Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
54 Cards in this Set
- Front
- Back
GAAS are issued by who?
|
AICPA Auditing Standards Board (ASB)
|
|
GAAS are issued in the form of _______?
|
Statements on Auditing Standards
|
|
What standard is to be used in the preparation and issuance of audit reports for issuers?
|
Public Company Accounting Oversight Board (PCAOB)
|
|
PCAOB have what kind of standards?
|
Auditing Standards
|
|
Audits of government organizations the receive government funds are conducted in accordance with what standard?
|
Generally Accepted Government Auditing Standards (GAGAS)
|
|
What are considered issuers of entities subject to the rules of the SEC?
|
Public Companies
|
|
PCAOB was created by which act?
|
Sarbanes Oxley Act of 2002
|
|
PCAOB Auditing Standards (AS) replace what?
|
ASB Standards or Statements on Auditing Standards for issuers
|
|
What is the name of the standard setting board of the International Federation of Accountants?
|
International Auditing and Assurance Standards Board (IASSB)
|
|
The IASSB issues what kind of standards?
|
International Standards on Auditing (ISA)
|
|
What standards apply to attest engagements?
|
Standards for Attestation Engagements (SSAE)
|
|
What standards apply to a nonpublic entity seeking unaudited financial statements or unaudited financial information?
|
Statements on Standards for Accounting and Review Services (SSARS)
|
|
In the United States, auditors are required to comply with ____ published by _______ for non-issuers and _____ for audits of _____?
|
1. Statements on Auditing Standards (SAS)
2. Auditing Standards Board 3. Public Company Accounting Oversight Board (PCAOB) 4. issuers |
|
What is the flow of an unqualified opinion?
|
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 |
|
What is the structure of a unqualified opinion?
|
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 |
|
Reference to GAAS is included in which paragraph?
|
Auditor's Responsibility Paragraph
|
|
Reference to GAAP is included in which paragraph?
|
Opinion paragraph
|
|
What are the four types of opinions?
|
1. Unmodified
2. Qualified (except for) 3. Adverse opinion (pervasive GAAP problem) 4. Disclaimer of Opinion (significant GAAS problem) |
|
What are the types of opinions are available for GAAP?
|
Qualified (except for)
Adverse Opinion |
|
What are the types of opinions available for GAAS?
|
Qualified (except for)
Disclaimer of Opinion |
|
Does an Emphasis of Matter paragraph come before or after the Opinion paragraph?
|
After but before Other-matter paragraph
|
|
Does an Other-Matter paragraph come before or after the opinion paragraph?
|
After
|
|
If you assume responsibility for another CPAs work, what are the additional investigation steps?
|
Reputation
Independence Professional competency Program steps performed Check out their RIPP |
|
What does Rule 203 of the AICPA Code of Professional Conduct State?
|
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
|
|
What elements make-up an emphasis of matter paragraph?
|
1. Going concern
2. Consistency 3. Changing prior opinion 4. Special purpose framework |
|
What are the procedures when the auditor admits there is a going concern problem?
|
Analytical procedures
Debt compliance Minutes Inquiry of client's legal counsel Third parties Subsequent events review ADMITS |
|
What are the conditions and events that may be indicative of substantial doubt of a going concern?
|
Financial difficulties
Internal matters Negative trends External trends Client's admit they are FINE |
|
What two terms must be used in an explanatory paragraph regarding an entity's ability to carry-on as a going concern?
|
Substantial doubt
Going Concern |
|
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 |
1. Unqualified
2. Qualified (except for - GAAS) or Disclaimer of Opinion 3. Qualified (except for - GAAP) or Adverse |
|
Describe the subsequent opinion based on the following conditions related to going concern issues:
1. Adequate GAAP Disclosure 2. Inadequate GAAP Disclosure |
1. Unmodified (emphasis of a matter)
2. Qualified (except for - GAAP) or Adverse opinion |
|
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?
|
Unmodified emphasis of a matter
|
|
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?
|
Qualified or Adverse
|
|
What are the four situations in which an auditor expresses an adverse opinion?
|
1. Accounting Policy
2. Presentation 3. Departure from GAAP 4. Unreasonable Accounting Estimate |
|
What two issues make-up a Qualified (except for) GAAS problem?
|
1. Insufficient evidence
|
|
What are the four situations in which an auditor expresses a disclaimer of opinion?
|
1. Insufficient evidence
2. Signifcant going concern uncertanity 3. Lack of independence |
|
What two modifications are done to the introductory paragraph when issuing a disclaimer of opinion?
|
1. Use of the words "were engaged to audit" instead of "have audited"
2. Deletion of the reference to the auditors responsibility |
|
Under what conditions should an auditor consider withdrawing from an engagement?
|
When the financial statements are false, fraudulent or misleading
|
|
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:
|
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 |
|
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
|
Notify each member of the board of directors of a refusal for management to correct the issue
|
|
What are the two types of subsequent events?
|
1. Recognized (Type I)
2. Non-recognized (Type II) |
|
What is a recognized subsequent event and what is the auditor's treatment?
|
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) |
|
What is a non-recognized subsequent event and what is the auditor's treatment?
|
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 |
|
What is the format to update or change a prior opinions?
|
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 |
|
What are the procedures to test for subsequent events?
|
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 |
|
What are the types of opinions under the old AICPA standard?
|
1. Unqualified
2. Qualified Opinion (Except for) 3. Adverse Opinion 4. Disclaimer of Opinion |
|
Under the old AICPA standard, what is management's responsibility regarding uncertainty?
|
1. If it is probable and reasonably estimated, then record
2. If it is probable and cannot be estimated, then disclose |
|
Under the old AICPA standard, what is the format of the Auditor's report
|
RAPMEAM RAPMEAM
1. Responsibility of management (f/s) 2. Responsibility of auditor (opinion) |
|
Under the old AICPA standard, what are the ten Generally Accepted Auditing Standards?
|
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) |
|
Under the old AICPA standard, which standards of reporting are considered implicit?
|
1. Consistency
2. Disclosure |
|
Under the old AICPA standard, which standards of reporting are considered explicit?
|
1. Accounting
2. Opinion |
|
Under the old AICPA standard, what is the objective of the fourth standard?
|
To prevent misinterpretation of the degree of responsibility the auditor is assuming when his/her name is associated with financial statements.
|
|
When the examiner require CPA candidates to respond to questions concerning the standard audit report, you must remember:
GAAS = ? GAAP = ? |
1. Scope Paragraph
2. Opinion Paragraph |
|
What are three major differences betweeen the audit report under the old AICPA standards and the International Standards on Auditing?
|
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 |
|
Under the old AICPA standard, what are the seven circumstances for an explanatory paragraph in a modified unqualified opinion?
|
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 |