AUD 4 Flashcards
The auditor would refer to a scope limitation specifically in the Basis for Qualified Opinion paragraph and in the Opinion paragraph. The Auditor’s Responsibility section would also be modified to state, “We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion.”
The auditor would refer to a scope limitation specifically in the Basis for Qualified Opinion paragraph and in the Opinion paragraph. The Auditor’s Responsibility section would also be modified to state, “We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion.”
when management refuses to furnish a representation letter, the scope of the auditor’s examination has been limited sufficiently to preclude an unmodified opinion.
when management refuses to furnish a representation letter, the scope of the auditor’s examination has been limited sufficiently to preclude an unmodified opinion.
This answer is correct because reviews result in limited (negative) assurance.
This answer is correct because reviews result in limited (negative) assurance.
the term “should” refers to a presumptively mandatory requirement.
the term “should” refers to a presumptively mandatory requirement.
when the group engagement partner finds it impractical to review the work of another auditor, he or she will make reference to the examination of the component auditor and issue an unmodified report. This reference will indicate the division of responsibility between that portion of the financial statements covered by the two CPA firms.
when the group engagement partner finds it impractical to review the work of another auditor, he or she will make reference to the examination of the component auditor and issue an unmodified report. This reference will indicate the division of responsibility between that portion of the financial statements covered by the two CPA firms.
When a decision is made not to make reference to the component auditor—that is, to take responsibility for that auditor’s work—the group auditor should perform additional procedures dependent upon the significance of the component.
When a decision is made not to make reference to the component auditor—that is, to take responsibility for that auditor’s work—the group auditor should perform additional procedures dependent upon the significance of the component.
If financial statements prepared on a comprehensive basis of accounting other than GAAP (i.e., in accordance with a special purpose framework) are not appropriately titled, the auditor must disclose any reservations in an explanatory paragraph and qualify the opinion for the inappropriate title of the statements, which constitutes a departure from the applicable accounting framework (analogous to a GAAP departure).
If financial statements prepared on a comprehensive basis of accounting other than GAAP (i.e., in accordance with a special purpose framework) are not appropriately titled, the auditor must disclose any reservations in an explanatory paragraph and qualify the opinion for the inappropriate title of the statements, which constitutes a departure from the applicable accounting framework (analogous to a GAAP departure).
operational audits attempt to improve operations and reduce waste through the introduction of controls.
operational audits attempt to improve operations and reduce waste through the introduction of controls.
The AICPA Accounting and Audit Guide, Audits of State and Local Governmental Units, requires the communication of weaknesses that are material in relation to the federal financial assistance program.
The AICPA Accounting and Audit Guide, Audits of State and Local Governmental Units, requires the communication of weaknesses that are material in relation to the federal financial assistance program.
This answer is correct because Government Auditing Standards requires that auditors report on the scope of their testing of compliance with laws and regulations and of internal controls.
This answer is correct because Government Auditing Standards requires that auditors report on the scope of their testing of compliance with laws and regulations and of internal controls.
The General Accounting Office’s “Yellow Book” suggests that in addition to financial statements, such an audit may include consideration of (1) program results, (2) compliance with laws and regulations, and (3) economy and efficiency.
The General Accounting Office’s “Yellow Book” suggests that in addition to financial statements, such an audit may include consideration of (1) program results, (2) compliance with laws and regulations, and (3) economy and efficiency.
Compliance reports require a statement that management is responsible for compliance with laws, regulations, contracts, and grants.
Compliance reports require a statement that management is responsible for compliance with laws, regulations, contracts, and grants.
The MD&A review of an issuer (public) entity should be restricted to the use of specified parties.
The MD&A review of an issuer (public) entity should be restricted to the use of specified parties.
This answer is correct because PPS sampling requires special design considerations when there are negative balances, while classical methods do not.
This answer is correct because PPS sampling requires special design considerations when there are negative balances, while classical methods do not.
The ratio estimation sampling technique uses the ratio between the audited to book amounts as a measure of standard deviation in its sample size computation. Answer (a) is correct because when audit differences are approximately proportional to account size the standard deviation of the ratio is small and this results in a relatively small required sample size.
The ratio estimation sampling technique uses the ratio between the audited to book amounts as a measure of standard deviation in its sample size computation. Answer (a) is correct because when audit differences are approximately proportional to account size the standard deviation of the ratio is small and this results in a relatively small required sample size.
