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11 Cards in this Set
- Front
- Back
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The most likely reason the audit cannot reasonably be expected to bring all noncompliance with laws and requlations by the client to the auditor's attention is that |
Noncompliance by clients often relates to operating aspects rather than accounting aspects. |
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When an auditor becomes aware of a possible act of noncompliance with laws or regulatons, the auditor should obtain an understanding of the nature of the act to |
Evaluate the effect on the financial statements. |
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Dring the annual audit of Ajax Corp., an issuer, jones, CPA, a continuing auditor, determined that illegal political contributions had been made during each of the past 7 yrs, including the year under audit. Jones notified the board of directors about the illegal contributions, but they refused to take any action because the amounts involved were immaterial to the financial statements. Jones should reconsider the inteded degree of reliance to be placed on the |
Management representation letter. |
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During the audit of a new client, the auditor determined that management had given illegal bribes to municipal officals during the year under audit and for several prior years. The auditor notified the client's board of directors, but the board decided to take no action because the amounts involved were immaterial to the financial statements. Under these circumstances, the auditor should |
Consider withdrawing from the audit engagement and disassociating from future relationshipes with the client |
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If the auditor considers an act of noncompliance with laws and regulations to be sufficiently serious to warrant withdrawing from the engagement, the auditor would likely |
Consult with legal counsel as to what other action, if any, should be taken. |
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Under the Private Securities Litigation Reform Act of 1995, Baker, CPA, reported certain noncompliance with laws and regulations to Supermart's board of directors. Baker believed that failure to take remedial action would warrant a qualified audit opinion because the noncompliance had a material effect on Supermart's financial statements. Supermart failed to take apprpriate remedial action, and the board of directors refused to inform the SEC that it had received such notification from Baker. Under these circumstances, Baker is required to |
Deliver a report concerning the noncompliance to the SEC within 1 business day. |
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Which of the following statements concerning noncompliance with laws and regulations by clients is correct? |
An auditor has responsibility to detect noncompliance with laws and regulations that has a direct effect on the financial statements. |
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The auditor's responsibility for the detection of noncompliance with laws and regulations is greatest for laws and regulations that have |
A direct effect on the determination of material amounts and disclosures in the financial statements. |
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In a financial statement audit, |
The auditor should inquire of management about violations of laws and regulations as well as inspect correspondence with regulatory authorities. |
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An audit in accourdance with GAAS is most likely to include comprehensive audit procedures designed to detect material noncompliance by the client relating to |
Tax laws. |
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A difference between International Standards on Auditing (ISAa) and GAAS relating to violations of laws and regulations is that |
The ISAs do not differentiate between violations of laws and regulations having direct and indirect effects. |
