Cpa Review: Aud 1

Front 1

GAAS are issued by who?

Back 1

AICPA Auditing Standards Board (ASB)

Front 2

GAAS are issued in the form of _______?

Back 2

Statements on Auditing Standards

Front 3

What standard is to be used in the preparation and issuance of audit reports for issuers?

Back 3

Public Company Accounting Oversight Board (PCAOB)

Front 4

PCAOB have what kind of standards?

Back 4

Auditing Standards

Front 5

Audits of government organizations the receive government funds are conducted in accordance with what standard?

Back 5

Generally Accepted Government Auditing Standards (GAGAS)

Front 6

What are considered issuers of entities subject to the rules of the SEC?

Back 6

Public Companies

Front 7

PCAOB was created by which act?

Back 7

Sarbanes Oxley Act of 2002

Front 8

PCAOB Auditing Standards (AS) replace what?

Back 8

ASB Standards or Statements on Auditing Standards for issuers

Front 9

What is the name of the standard setting board of the International Federation of Accountants?

Back 9

International Auditing and Assurance Standards Board (IASSB)

Front 10

The IASSB issues what kind of standards?

Back 10

International Standards on Auditing (ISA)

Front 11

What standards apply to attest engagements?

Back 11

Standards for Attestation Engagements (SSAE)

Front 12

What standards apply to a nonpublic entity seeking unaudited financial statements or unaudited financial information?

Back 12

Statements on Standards for Accounting and Review Services (SSARS)

Front 13

In the United States, auditors are required to comply with ____ published by _______ for non-issuers and _____ for audits of _____?

Back 13

1. Statements on Auditing Standards (SAS)
2. Auditing Standards Board
3. Public Company Accounting Oversight Board (PCAOB)
4. issuers

Front 14

What is the flow of an unqualified opinion?

Back 14

MR DIM REPORTS CRAME

M - Management's
R - Responsibility
D - Design
I - Implementation
M - Maintenance
R - Responsibility of the Auditor
E - Express an opinion on financial statements
P - Plan and perform the audit to obtain reasonable assurance
P - Perform procedures to
O - Obtain audit evidence
R - Risk assessment of material misstatement of the financial statements
T - Test internal controls relevant to the preparation and fair presentation of the
S - financial Statements
C - internal Control opinion is not expressed
R - Reasonableness of
A - significant Accounting estimates made by
M - Management as well as
E - Evaluating the overall presentation of financial statements

Front 15

What is the structure of a unqualified opinion?

Back 15

1. Title - "Independent" used
2. Addressee - not to management
3. Introductory paragraph
4. Management's Responbility for the F/S
5. Auditor's Responsibility
6. Auditor's Opinion
7. Other Reporting Responsibilities
8. Signature of Auditor
9. Auditor's Address
10. Date of Auditor's report

Front 16

Reference to GAAS is included in which paragraph?

Back 16

Auditor's Responsibility Paragraph

Front 17

Reference to GAAP is included in which paragraph?

Back 17

Opinion paragraph

Front 18

What are the four types of opinions?

Back 18

1. Unmodified
2. Qualified (except for)
3. Adverse opinion (pervasive GAAP problem)
4. Disclaimer of Opinion (significant GAAS problem)

Front 19

What are the types of opinions are available for GAAP?

Back 19

Qualified (except for)
Adverse Opinion

Front 20

What are the types of opinions available for GAAS?

Back 20

Qualified (except for)
Disclaimer of Opinion

Front 21

Does an Emphasis of Matter paragraph come before or after the Opinion paragraph?

Back 21

After but before Other-matter paragraph

Front 22

Does an Other-Matter paragraph come before or after the opinion paragraph?

Back 22

After

Front 23

If you assume responsibility for another CPAs work, what are the additional investigation steps?

Back 23

Reputation
Independence
Professional competency
Program steps performed

Check out their RIPP

Front 24

What does Rule 203 of the AICPA Code of Professional Conduct State?

Back 24

The auditor may not express an opinion indicating that the financial statements of an entity are presented fairly if they are not in conformity with generally accepted accounting principles

Front 25

What elements make-up an emphasis of matter paragraph?

Back 25

1. Going concern
2. Consistency
3. Changing prior opinion
4. Special purpose framework

Front 26

What are the procedures when the auditor admits there is a going concern problem?

Back 26

Analytical procedures
Debt compliance
Minutes
Inquiry of client's legal counsel
Third parties
Subsequent events review

ADMITS

Front 27

What are the conditions and events that may be indicative of substantial doubt of a going concern?

Back 27

Financial difficulties
Internal matters
Negative trends
External trends

Client's admit they are FINE

Front 28

What two terms must be used in an explanatory paragraph regarding an entity's ability to carry-on as a going concern?

Back 28

Substantial doubt
Going Concern

Front 29

Describe the subsequent opinion based on the following conditions related to uncertainty:

1. GAAP & Evidence: Audior agrees with management
2. No Evidence: Auditor unable to obtain evidence
3. Non-GAAP: Auditor disagrees with management

Back 29

1. Unqualified
2. Qualified (except for - GAAS) or Disclaimer of Opinion
3. Qualified (except for - GAAP) or Adverse

Front 30

Describe the subsequent opinion based on the following conditions related to going concern issues:

1. Adequate GAAP Disclosure
2. Inadequate GAAP Disclosure

Back 30

1. Unmodified (emphasis of a matter)
2. Qualified (except for - GAAP) or Adverse opinion

Front 31

What type of opinion would you render because of a lack of consistency if there was a GAAP change that was determined to be acceptable/justified?

Back 31

Unmodified emphasis of a matter

Front 32

What type of opinion would you render because of a lack of consistency if there was a Non-GAAP change that was determined to be unacceptable/unjustified?

Back 32

Qualified or Adverse

Front 33

What are the four situations in which an auditor expresses an adverse opinion?

Back 33

1. Accounting Policy
2. Presentation
3. Departure from GAAP
4. Unreasonable Accounting Estimate

Front 34

What two issues make-up a Qualified (except for) GAAS problem?

Back 34

1. Insufficient evidence

Front 35

What are the four situations in which an auditor expresses a disclaimer of opinion?

Back 35

1. Insufficient evidence
2. Signifcant going concern uncertanity
3. Lack of independence

Front 36

What two modifications are done to the introductory paragraph when issuing a disclaimer of opinion?

Back 36

1. Use of the words "were engaged to audit" instead of "have audited"
2. Deletion of the reference to the auditors responsibility

Front 37

Under what conditions should an auditor consider withdrawing from an engagement?

Back 37

When the financial statements are false, fraudulent or misleading

Front 38

What are the four mitigating factors to consider for dealing with the conditions that led to the auditors belief that there is substantial doubt about an entity's ability to continue as a going concern:

Back 38

1. Plans to borrow money or restructure debt
2. Plans to sell assets
3. Plans to delay or reduce expenditures
4. Plans to increase ownership equity

Front 39

What is the first thing an auditor should do to prevent further reliance on Financial Statements where a subsequent event impacts the auditor's report

Back 39

Notify each member of the board of directors of a refusal for management to correct the issue

Front 40

What are the two types of subsequent events?

Back 40

1. Recognized (Type I)
2. Non-recognized (Type II)

Front 41

What is a recognized subsequent event and what is the auditor's treatment?

Back 41

A condition that existed on or before the balance sheet date.

An adjustment to the financial statements is usually required of the condition existed at the date of the financial statements (i.e. trade receivable)

Front 42

What is a non-recognized subsequent event and what is the auditor's treatment?

Back 42

A condition that existed after the balance sheet date

These types of events may require disclosure by a note to the financial statements or require complete supplemental disclosure

Front 43

What is the format to update or change a prior opinions?

Back 43

DORCS

1. Date of the auditor's previous report
2. Opinion type previously issued
3. Reason for the prior opinion
4. Changes that have occurred
5. Statement that the opinion is different

Front 44

What are the procedures to test for subsequent events?

Back 44

PRIME

1. Post balance sheet transactions
2, Representation letter should be obtained from mgmt
3. Inquiry
4. Minutes of stockholders, directors. and other committee meetings should be read during the subsequent period
5. Examine latest available financial transactions; compare them with the financial statements under audit

Front 45

What are the types of opinions under the old AICPA standard?

Back 45

1. Unqualified
2. Qualified Opinion (Except for)
3. Adverse Opinion
4. Disclaimer of Opinion

Front 46

Under the old AICPA standard, what is management's responsibility regarding uncertainty?

Back 46

1. If it is probable and reasonably estimated, then record
2. If it is probable and cannot be estimated, then disclose

Front 47

Under the old AICPA standard, what is the format of the Auditor's report

Back 47

RAPMEAM RAPMEAM

1. Responsibility of management (f/s)
2. Responsibility of auditor (opinion)

Front 48

Under the old AICPA standard, what are the ten Generally Accepted Auditing Standards?

Back 48

TIP PIE ACDO

General
1. Training
2. Independence
3. Professional Care

Field Work
4. Planning and Supervision
5. Internal Control, Entity and Environment
6. Evidence

Reporting
7. Accounting (Explicit)
8. Consistency (Implicit)
9. Disclosure (Implicit)
10. Opinion (Explicit)

Front 49

Under the old AICPA standard, which standards of reporting are considered implicit?

Back 49

1. Consistency
2. Disclosure

Front 50

Under the old AICPA standard, which standards of reporting are considered explicit?

Back 50

1. Accounting
2. Opinion

Front 51

Under the old AICPA standard, what is the objective of the fourth standard?

Back 51

To prevent misinterpretation of the degree of responsibility the auditor is assuming when his/her name is associated with financial statements.

Front 52

When the examiner require CPA candidates to respond to questions concerning the standard audit report, you must remember:

GAAS = ?
GAAP = ?

Back 52

1. Scope Paragraph
2. Opinion Paragraph

Front 53

What are three major differences betweeen the audit report under the old AICPA standards and the International Standards on Auditing?

Back 53

1. ISA has expanded descriptions of responsibilities
2. ISA should name the location/jurisdiction of the auditor
3. ISA can cite both national and international standards when there is no conflict between both sets

Front 54

Under the old AICPA standard, what are the seven circumstances for an explanatory paragraph in a modified unqualified opinion?

Back 54

1. Necessary departure from GAAP
2. Going concern
3. Emphasize a matter
4. Justified lack of consistency
5. Required SEC financial data has been omitted/not reviewed
6. Designated accounting standards setter requires information to accompany an entity;s basic financial statements
7. Other information is materially inconsistent