Auditing 1 - Chapter 2

Front 1

List four types of auditors:

Back 1

External Auditors (Independent Auditors)
Internal Auditors
Government Auditors
Forensic Auditors

Front 2

The type of auditor that must be a CPA.

Back 2

External Auditors (Independent Auditors)

Front 3

This type of auditor performs operational audits mostly.

Back 3

Internal Auditors

Front 4

This type of auditor is connected to IRS and GAO.

Back 4

Government Auditors

Front 5

The type of auditor that reconstructs incomplete accounting records to settle insurance claims over inventory valuation, probes money-laundering activities by reconstructing cash transactions or investigates and documents embezzlement and negotiates insurance settlements.

Back 5

Forensic Auditors

Front 6

Attestation services includes:

Back 6

Audits
Reviews
Internal control over Financial Reporting
Attestation Services on Information Technology and other attestation Services

Front 7

Attestation Services is a subset of ___________

Back 7

Assurance Services

Front 8

During the economic boom of the late 1990s and the early 2000s, accounting firms aggressively sought opportunities to market a variety of _______________ to their audit clients.

Back 8

high-margin nonaudit services

Front 9

What Act did Congress pass in 2002 to reform accounting and protect investors?

Back 9

The Sarbanes-Oxley Public Company Accounting Reform and Investor Protection Act.

Front 10

What act did Congress pass in 2010 to protect consumers and reform Wall street?

Back 10

Dodd-Frank Wall Street Reform and Consumer Protection Act.

Front 11

The auditor has a responsibility to plan and perform the audit to obtain ______________ about whether the financial statements are free of material misstatement, whether caused by error or fraud.

Back 11

reasonable assurance

Front 12

Because of the nature of audit evidence and the characteristics of fraud, the auditor is able to obtain ________, but not _________, assurance that material misstatements are detected.

Back 12

reasonable
absolute

Front 13

The primary context with which an auditor is concerned is the _______ or ________ of his or her audit client. In other words, the context provided by the client’s business impacts the auditor and the audit, and is thus a primary component of the environment in which financial statement auditing is conducted.

Back 13

industry
business

Front 14

Business organizations exist to create value for their stakeholders. Due to the way resources are invested and managed in the modern business world, a system of _____________ is necessary, through which managers are overseen and supervised.

Back 14

corporate governance

Front 15

Name six organizations that affect the public accounting profession.

Back 15

AICPA (American Institute of Certified Public Accountants)
FASB (Financial Accounting Standards Board)
IAASB (Internal Auditing and Assurance Standards Board)
IASB (International Accounting Standards Board)
PCAOB (Public Company Accounting Oversight Board)
SEC (Securities and Exchange Commission)

Front 16

Auditing standards serve as _____ for and ____________ of the auditor’s performance.

Back 16

Guidelines
measures of the quality

Front 17

The Auditing Standards Board guides ___________ companies.

Back 17

Nonpublic

Front 18

What three categories do the 10 Generally Accepted Auditing standards (PCAOB) fall under?

Back 18

General
fieldwork
reporting

Front 19

List the general standards.

Back 19

Adequate technical training and proficiency,
independence,
due professional care

Front 20

List the standards of fieldwork.

Back 20

Adequate planning & supervised assistants,
obtain sufficient understanding of internal controls,
obtain sufficient appropriate evidential matter

Front 21

List the standards of reporting.

Back 21

GAAP,
consistency,
disclosures,
opinion

Front 22

Pertaining to the principles underlying an audit, what is the purpose of an audit (as outlined by ASB)?

Back 22

To express an opinion on the financial statements prepared by management, whose responsibility is to prepare the financial statements and to provide the auditor with information necessary to conduct the audit.

Front 23

Pertaining to the principles underlying an audit, what is the responsibility of an auditor during an audit (as outlined by ASB)?

Back 23

Have competence and capability; comply with ethical requirements; maintain professional skepticism; exercise professional judgment

Front 24

Pertaining to the principles underlying an audit, what is the performance of an auditor during an audit (as outlined by ASB)?

Back 24

Sufficient appropriate audit evidence supporting reasonable (not absolute) assurance that the financial statements are free of material misstatement

Front 25

Pertaining to the principles underlying an audit, what is the auditor’s reporting responsibility (as outlined by ASB)?

Back 25

Express an opinion, in the form of a written report, based on an evaluation of the audit evidence obtained; or state that an opinion cannot be expressed

Front 26

GAAS and SAS are considered to be ____________ of performance for auditors.

Back 26

minimum standards

Front 27

_______ adopted, on an interim basis, GAAS and SAS existing in 2003 and issued standards called ________________.

Back 27

PCAOB
Auditing Standards (AS).

Front 28

Statements on Auditing Standards (Interpretations of GAAS) are classified by TWO numbering categories:

Back 28

SAS and AU numbers

Front 29

The ____ number applies to the order in which the standards are issued and are thus chronological.
The ____ codification organizes the SAS according to topical content.

Back 29

SAS, AU