paragraph added? Where is it added?
Both a qualified opinion only (due to non-GAAP) and an adverse report affect opinion only and have a fourth paragraph added before the opinion paragraph.
What are the components of the Standards of Field Work?
-) Adequate planning and supervision
-) Sufficient and competent evidence
-) Understand internal controls
What are the general reasons for a qualified report?
Assume both don't materially impede on making a statement on the fairness of the statements.

-) The scope of the audit has been restricted

-) the statements have not been prepared in accordance with GAAP
If an immaterial misstatement exists in the financial statements, can the auditor issue a standard unqualified opinion?
Yes.
A ..... report has only one paragraph.
... disclaimer due to lack of independence ...
What are the components of the Standards of Reporting?
-) Report shall state if statements are in accordance with GAAP
-) Report shall ID circumstances where GAAP are not observed
-) Report will only state if informational disclosures if they are NOT reasonably adequate
-) Report will contain an expression of opinion
What two types of reports affect the introductory paragraph?
The unqualified shared report with other auditors and the disclaimer due to scope limitation entail modifications to the introductory paragraph.
If an auditor makes reference in the report to another auditor who performed part of the the audit, does this qualify the opinion? If it is not qualification [statement is still unqualified], does the primary auditor hold responsibility for the other auditor's work?
An auditor can use a modified wording unqualified opinion report to identify the other auditor, which is appropriate when the primary auditor couldn't review the other auditor's work, or the other auditor performed a material percentage of the total audit.

The only way the primary auditor can escape responsibility for the assisting auditor is by releasing a qualified opinion.
In a disclaimer due to a scope restriction...
the scope paragraph is omitted entirely.
What are the components of the General Standards?
-) Adequate training and proficiency
-) Independence in mental attitude
-) Due professional care
EP?
Engagement performance: work performed must meet professional standards.
Five elements of quality control:
IIO, PM, A+C and C+E, EP, M
TIC?
General Standards. adequate technical Training and proficiency as auditor; Independence; due professional Care.
PM?
Personnel management
A CPA firm is reasonably assured of meeting its responsibility to provide services that conform with professional standards by having an...
...an appropriate system of quality control.