Assurance and Advisory Service

Question 1

Purpose of establishing quality control policies and procedures for deciding whether to undertake new clients

Answer 1

Provide reasonable assurance that the firm has the resources to undertake the new engagement

Question 2

The audit work performed by each assistant should be reviewed to determine if it was adequately performed and to evaluate whether?

Answer 2

Results are consistent with the conclusions to be presented in the auditor’s report

Question 3

Consulting services include

Answer 3

Analysis of the client’s accounting system
review of the client’s prepared business plan
preparation of information for obtaining financing
Other possible services include: implementation services, staff and other support services and other product services

Question 4

Assurance and advisory services differ from consulting

Answer 4

assurance and advisory services usually involve situations when one party wants to monitor the other and focus on improving information

Question 5

How should differences in the engagement partner and the quality control reviewer be resolved.

Answer 5

By following the firms policies and procedures

Question 6

What standards are applicable for a compilation of the historical financial data for a non-issuer?

Answer 6

SSARS (Statements on standards for accounting and review services)

Question 7

A CPA firm would st provide reasonable assurance of meeting its responsibility to perform professional services that conform to professional standards by?

Answer 7

Maintaining a quality control system that is suitably designed in relation to its organization structure.

Question 8

A public accounting firm should have policies and procedures that address difference in opinion which require:

Answer 8

conclusions be documented and implemented and not leased until the matter is resolved AS1215 Audit Documentation

Question 9

A CPA firm would best provide reasonable assurance of meeting its responsibility to perform professional services that conform to professional standards by:

Answer 9

Maintaining a quality control system that is suitably designed in relation to its organization structure

Question 10

What standards apply to audits of non-issuers?

Answer 10

The ASB’s standard

Question 11

Public companies are required to comply with?

Answer 11

The SEC and PCAOB

Question 12

What audits do the GAS apply to?

Answer 12

Federal government entities, programs, activities and functions

Question 13

Assertions related to classes of transactions and events

Answer 13

Occurrence, Completeness, Accuracy, Classification, Cutoff

Question 14

Assertions about account balances

Answer 14

Existence, valuation and allocation, completeness, rights and obligations

Question 15

Assertions about presentation and disclosure

Answer 15

Occurrence and rights and obligations, completeness, classification and understand-ability, accuracy and valuation

Question 16

Three types of attestation engagements

Answer 16

Examination, reviews, agreed upon procedures

Question 17

Difference between examination/review and historical financial statement audit

Answer 17

In examination and review the focus is not on financial statement data

Question 18

Practice monitoring programs

Answer 18

1. Required to be enrolled in an AICPA practice monitoring program if services performed are within the scope of the AICPA’s monitoring standards
2. a firm enrolled in the Center PRP or the AICPA PRR is deemed to be enrolled in an approved practice monitoring program
3. quality control over the audits of public comapnies are evaluated over periodic inspections by the PCAOB, and whatever the PCAOB does not audit the Center PRP inspectss

Question 19

Policies and Procedures in place of a quality control system:

Answer 19

1. provide reasonable assurance that the firmand its personnel comply with professional standards, and legal, and regulatory requirements.
2. The firm issues appropriate reports

Question 20

Statements on quality control standards SQC’s

Answer 20

a. SQC’s (QC10) recquire firms have a system of quality control
b. other standards provide guidance on quality control AU-C-220 (audits in accordance w/ GAAS
SQC’s apply to all CPA firms w/ regards to their accounting and auditing practices. ENgagements include: audit, attestation, compilation, review, and other services.

Question 21

Purpose of anAudit

Answer 21

to express an opinion on whether the financial statements are presented fairly in accordance with the proper framework and arr from material misstatement whether due to fraud or error

Question 22

Audit Risk

Answer 22

The risk that an audit will not detect a material misstatement

Question 23

Assertions about transactions and events

Answer 23

occurrence, completeness, accuracy, cutoff, classification

Question 24

Assertions about account balances

Answer 24

existence, rights and obligations completeness, valuation, and allocation

Question 25

Assertions about presentation disclosure

Answer 25

occurrence, rights and obligations, completeness, classification, accuracy and allocation

Question 26

Additional professional services

Answer 26

preparation (non-attest), compilation (non-attest but must be independent), Review (limited assurance performed by inquiry and analytical procedures) agreed upon procedures (attest must be independent)