Audit 1 Module 2 - Audit Engagements

Question 1

Preparation and fair presentation of FS requires

Answer 1

1. Identification of the applicable financial reporting framework
2. Prep and fair presentation of FS in accordance w framework
3. Inclusion of the adequate description of the framework in the fs

Question 2

Auditor responsibilities

Answer 2

Professional skepticism
Relevant ethical requirements
Professional judgment
Obtain sufficient audit evidence
Comply with GAAS

Question 3

Professional skepticism- look out for

Answer 3

Contradicting evidence
Reliability of documents
Possible fraud conditions

Question 4

In order to obtain reasonable assurance, the auditor must:

Answer 4

Plan the work
Apply appropriate materiality levels
Identify and assess risks of material misstatement
Obtain sufficient appropriate audit evidence

Question 5

Inherent limitations

Answer 5

Nature of financial reporting
Nature of audit procedures
Timeliness of financial reporting

Question 6

If an audit is needed, nonissuers have the choice of:

Answer 6

1. FS audit only (one opinion)
2. Integrated audit (two opinions- fairness & operating effectiveness)

Question 7

Overall objectives of FS audit:

Answer 7

1: obtain reasonable assurance about whether fs are free from material misstatement whether due to error or fraud
2. Report on the fs and communicate as required by GAAS

Question 8

Objectives of the audit of internal control over financial reporting

Answer 8

1. Express opinion on effectiveness of the company’s internal control
2. Plan/perform audit to obtain evidence that’s sufficient to obtain reasonable assurance about whether material weaknesses exist