A1&A2 Flashcards by Chen Wenyan

Auditing standards
v.s.
Auditing procedures

✅ Auditing standards
The quality of the performance of the acts

✅ Auditing procedures
The acts to be performed

@3208

How well did you know this?

Not at all

Perfectly

In order to obtain reasonable assurance, the auditor must:
4 steps

Plan the work and properly supervise any assistants
Identify and assess risks of material misstatement
⬆️ (fraud or error)
Determine and apply appropriate materiality levels
Obtain sufficient appropriate audit evidence

@3367

How well did you know this?

Not at all

Perfectly

Management is responsible for:
有3

Preparation and fair presentation of F/S in accordance with the applicable financial reporting framework
The design, implementation and maintenance of internal control relevant to 1. that are free of material misstatement due to error or fraud.
Providing the auditor with access to information and persons within the entity needed to complete the audit

@3312

How well did you know this?

Not at all

Perfectly

Group engagement partner 決定 refer component auditor 時，要在 ________ state “We did not audit the F/S of X company”

Opinion section

@15005

How well did you know this?

Not at all

Perfectly

Subsequently discovered fact that lead to change in an audit opinion may be presented in

Emphasis-of-Matter
or
Other-Matter

@25

How well did you know this?

Not at all

Perfectly

A change in accounting principles, effect on comparability of F/S
✅Material
✅Immaterial
要如何表達

✅Material
Unmodified & refer to the change in Emphasis-of-Matter

✅Immaterial
不需說明

@8165

How well did you know this?

Not at all

Perfectly

企業的財報採用 IFRS + GAAP，
different report frameworks 要在 _______ stated

Other-Matter

@16329

Material weakness internal control
不會在 Other-Matter 出現
而是會 report to governance
視情況影響 opinion

How well did you know this?

Not at all

Perfectly

“In our opinion, except for….. described in the Basis for Qualification section of our report”
是屬於 _________ paragraph

Qualified Opinion

@14985

How well did you know this?

Not at all

Perfectly

改變前期的 opinion
Qualified ➡️ Unmodified
要如何 express

Unmodified ➕ Emphasis-of-matter

@15001

How well did you know this?

Not at all

Perfectly

A change in accounting principle 是 subsequent event 嗎

不是！

@3366

How well did you know this?

Not at all

Perfectly

若F/S 為 Adverse or Disclaim opinion, auditor 就不能對 ________ 有 opinion

不能對 supplementary information 有 opinion

@42

How well did you know this?

Not at all

Perfectly

Documentation completion date 🟰

Release date ➕
45 天 (Issuer)
60 天 (Nonissuer)

@5395

How well did you know this?

Not at all

Perfectly

Auditor’s documentation of risk assessment should consider the 有 3 of the an entity being auditing

Nature
Size
Complexity

@16297

How well did you know this?

Not at all

Perfectly

Quality control elements
HELPME

主要目的是防止

associated with 與 lack of integrity 的企業

@5751

Human Resources
Engagement
Leadership
Performance
Monitoring
Ethical (Independent)

How well did you know this?

Not at all

Perfectly

Substantial test 通常在 _______ 執行

After year-end
@2671

After initial planning activity

例如
Evaluate the reasonableness of the client’s accounting estimates
Inquire of the client’s attorney as to whether any unrecorded claims are probable if assertion
@2675
Anticipated sample size @3031

How well did you know this?

Not at all

Perfectly

在接受 an engagement to audit a new client, a CPA 必須要 obtain

客戶同意
詢問 predecessor auditor

@2677

How well did you know this?

Not at all

Perfectly

Audit process 前中後的 Obtain

前
客戶同意 inquiring predecessor auditor

中
Engagement letter (由 auditor 出具) @3887

Planning stage :
Make a preliminary assessment of materiality @7148
Preliminary understanding of client’s control environment
Understanding of client’s industry and business
Audit committee communication @7148

後
Management representation letter

@2677

還不確定 planning stage 應該在這出現嗎 9/25

Material level 與 Substantive testing 的關係

反向關係

Increase in Material level
會 Decrease audit risk
進而 Decrease substantive testing

@5484

先決定 Material level
再決定 Substantive testing

@3031

Overall material 🟰
&
Performance materiality 🟰

Overall material
🟰Applicable benchmark
✖️Applicable % of “Revenue or other”

Performance materiality
🟰Overall materiality
✖️ Likelihood Application %

@4703

存在於Engagement letter 有

Any specialists will be involved in the engagement @5718
Management’s responsibility to provide certain written representations to the auditor @4736
Signed & dated by client @4447
Objectives of the engagement @4447
Overall audit strategy (but not specific audit procedure) @8152
Limits the auditor’s responsibility to detect errors and fraud @5475
(Only reasonable assurance)
Summarize the timing and details of auditor’s planned field work @2378

Supplementary information 是用於出具________ 意見的財報

p.s. 其資訊是直接衍生自使用於 F/S 而來

Unqualified
Unmodified
Qualified

@17600

Adverse opinion 的 phrase

Disclaimer of opinion 的 phrase

Qualified opinion 的 phrase

✅ Adverse opinion
In our opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion section of our report, the accompanying consolidated F/S do 🔑not present fairly the financial position”…

✅ Disclaimer of opinion
Because of the significance of the matters described in the Basis for Disclaimer of Opinion section of our report, we have 🔑not been obtain sufficient appropriate audit evidence” to provide a basis for an audit opinion on these F/S…

✅ Qualified opinion
In our opinion, 🔑except for the omission of information describe in the Basis of Qualified Opinion section in our report”…

@14976

Audit plan 會有

Description of the nature, timing, and extent of
planned risk assessment procedures and
planned further audit procedures

Other audit procedures to be performed to comply with GAAS

@8687

Emphasis-of-matter 要特別強調

Specific matter
and
The matter did not lead to a modified opinion
@162

Special report
Cash basis / Tax basis
@10258

Six main F/S assertion:

COVERUP 1. Cutoff (PCAOB 沒有這條) @7686 正確的財報期間 2. Completeness 3. Valuation, Allocation and Accuracy 4. Existence and Occurrence 真實發生 and 存在 5. Rights and Obligations 資產的權利 and 負債的義務不能用來測試 Transaction & event 6. Understandability of Presentation and Classification (PCAOB 是 Presentation & Disclosure) @15054

Auditor’s responsibility is to 評估與檢測 F/S 可能的 material misstatements or fraud，意味著 auditor 應該要著重於評估

Mistakes Falsifications 虛假報告 Omissions ChatGPT @2982

Audit documentation 的主要功能有4

1. The principle support for the auditor’s report 2. Assistance in the planning, conduct and supervision of the audit 3. Accountability 4. Useful information @2359

F/S using cash basis 要在 ______ paragraph F/S using regulatory basis or contractual basis 要在 _______ paragraph

✅ Cash basis Emphasis -of-matter paragraph ✅ Regulatory basis (single opinion) or contractual basis Other-matter paragraph (restricted the use of auditor’s report) 以及 Description of the purpose in the Management’s responsibilities paragraph @166

Detective risk 是指 auditor 未能發現財報重大錯誤的可能性，所以通常會透過執行 ___________，降低 Detective risk

Substantial test @ChatGPT x @2939

COSO 由五個組織成立

AICPA IIA Institute of Internal Auditor IMA Institute of Management Accountants AAA American Accounting Association FEI Financial Executives Institute @ 466

During an audit, the auditor should maintain an attitude of professional skepticism, which includes a ______ mind and a _______ assessment of audit evidence

Questioning mind & Critical assessment @6872

Auditor’s working trail balance 通常含有 a column for

Adjustments & Reclassifications @2367

Audit objectives and assertions are contained in the

Audit plan @2367

Attributes of risk 有四

Type of risk Significant of the risk Likelihood of the risk Pervasiveness of the risk @7597

Substantial doubt about entity’s ability to continue as a going concern, 但無其他缺失, 應 Unmodified ➕ _______ Remain Alleviate

✅ Remain (Separate) Explanatory section/paragraph ✅Alleviate Emphasis-of-matter paragraph @15771

Client’s books and records are the support for _________. Audit documentation is the support for the work auditor has done to support the _______ provided on the auditor’s report.

F/S Opinion @2643

Substantial test 要在 interim date 測試前，auditor 必須先 assess the difficulty in controlling the ________ risk and determine whether ________ alternative procedure exist to extent the interim conclusion to year-end.

Incremental audit risk Sufficient @5505

Accept level of detection risk affects the nature, timing and extent of _____________ As detection risk increase, the assurance (effectiveness) must be provided from ___________ can decrease

Substantive procedures Substantive tests @2911

IR & CR 影響

DR @2911

Audit objectives are based on

F/S assertions @10832