A1 and A2

Question 1

four things auditor must do to obtain reasonable assurance

Answer 1

1 - plan and supervise
2 - materiality level
3 - identify and assess risk of material misstatements
4 - find sufficient appropriate evidence

Question 2

GAAS Hierarchy

Answer 2

1 - SAS and PCAOB
2 - Interpretive publications
3 - other auditing publications

Question 3

who do non issuers follow

Answer 3

Auditing standards board

Question 4

who do issuers follow

Answer 4

PCAOB standards

Question 5

what opinion if it is material but not pervasive (both FS and audit issue)

Answer 5

qualified opinion

Question 6

what opinion if no materiality issue (both fs and audit issue)

Answer 6

unmodified (unqualified) opinion

Question 7

what opinion if FS issue is material and pervasive

Answer 7

Adverse opinion

Question 8

what opinion if Audit issue is material and pervasive

Answer 8

disclaimer of opinion

Question 9

what is qualified opinion wording

Answer 9

except for

Question 10

what is adverse opinion wording

Answer 10

do not present fairly

Question 11

Required sections for unqualified (issuer)

Answer 11

Opinion of FS
Basis for Opinion
Critical Audit Matters

Question 12

Required Sections for Unmodified (Non Issuer)

Answer 12

Opinion (GAAP)
Basis for opinion (GAAS)
Responsibility of Mgt for FS (GAAP)
Auditors responsibility for Audit of FS (GAAS)
potentially Key Audit Matters

Question 13

Name the special purpose frameworks

Answer 13

1 - cash basis and modified cash basis
2 - tax basis
3 - regulatory basis
4 - contractual basis
5 - other basis

Question 14

When do you reference consistency in Emphasis of Matter?

Answer 14

Accounting Principal Change

Question 15

when is an emphasis of matter required??

Answer 15

justified change in accounting principle that has a material effect of FS

Question 16

what are examples of when a auditor MAY use emphasis of matter

Answer 16

• entity engaged in important lawsuit that could result in big loss
• major catastrophe has big effect of Financial position
• when entity engages in significant related party transactions

Question 17

what are the quality control elements for a CPA firm

Answer 17

H - Human resourcE
E - engagement/client acceptance and continuance
L - Leadership responsibilities
P - Performance of the engagement
M - Monitoring
E - Ethical requirements

Question 18

how long must WP of issuers be retained?

Answer 18

7 Years

Question 19

how long must WP of non issuers be retained?

Answer 19

5 Years

Question 20

how long following report release date should the audit of a non issuer be finalized

Answer 20

60 days

Question 21

how long following report release date should the audit of a issuer be finailzed

Answer 21

45 days

Question 22

what are the internal control components

Answer 22

• control environment
• risk assessment
• information and communication
• monitoring activities
• control activities

Question 23

What are the categories of entity objectives

Answer 23

• reliability of financial reporting
• effectiveness and efficiency of operations
• compliance with laws and regulations

Question 24

how dates work in kittign example

Answer 24

the receipt date per bank is recorded in the accounting period before the disbursement date.

Question 25

what do Quality Control policies and procedures apply to

Answer 25

all professional activities of a firms practice

Question 26

what do Generally Accepted Auditing standards apply to

Answer 26

individual audit engagements

Question 27

what is audit risk and equation

Answer 27

risk that the FS are materially misstated but the opinion is not appropriately modified (does not reflect) AR = RMM * DR or AR = IR * CR * DR

Question 28

What is the Risk of Material Misstatement

Answer 28

risk that the FS are materially misstatedd RMM = IR * CR

Question 29

what is inherent risk

Answer 29

susceptibility of an assertion to a material misstatement assuming not related controls possibility of an error/omission in the FS that in not due to failure of internal controls

Question 30

What is Control Risk

Answer 30

likelihood that a company's internal controls will not prevent or detect a material misstatement in a timely manner.

Question 31

What is detection risk

Answer 31

the likelihood that an auditor will not catch a material misstatement in the FS data only element that an auditor can control by varying NET of audit procedures

Question 32

What relationship does Risk of material misstatement have with detection risk

Answer 32

inverse

Question 33

what two things must be considered together when designing NET and what kind of relationship do they ahve

Answer 33

audit risk and materiality inverse relationship

Question 34

when is an emphasis of matter required

Answer 34

- to describe a justified change in accounting principal that has material effect - subsequent discovered facts lead to a change in audit opinion - FS are prepared in accordance with a special purpose framework optional EoM - uncertainty about litigation or regulatory action - major catastrophe have significant effect - significant related parties - unusually important subsequent events - substantial doubt about ongoing concern but have been allivated