AUD 1

Question 1

What word defines audit evidence?

Answer 1

Appropriate

Question 2

Audits should be prepared with..

Answer 2

Professional skepticism

Question 3

Reasonable assurance is defined as

Answer 3

A high but not absolute level of assurance to allow an auditor to detect a material misstatement.

Question 4

To obtain reasonable assurance…

Answer 4

Auditors should plan the work properly and supervise any assistants

Question 5

Audit requirements are in accordance with…

Answer 5

Both GAAS and government auditing standards GAGAS

Question 6

GAAS provides guidance and measures the quality of the auditor’s performance. GAAP does what?

Answer 6

GAAP provides applicable financial reporting framework

Question 7

Qualified or adverse opinion

Answer 7

If FS fail to disclose info that is generally required by GAAP

Question 8

Adverse opinion

Answer 8

When mateial and persuasive

Question 9

When an auditor lacks independence…

Answer 9

a disclaimer of opinion should be issued

Question 10

Disclaimer of opinion is for

Answer 10

significant scope limitation
FS are not audited
auditor is not independent

Question 11

Emphasis of matter paragraph is required to

Answer 11

describe a justified change in accounting principle that is material to the financial statements

Question 12

CPA doesn’t have to be independent to perform what?

Answer 12

Compilation-since these do not provide assurance

They need to state they are not independent.

Question 13

Decrease in tolerable misstatement means

Answer 13

Increase in sample size

Question 14

When is a disclaimer of opinion offered?

Answer 14

Significant scope limitation
Auditor is not independent
Financial statements are not audited

Question 15

What is the most authoritative guidance?

Answer 15

General guidance provided by a Statement on Auditing Standards

Question 16

Sound accounting policies is an implicit part of…

Answer 16

management’s responsibilities, not the auditor’s

Question 17

GAAS measures what?

Answer 17

The quality of the auditor’s performance and guides the auditor in a properly planned and executed audit

Question 18

Management not letting auditors use legal counsel results in what type of opinion?

Answer 18

Result in disclaimer of opinion or removal from the audit

Question 19

If material and persuasive, then issue what type of opinion?

Answer 19

Adverse

Question 20

With required supplementary information…

Answer 20

apply limited procedures and include “required supplementary information” as a section to the audit report

Question 21

If an auditor can’t get the F/S of a consolidated investee -

Answer 21

they cannot issue an unmodified opinion

Question 22

Omissions by SEC will be included where and what type of report is issued?

Answer 22

Other matter paragraph - unmodified report

Question 23

Lack of sufficient appropriate audit evidence and restrictions of the scope of the audit both can result in what type of opinions?

Answer 23

Qualified opinion

Question 24

Disclaimer of opinion means no opinion - one reason could be what?

Answer 24

Not enough audit evidence

Question 25

Audit of a nonissuer should conduct the audit according to what standards

Answer 25

ASB only is required but they may choose to follow PCAOB as well

Question 26

Inadequate disclosure of material information is a departure from GAAP and results in what type of opinion?

Answer 26

Adverse or qualified - depending on materiality | Adverse is material and persuasive

Question 27

Auditor decisions need to be made by the auditor - they cannot go to the audit committee of the client for advice on procedures. Instead, an auditor should..

Answer 27

exhibit professional judgement for the procedures

Question 28

An auditor should change the PY previous issued opinion when issuing comparative financial statements when...

Answer 28

the PY financial statements were restated

Question 29

If an auditor's contract is up, and they discover a fact that could have changed the FS but they have already issued the report, the auditor is required to do what?

Answer 29

Required to determine whether the information is reliable | and whether the facts existed at the date of the report

Question 30

Emphasis of matter paragraph is required ...

Answer 30

to describe a justified change in accounting principle that is material

Question 31

Adverse opinion is when

Answer 31

FS are represented not in accordance with GAAP

Question 32

When lacking independence, what type of opinion can be issued?

Answer 32

Disclaimer of opinion

Question 33

The opinion paragraph in an auditor's report should include

Answer 33

identifying the applicable financial reporting framework and its origin

Question 34

Independence is not required for what type of report?

Answer 34

Compilation.

Question 35

When is the rep letter dated?

Answer 35

At the end of an audit report by management. | The audit report is signed before the rep letter is signed.

Question 36

Quick ratio

Answer 36

Current assets excluding inventory and prepaid expenses / current liabilities