1B

Question 1

Aggregate Audit % of low-risk vs non low-risk of federal financial support?

Answer 1

20% low risk and 40% non low risk

Question 2

Objectivity

Answer 2

Obligation to be impartial, intellectually honest, and free of conflicts of interest.

Question 3

Assertion Categories

Answer 3

Account Balances & Transactions and Events

Question 4

Six Account Balance Assertions

Answer 4

Existence, Rights and Obligations, Completeness, Accuracy, Valuation, and Allocation, Classification, & Presentation

Question 5

Six Transactions and Events Assertions

Answer 5

Occurrence, Completeness, Accuracy, Cutoff, Classification, & Presentation

Question 6

Existence Assertion

Answer 6

That the Assets, Liabilities and Equity Interests actually exist.

Question 7

Rights and Obligations Assertion

Answer 7

That the entity holds or controls the rights to assets and that the liabilities are the obligations of the entity.

Question 8

Completeness Assertion

Answer 8

That all assets, liabilities, and equity interest that should have been recorded have been recorded and all related disclosures that should have been included in the financial statements have been included.

Question 9

Accuracy, Valuation, and Allocation Assertion

Answer 9

That Assets, Liabilities, and Equity Interests have been included in the financial statements at appropriate amounts.

Question 10

Classification Assertion

Answer 10

That Assets, Liabilities, and Equity Interests have been recorded in the proper accounts.

Question 11

Presentation Assertion

Answer 11

That Assets, Liabilities, and Equity Interests are appropriately aggregated or disaggregated and clearly described, and related disclosures are relevant and understandable in the context of the requirements of the applicable financial reporting framework.

Question 12

Occurrence Assertion

Answer 12

That Transactions and Events that have been recorded or disclosed have actually occurred.

Question 13

Completeness Assertion

Answer 13

That all Transactions and Events that should have been recorded have been recorded, and all related disclosures that should have been included in the financial statements have been included.

Question 14

Accuracy Assertion

Answer 14

Amounts and other data relating to recorded transactions and events have been recorded appropriately, and related disclosures have been appropriately measured and described.

Question 15

Cutoff Assertion

Answer 15

That Transactions and Events have been recorded in the correct accounting period.

Question 16

6 Elements to a Firms Quality Control System

Answer 16

Leadership Responsibilities, Relevant and Ethical Requirements, Acceptance and Continuance of Clients and Specific Engagements, Human Resources, Engagement Performance, & Monitoring

Question 17

Leadership Responsibilities Quality Control

Answer 17

Does the work comply with professional standards?

Question 18

Relevant and Ethical Requirements Quality Control

Answer 18

Does the firm have practical ethical requirements?

Question 19

Acceptance and Continuance of Clients and Specific Engagements Quality Control

Answer 19

So Firms only accepts engagement work that it is qualified to perform and to minimize the chances of working with a client whose management lacks integrity.

Question 20

Human Resources Quality Control

Answer 20

Ensure that the firm has sufficient, competent personnel to handle the firm’s engagements in accordance with the applicable requirements and issue reports required by the engagements.

Question 21

Engagement Performance Quality Control

Answer 21

Ensure that engagements are adequately supervised and needs to provide elements to support consistency of engagement performance, supervision, and review functions.

Question 22

Monitoring Quality Control

Answer 22

Are the QC procedures appropriate, relevant, and operating effectively?

Question 23

Loss Contingency Requirements

Answer 23

If it’s Probable and Reasonably Estimates

Question 24

Supplementary Information Include applying audit procedures?

Answer 24

Auditor has no obligation to apply audit procedures but auditor may choose to modify or redirect certain procedures to express an opinion.

Question 25

Emphasis of Matter Paragraph

Answer 25

Material change in accounting principles or FS are prepared using a special purpose framework.

Question 26

Disclaimer of Opinion Reason

Answer 26

1) Auditor is not independent
2) Scope has been severely limited
3) unresolved uncertainty that is far reaching and serious.

Question 27

Control Risk

Answer 27

Could a material misstatement occur that will not be prevented, detected, and corrected on a timely basis by internal control?

Question 28

GAGAS Threats to Independence

Answer 28

Self-Interest Threat
Self-Review Threat
Bias Threat
Familiarity Threat
Management Participation Threat
Structural Threat

Question 29

Self-Interest Threat

Answer 29

Financial Reason or other personal interests will inappropriately influence the auditor’s judgement or behavior.

Question 30

Self-Review Threat

Answer 30

Auditor might not appropriately evaluate previous judgements or services that they provided before the audit.

Question 31

Bias Threat

Answer 31

Auditor might take a position or make a judgement that is not objective based on political, ideological, social, or other personal convictions.

Question 32

Familiarity Threat

Answer 32

That a relationship with management or personnel of an audited entity might result in judgements that are not objective.

Question 33

Management Participation Threat

Answer 33

The Auditor taking on a role in management or performing management functions on behalf of the audited entity could result in judgments that are not objective.

Question 34

Structural Threat

Answer 34

The placement of the audit organization within a government entity, in combination with the structure of the government entity being audited could affect the audit organization’s ability to perform work and report results objectively.

Question 35

Significant Deficiency in Internal Control

Answer 35

A deficiency or combination of deficiencies in the design or operation of a control that doesn’t prevent, detect, or correct misstatements on a timely basis.

Question 36

Material Weakness in Internal Control

Answer 36

A deficiency or combination or deficiencies that results in a reasonable possibility that a material misstatement will result as a result of the deficiency.

Question 37

5 Elements of Internal Control

Answer 37

Control Environment
Risk Assessment
Information and Communication Systems
Control Activities
Monitoring

Question 38

Control Environment

Answer 38

Policies and Procedures to establish overall control of the organization.

Question 39

Risk Assessment

Answer 39

Policies set to identify and analyze relevant risks so that they can be managed.

Question 40

Information and Communication Systems

Answer 40

Policies and Procedures to identify, capture, and exchange relevant information so that employees can meet their responsibilities in a timely manner.

Question 41

Control Activities

Answer 41

Policies and procedures set so that managements objectives will be achieved.
This includes segregation of duties, physical controls, and authorization.

Question 42

Monitoring

Answer 42

Policies and procedures to measure the effectiveness of internal controls as time goes on.

Question 43

Risk Assessment Procedures

Answer 43

Inquire of Management
Observation and inspection of documents
Analytical planning procedures
The review of information from prior periods
Audit Team discussing the risks identified

Question 44

Substantive Procedures

Answer 44

Tests of Transaction details and account balances and analytical procedures performed to detect material misstatements in account balances, transaction class, and disclosure components of the financial statements. Used to test the financial statement assertions.

Question 45

Test of Controls

Answer 45

Provides evidence on a sample basis about the presence or absence of a control condition

Question 46

Tolerable Misstatement

Answer 46

If an error or misstatement is below the TM, it won’t impact the fair presentation of the financial statements.

Question 47

Attribute Sampling

Answer 47

Test used to perform a test of control. Meaning the auditor is looking at transactions to determine if a control was either performed or not performed.