A5 Flashcards
what are the elements of internal control
C - Control environment
R - Risk assessment
I - Information and communication system
M - Monitoring
E - Existing Control activities
Who do PCAOB internal control standards apply to
Issuers (public company)
Who do AICPA internal control standards apply to
non issuers private company
When performing an integrated audit, what approach shold be used in selecting controls to be tested
top down approach
when are the auditors and management’s responsibility presented in separate paragraphs
when auditng a private company (either separately or combined report
what opinion does the presence of a material weakness in internal controls result in
adverse opinion
what is a financial forecast fs
Prospective FS based on expected conditions and expected courses of action
what standards does an audit engagement follow?
PCAOB for issues, and SAS for non issuers
what standards do preparation, compilation, and review engagements. follow
SSAES (statements on standards for accounting and review services)
what standards do attest engagements follow?
SSAE (statements on standards for attestation engae magnets
what two items will an attestion never referrence
1- historic financial statements
2 - GAAP
what are the common concepts included in SSAE
CAPE CORP
C - Compliance
A - Acceptance and continuance
P- Preconditions are present
E - ENgagement documentation (timeliness, retention, ownership, confidental
C - Acceptance of change in terms as reasonable
O - using work of others
R - Responsibility of quality control
P - professional skepticism and professional judgement
What are some subject areas that SSAE provides standards
agree upon procedures
financial forecasts and projections
pro forma FS
compliance
Mgt discussion and analysis
reporting on controls at a serivce org
what is a financial projection fs
prospective FS based on hypothetical assumptions. what if
what are the prospective FS engagement types
preparation
compilation
examination
agree upon procedure
Agreed upon procedures engagement have the following conditions
I - independence
A - agreement of parties (procedures, criteria material limits:)
M - measurability and consistency
S - ufficiency of procedures (clients responsibility)
U - use of report (general or restricted)
R - responsibility of subject matter (clients responsible)
E - engagement to perform AUP on prospective FS
What criteria is used to determine findings in an agreed upon procedures enegagmenet
the client and CPA will agree on criteria , procedures, and materiality limits for reporting
which prospective FS are for Limited Use
Both Financial Forecasts and Financial Projections
which prospective FS are for general use
only financial forecasts
explain the limited use of prospective FS
these prospective FS are only able to be used by responslie party or by parting negoating wiht repsonsible parties.
can be either financal forecast or financial projections
explain the general use of prospective FS
financial forecast can be used by all parites. (public)
What is an agreed upon procedure engagement
type of attestation engagement in which CPA is eneagged by. client to issue a report based on specific procedures performed
requirements for compliance examination
1 - perform risk assessment
2 - design responses to risk assessment
3 - determine if supplementary audit requirements exit
4 - obtain written representation form mgt
5 - prepare reports
6 - prepare required documentation
what two types of engagments are addressed by attestation standards
1- compliance with specific requirements
2 - internal control over compliance
