Audit 4 Flashcards
(184 cards)
1
Q
MCQs m1: If an auditor does not receive a/r confirmation what is he least like to do
A
Increase the assessed leve of detection risk for the valuation assertion. this deals with existence and nt valuation assertion besed on auditi risk = i/r *c/ *dr
2
Q
Which control would be most effective in offseting sale personnel from maximum sales volume at the expense of high bad debt write off
A
dont’ have these employee involved in credit granting functions.
3
Q
which procedure wold not be an i/c designed to reduce the risk of errors in billing
A
reconciling sales invoces to a/r subledager not an effectie i/c on billing
4
Q
In order to decide if i/c is working properly in minimizing the failure to prepare sales invoices, an audit would select sample transactions from the population of
A
shipping document files becasue they provide evidence that a sale has been secured and if invoices exist.
5
Q
confirmation of customers a/r rarely provides reliability evidence of completeness assertions because
A
Because customers may not be inclined to report understatements error in their account.
6
Q
What is the best wasy to find out if client is frauduently reporting sales
A
trace sales invoces back to shipping documents to see if related shipping document exist.
7
Q
Is remittance, sales invoice and credit memos part of flow chart are input document and part of applications
A
yes
8
Q
Is GAAS followed if auditor recieve faxed or emailed confirmation without following and confirming with client’s customer
A
No
9
Q
If audit have not received confirmation replies, will one option be to have client contact customer abut confirming
A
yes. when they have sent out multiple reuest.
10
Q
what would be used in a sudit data analytic procedure n performing substance procedures testing on the occurance of sales transactions and the accuracy of a/r
A
sales order quantity customer acct id. invoice amount would not PO numbers more likely done in expenditure cycle
11
Q
if all confirmation were confirmed at interim date and looked reasonable. what additional procedure is needed to be performed at year-end
A
review supporting documetation for large balances after interim date and evaluation signifcant changes in balances at year-end
12
Q
negative confimation are used when
A
when the combined assess level of i/r and c/r are lown., a large number of small bal in involved and audtor beleves the recipient recieving confirmation will reply.
13
Q
which of the procedures would be used to test the existance assertion of a/r
A
would be sendin confirmation to customers to confirm the have open invoces. where as completion wold be. tracing invoces and transactions determining if shippment went out at y-e would be cutoff
14
Q
when is it best to use blank confirmation
A
when recipient can fill in the blance with there information without doing further investigation.
15
Q
tracing copies of prepared sales invoices to copies of corresspondence shipping document provide evidence that
A
sales billed to customers were actual not. shipment to customers were properly biiled
16
Q
negative conf and less effective than positive conf becass
A
due to the small balances of negative confirmation, it is no gaurantee customers willl resond due to lack of willingness
17
Q
two assertion which confirmation for a/r evidence would be
A
Rights anf obligation of a/r and existence of a/r. not completeness would be looking if recorded and valuation would be how is it worth.
18
Q
what procedure would auditor perfom if did not recieve second request confirmation
A
inspect shipping records documentation.sold to debtor No increae assess level of detection.
19
Q
If auditor found fictitious sales to customers what is his test
A
send out confirmatio to all customers
20
Q
what is a best control to ensure sales are properly authorized when assessing risk for sales
A
Sales orders are sent out to credit department for approval.
21
Q
would a audit look at prior year info that was resolved in last year to set procedures
A
no.
22
Q
If the objective of the auditor is to test of details of possible understatement of sales he would
A
test shipping douments to sales document to make sure order was shipped.
23
Q
Should the same person who received Cash receipts endorse checks
A
no.
24
Q
If an auditor is performing a test of details of sales transactions and examine a sample of sales invoices to determine if they are recorded in the proper revenue accounts he is performng a
A
test of classificaton into proper accounts
Tracing shipping documents to sales invoices and then to sales journal and account receivable ledger would be a completeness assertion.
25
Is receiving reports a least likely safegaurd of cash
yes.
26
are negative confirmation used when RMM is low
yes
27
MCQs a4; m2: when an auditor is doing test of control to find evidence of a/p misstated he would
examine vendor statements for amounts not reported as purchases shows if a/p is understated it is a completion assertion via tracing statements to a/p aged schedule
28
is accounting for unused prenumber po and receiving reports an effective i/c in voucher department
no. voucher match po, recieving and invoices for payment process. unused po are in the purchasing
29
What information is the voucher dept need to pay invoice
po. and recieving report
30
auditor determining ap is completed would verify if merchandise has been received what would they test
the receiving report. then they would know merch is recevied and ready to be paid in ap. Remember po is done via purchasing dept. purch not necessarily merch is at co.
31
the same person can match to invoices and recieving report can also
Recompute the calculation of vendor invoices to provided authorization for payment.
32
mailing the checks and remittance would be controlled by the check signer
yes. this is the treasury dept.
33
If good are sent back via shipping department then purchasing dept send accounting ap dept
a Debit memo to reduce ap.
34
authority to accept goods should be done through receiving dept with authorized po.
yes.
35
what is the procedures for an auditor to perform to search for recorded ap
compare cash payments after the b/s date with the ap tb. this is test to match a dr ap with a cr cash. remember 3 step match has already happen.
36
would the purchasing dept also handle the negotiation of vendor payment terms
yes. The requisition of goods would come from the raw material or stores dept. who is requesting the good ans contact purchasing.
37
A cfo who waived approvals on checks would be a inadeaquate i/c
yes.
38
when confirming the proper evidence about completeness audit would use
vendors that have done business with client.
39
confirmation are an unecessary step by auditor if
there are other reliable external evidence available to support the business.
40
how would a invoice not be paid twice
when check signer reviews and cancel voucher packet.
41
if ap clerk post vendor invoices and mails check is this i/c weakness
yes. Think ARC is separated. ap clerk is posting and have custody of checks.
42
to provide assurance that each voucher is submitted and is paid only once. auditor would test to determine
a stamped paid by check signer is on each voucher.
43
When auditing a/p. audit, auditor is focus on management assertion of
Completness. a/p auditor is looking for understatement
Where as existence. auditor looking for overstatement of assets.
44
Effective i/c for ap is to
establish agreement with vendor invoice, recieving report and po. the 3 match
45
Tracing po to recieving , purchase journal and cash disbursement journal is a substantive procedure used in
Completion to determine that purchases were properly ordered.
remember this procedure is a purch po procedure and not a cash disbursement procedures where auditor would test cash disbursements.
46
what would be a good audit procedure in ap for existence and occurance
vouch selecting amounts from ap listing to vouch packaging. the auditor at the selcted vouchers- from the ap listing = existance and tieing to vouch package = occurance
47
when would an auditor use ap confirmations
when vendors statements are not available. auditors send our positive or blank ap confirmation confirmation would not be the primary test if statements are available. auditor would not select large balances for confirmation this would not be consider a test of understatement but they would use small to zero balances for confirmations
48
would the treasury dept returning the vouch package back to ap for cancelling a weak i/c
yes.
49
an auditor test confirm and owed by client is a test procedure on
confirm is a test of completion and existence but normally completion owed base on 3 match would be rights ( to goods) and obligation (to pay)
50
is sending out ap confirmation a least likely ap audit test of procedures
yes. because if there are better options auditor will select them.
51
if auditor is testing for dates and periods it is testing for cut offs
yes.
52
M3 mcq; what i/c would deter lapping
segregation of duties between cash receipt and a/r posting general staff. lapping occurs when cash receipts are stolen and posted to another account such as ar with applying customers remittance. and post another customer cash to that a/r
53
if a bookkeeper has access to check stock and signatrue plate would this be a high risk and high i.c for embazzelement
yes.
54
evidence of y-e cash balance is documented via
bank recs.
55
what is the best way to prevent lapping
compare date checks are deposited per bank statement to dates check are credited to a/r or sales.
56
what is a limitation of bank confirmation
that the bank employee signing the does not know all accounts client has with the bank.
57
if co. has a IA would he be the first person to review the bank statement for i/c purposes
yes.
58
to detect if kitting is happen an auditor would
trace bank transfer from the last part of audit period to the subsequent period .
kiting is a form of check fraud, involving taking advantage of the float to make use of non-existent funds in a checking or other bank account. In this way, instead of being used as a negotiable instrument, checks are misused as a form of unauthorized credit.
59
auditing a clients y-e cash balances. auditor uses standard bank confirmation and bank recs. these substantive procedures test the following assertions
Completes and valuation and allowances.
cutoff is not uses in testing ending cash balances.
60
A4-M4 MCQs; What procedure would an auditor perform to obtain assurance that slow moving and obsolete items in inventory are id.
Examine an analysis of inventory turnover it would give a assurance that inventory is properly value because it test how fast inventory is being sold via COGS and what items should be written down because of obsolete or damage.
In addition, inventory turnover analysis gives evidence of management assertion of inventory valuation and accuracy.
61
An auditor test count that are traced to clients inventory listing is a test of what f/s assertion
The test of completion test the test count and verify with the inventory listing.
62
a client with perpetual inventory records both quantity and dollar assessed at a control risk of high, an auditor would would probably
Do test and schedule count at the end of the year or b/s date due to high control risk and not at interim date low control risk. So if client is doing inventory counts multiple times a year and still high risk, this is good conttrol but in effective.
63
would periodical inventory counts that are used to adjust the perpetual inventory record would be a internal control method used to maintain accurate inventory records
Yes.
64
Would testing the computation of standard overhead rates be the least likely test performed to determine slow moving and obsolete inventory
yes. because overhead would be used more effectively in test of valuation and accuracy of inventory and indirectly why slow moving.
65
what management assertion is an auditor most likely testing if the audit objective state all inventory on hand is reflected in the ending inventory balance
The is a test of completion. test of count to inventory listing in inventory report
66
what procedures would be most appropriate for testing the completeness of assertion as it applies to inventory
So if completion is the test of test count back to listing records.
Test count and report listing must of closed period. this done through cut off procdures in shipping and recieving.. while accounting for goods in transit.
67
what is the fundamental for completion and existment assertion to f/s
Completion= test count to inventory listing . or prenumber tags to the inventory report sheet.
Existence = inventory listing to test count. Existence assertion are for assets and risk of overstatement and not testing for liab. i.e ap
68
what statement matches the f/s assertion with the potential misstatement and relevant audit procedures
auditor may physically examine a sample of inventory count in order to test existence of inventory = asset to ensure the the inventory is not overstated.
existence = assets = overstated
complete = understatement
rights and obligations is tested on ownership but would not be tested on inventory due to consignment
69
if an audit is unable to get acesss to phyical inventory but alternative methods to conduct audit procedures can he use them instead of withdraw from engagement
yes. if alternatie method are there to be used.
only with if no alternative.
70
of the two inquiries, which one would be not be considered an f/s assertion.
inquiry of consigned inventory
inquire of damaged and obsolete good
inquire of consigned goods is not a valuation assertion. inqiure of damage and obsolete good is because inventory will be written down.
71
A4 M5 MCQs; if an auditor is assessing management rationale for selecting a model to measure the fv of debt securities. During the current year, the active trading mkt for debt security was introduced would the auditor validate the model based on prior years
No. becaue model was introduced in the current year. no model in the past or prior year/
72
if auditor are given securites for audit to record and count the securities. what information should auditor included in this worksheet
in addtion to security count, the auditor should have an aknowledgement by client that securites were returned back to client. to eliminate employee missappropriation and blaming auditors for not returning.
73
What information should an auditor use to recompute dividend income and confirm it is reasonable to management assertions.
he should get an electronic copy of clients dividends given record confirmation that shows and verify dividend rates
74
What would be a control in place to safeguard marketable securities when there is no independent agent.
have to company officials with joint controls of securites that are kept in a bank safe-deposit box.
75
An auditor is scanning a client record to review securities transfer based on managment assertions. what is auditor determining
understandability and classification of securities and classification of securites and valuation of securities and accuracy of transfers.
76
77
if an auditor wanted to confirming the existence of l-t investments, he would
confirm the number of shares that are held by an independent custodian
78
what is one the best ways to reduce fraud
ARC segregation of dutes
Authorization separate from recording separate from custodial
79
When an auditor is doing anaylitcal review or procedure is doing it from b/s or i/s
looking at preditable accounts on the i/s such as completion of investment income.
80
when an auditor is valuating the assertion made by clients on investment, the auditor would examine the
clients audited f/s and recalculate investment income or losses.
81
how would an auditor verify the valuation of marketable securities at b/s date
the valuation of securities is the unreal or real g/l of securites that are debited to investments and cr to g/l on i/s.
Since this is b/s assertion , we compare the price of the securities to closing price at b/s date.
82
What would provide the greatest assurance that securites are safe guarded
The best i/c is ARC. Authorization security is greatest when it is dual authorization
83
if an auditor is unable to count the securities that are in a safe deposit box, the auditor would
first thing the auditor must to is confirm the existence of securities. he first option is to request that securites are sealed by client until auditor can count securites and no trans come in or out
84
When a client is using derivatives as securites transactions, the auditor first should
develop an understanding of the economic substance of each derivitive. under GAAP transaction and events be reported in accordance to their economic substance even if it differ from their form.
So auditor must understand from an economic perspective; valuation, reasonale of assumption, market variables
85
what procedure would an auditor do to test the valuation of a delinquent of the collateral of a delinquent loan recievable.
would get an appraisal of the current value of the collateral.
would not confirm the loan balance
86
87
If an auditor is doing analytical procedures low earnings , he would perform test based on
remember analytical procedure on done from predictable i/s accounts. he would look at errors in recording of amortization of excess cost over the book value in real or unreal g/l
88
if an auditor is valuating intangible asset and recomputed amoritization cost to confirm managment assertion on the b/s, he would
review and compute from a valuation, allocation and accuracy perspective. he recomputing for b/s results of appreciatio or depreciatio of asset.
89
An auditor is performing substantive procedures on clients ending investment balance . how would he test for valuation and allocations
he would test the reasonableness and appropriateness of the market variable and assumption used in client investment model. aka comparing market to client investments.
90
Is verifying proper f/s impact by reculating the g/l associated with change in fv for a sample of derivative method a procedures that the audit would use
no. auditor would use the following procedures
- obtain an understanding of method uses (per GAAP)
- evaluate whether the determination of fv is consistent with the specified valuation method
- if applicable frame is consistent with method use.
91
if auditor is verifying clients investmemnt have pledges or collateral attached ,she is using what audit procedures on management assertions
Rights and obligation and occurance. determing does client on securites or creditor.
92
Would an auditor request that securities be sold at the end of the year.
No
93
94
Would an cash receipt clerk crediting accounts when customer paid be a weak i/c
Yes. I/C = ARC
Cash receipt record payment and should not have custody of check signed checks
A payroll clerk that prepare payroll register and prepare checks is fine. If checks were signed then weak i/c.
95
In testing PPE, the auditor examines new additions listed on PPE anlaysis sheet. this procedure is evidence of management assertions
Examine the PPE list = existence of PPE
96
What are some auditor evidence use for management assertions
Completeness= review. cliente does the work
Existence = Examine. auditor does the work
Understanding and classificaton = presentation, describe and discolsed
Valuation, accuracy and allocation = looking at amounts, FV and NBV
97
What would and auditor least likely put in a i/c questionairre
Things he would put in i/c: ARC
Authorization, Recordkeeping or recording
Custody
not in i.c non ARC
requesting po for bids.
98
When analyzing repairs and maintence expenses, the auditors is looking audit evidence on
expenditure for PPE that were not charged to expenses.
auditors = skeptism.
99
In performing test of granting stock options, the auditor should test
Granting stock options is a governance authorization. Auditor should trace transaction and authorization to a board vote.
100
In auditing l-t bond payabel, an audit most likely would
do 'Half audit analytical procedures
looking for a reasonable payble sitiuation.
Compare intererest exp (i/s) to bond payable (b/s)
101
In auditing payroll, an auditor most likely would
Half analytic procedure
compare payroll costs (i/s) to budget or entity standards
102
What would an auditor most likely include in i/c **note payable** questionnaire
Think ARC
I.e borrowing **notes payable** that was authorized by the BOD
Remember : two authorized check signers on that note payble is an disbursement i/c
Always think highlevel authorizatio first.
103
Auditor plan to examne l-t debt most likely would includes steps that require
half analytical procedures; always look for a comparison or correlating of a expense to some other catagory
such as correlating interest exp recorded to outstanding debt.
104
105
property aquistion that were misclassified as an exp. would most likely be detected by the interanl accountant control sysem by
Don't think ARC. This is a classification situation no IC and help. Think budget to acutal. if expenses have a high obudget overage, iA should investigate.
106
If during an audit, client insurance poliy is not available this could possibily mean
There is a lien on the ppe
107
An Auditor most likely would extend substantive test of payroll when
when there are possible sigificant errors based on testing such as overpayments, usual fluctuations
108
109
the sampling unit in a test of control pertaining to the existence of payroll transactions ordinarily is a
Existence test examine
Report to document works backword
such as Payroll register to clock card or time ticket
Where as completion test examine
Document to Report works forward.
clock card or time ticket to payroll register.
110
What would be considered a improper segregation of duties set up
think ARC
If HR maintain blank checks and signature plate
this is custody and authorization in the same department.
111
Disclosing and presenting appropriate amounts of payroll perform under audit procedures for evidence of management assertions would be
valuation, allocation and accuracy
112
auditor is palnning to test details for client debt transactions and uses test of existence and occurance, he would
think high level first.
Review the bd minutes for evidence for an agreement and then inspect the agreement.
113
114
If audit belives test of i/c are effective he would move to
do audit procedures on valuation testing by recalculating y-e payroll accrual and company accrual report. not a completeness because auditor is doing it.
115
Is a good example of subtantive testing for existence a examine of board minutes for equity and stock transaction
yes. auditor is doing it.
116
117
a4 m7 mcqs: when performing management inquires into client .contingencies what would not be a contignecy
A contingency is something that has not happen and not on the f/s. a review of derivaties on b/s is something that has happen is on the the b/s
118
What is not an audit procedures on a clients accounting estimates
Determining clients estimate are consistent with primary competetors. With industry yes.
119
Would the phrases 'reasonable period of time not to exceed one year" or Going concer be in the EOM paragraph when there is substantial doubt.
reason period = no
Going conern = yes.
when there is substantial doubt for a reaonable period of time about a company then auditor would put in the EOM paragraph = substantial doubt and going concern.
120
when would a auditor chose between qualified and adverse opinionl
when there is substantial doubt about an entitys ability to continue as going concern are inadequatlely disclosed. this is a departure of GAAp due to inaddequatelty disclosed.
121
what procedures would an auditor perform concerning litigation, claim, assessment
when conducting auditures contigency, audit wants to all right and obligations they will ask mamangemt for assurance that they have discolsed all claimes that the lawyers has advised are probable in assertions.
122
what procedures would auditor do in assistng to id. litigations, claims and assessmenent
Audit procedures to gather evidence of management assertion through existence == Reading the file of correspondence from taxing authorities.
123
which audit procedure will most likely assist in substantial doubt on going concerns
Existence= reading the minutes of meetings with stockholders and BOD
124
What is an indication that there is subtstantial doubt about a company going concerns
Recurring working capital shortage = ca -cl = negative.
125
What are some mitigation event that auditor would consider for going concerns
1. postponment of expenditures (including r&d )
2. plans to dispose of assets
3. palns to borrow money to restructure debt
4. Plans to increase ownership equity or sell stock for deduce debt to equity ratio and cash infusion
126
what would not be procedure uses in evaluating reasonableness of accounting estimates
confirmation of all accounting estimates in management letter would not be an audit procedure.
127
What conditions or event would have an auditor to have substantial doubt about a co. going concern
Cash flows from operating activities are negatives.
128
Which of the following parties should request inquires from lawyers
Client management. due to attorney client privilage.
129
if there is a substantial doubt for going concern for a person of time and the disclosure are adequate, auditor could report
a disclaimer opinion and/or except for qualified
Auitor report is either a unmodified or unqualified with EOM'
or Disclaimer
Qualified and adverse are for inadequate disclosure.
130
if there is an substantial doub in ye 4 with unmod eom and it was removed year 5. what is auditor responsbility for comparative in year 5 comparative audit
if removed in current year ye 5, the no mention in year 5 audit
131
if a client will not permit inquiry of outside legal counsel, the auditor;s report ordinarilly will contain
GAAS scope limitation = disclaimer
132
when an auditor concludes there is substantial doubt about client continue as going concern for a reasonable time period, auditor responsibility is to
consider the adequatecy of disclosure about clients possible inability continue as a going concern and include eom paragraph unmod
133
what is a audit procedure used to for going conern
review of compliance with terms of debt agreement look for non compliance such as not making payemnts when due.
134
would sell of assest be a mitigation in going concern
yes.
135
what is procedure auditor woudl use for going concerns
inquiring with client legal counsel about litigation, claims and assessments based on significant debt on the books.
136
if a sucessor finds a material misstatement that was reported by predecessor, the sucessor should do what first
arrange a meeting with managment, predecessor and sucessor. to discuss the matter.
137
Would a vague statement in a client attorney letter be a consideration for auditors to request clarifications
yes. a vague statement such as :" we believe the action can be settled for less than the damages claimed. gving likely hood of some known or estimable amounts.
138
139
what procedures would an auditor perform regarding litigation
discuss with management its p&p for identifying and evaluation litigation. existence = inquiry
140
what would be considered an audit procedure used in going concern
confirming with third parties the details of arragments to maintain financial support. or needed financial support.
141
a4 mcqs m8: Misstatement discovered by the auditor were immaterial in the aggregate in prior year, How should the audit handle in current years audit
Do not retest immaterial misstatements but Consider them in evaluation of audit in the current year
142
If auditor has a materiality level of $16K and a torable level of $11K and had client adjustment of -3770 if client refused to make adjustments what should adjusment be compared to
the $11K tolerable.
143
144
What are the key factors and assumptions in evaluating reasonable accounting estimates for auditors
1. significant to the accounting estimates
2. sensitive variations
3. deviations from historical patterns
subjective and susceptible to misstatements and bias.
145
what action should an auditor take in response to discovering a deviaiton from the prescribed control procedure
Since the deviation is a estimated guess, the auditor should first want to understand the potential consequences of the deviaiton
146
how would the adjustment be for a unrecord a/p of $50K that is material be with overstatement recorded as positive amounts and understatements record as negative amounts
The would be an unrecorded negative amount
($50) Libility CR
$50K before tax DR.
Remeber no adjustment to expenses.
147
If a client had sales in year 3 with a 20% profit margin and the following:
shipped merchave value to consignee of $36K.
the client booked the sales in yr 2 instead of year 3 . what is the audit adjustment
first get the sales: 36000/ (1- profit margin .20)
36,000/.80
45,000 sales
now do adj ent to correct year 3 sales
DR Sales 45,000
DR Inventory $36,000
CR A/R $45,000
Cr COGs 36000
148
To determine that uncorrected misstatements are material either individually or aggegate the auditor should an should not do the follwowing
should: look at particual circumstancees
look at the effect of uncorrected misstatement related to prior period or evaluate prior period.
look at the size at nature of the misstatement
should not; consider cost of fixing the misstatement.
149
150
Under PCAOB standard would purchase insurance on jan of year 1 recognize only insurance exp incurred and booking rest to prepaid to management bias
no.
151
If employees are able to change their approved time cards is the a weak i/c by design
yes. which would next impact operations.
152
If an auditor set an materiality rate at $125K. what immateriality under the threshhold would be considered material
when examining from the perspective it lean towards quality and not quantity.
A non disclose related party transaction of $45K would be considered material.
153
auditor set materiality at $100,000. Bad debt allownace based on audit evidence was between $1.5m to $1.8M and client record $800K. what is unadjusted difference
Take the later of audit evidence $1.5K - 800 what is on the book = 700K need to put on the boods
DR bad debt exp. 700K and CR allw for bad debt $700K
154
what material misstatement id in audit that is a below quantity material limit that is a quality material
if the quantity materiality limit is quality material that changes co ops to a net loss.
if arises from trans cycle than the reasses of control risk and modified substantive test may happen.
155
A4 M9 McQs: what is an expression that is included in a management letter
Expression such as : completetion, recognition, measurements, disclosures and subsequent events
156
What information is included in a written management letter
that belief that misstatement id by the auditors and not corrected are immaterial. due to AR = IR flows and how much is caught by management design of i/c control risk and remaining flow of misstatement is caught by auditors in detections
157
What matters would not be a materility limit
Anything that is not an amount in the f/s and is not directly related such as Management available BOD minutes, managment responsibility for f/s, available financial records, completenes bod minutes.
158
what would be include in the management rep letter as a specific representation
information concerning fraud of management, employees that have primary roles in i/c
159
what would be additonal written information in management rep letter.
Rep letter confirms management oral evidence during the engagement on things such as compensating balances other arrangement involving cash balances have been disclosed.
160
If an auditor is preparing a three year f/s comparison, he will need to address how many years in management rep lette
all three.
161
A4 M11 MCQs. When group auditor is not assuming responsibility of component auditor. what infor should be communicated from group auditor to componet auditor
Communication Group audit to component should include:
Explanation of how the group engagement team will use the work of the component accountant
Ethical requirements
Share of listed related parties information
Identify significant risks of material misstatements
After conclusion of the audit, group team should request that component communicate back to them all on matter relevant to conclusions.
162
What is communicated component to group auditor
Communication that is request by component auditor
List of corrected and uncorrected misstatement of financial information
Indicators of possible management bias
Id. Material weakness and significant deficiency and thresholds
Other significant findings of fraud
Compliance with group accountants
Non compliance
Response Significant RMM
163
164
would discloure of client information to a third party provider when member does not enter into an confidential agreement with third party need client permission
yes. needs client permission if no confidential agreement signed
disclose of information to clients insurance company does not need client permission.
disclosure of clients name to a potential client does not need client permission.
165
In the exam on question of what information can and can not be discllosed with out without clients information. Allowing a review by a professional practice would mean
a professional pratice review board. TRICKY watch for the is type answer it may or may not be used as correct answer in this question it was .
166
A4 mcqs study m10; what are and are not disagreement that auditor would communicate to governance
Are;
Scope limition and scope
application of accounting principals releated to cost of new accounting software
management's judgement on accounting estimates
are not
lifo inventory layers based on preliminary info
167
what is an auditors obligation to id deficiencies in the design of operation of i/c
auditor need not search for significant deficiency in i/c but should document and communicate such deficiency as discovered.
168
If a clerk is not experiance in doing job in i/c this will lead to
deficiency in operation of i/c; this when i/c there but not being performed correctly by personnel
deficiency in design of i/c on the other hand is when is non compliance happen even though there is a good desing=
169
what is true about significant deficiency of i/c with respect to f/s
an auditor may communicate significant deficiency during an audit or after the completion.
170
What is example of a matter that is communicated to governance by auditors
the effect of significant accounting policies adopted by management in areas that there is no guidance
171
questions that auditor would ask management which it a communicated with governance is
Has management communicated with another cpa firm on other matters
172
when auditor is communicated significant defiencies in i/c for non issue auditor should
restrict the distribution of i/c report to certain to management and bod.
173
control deficiency wouid be considered a material weakness when the likelihood that f/s misstatement will not prevent, or detect/correct and the magnitude of such are **at a minimum** he should present a report of
likelihood; reasonalable
magnatude= material
this said there is a reasonable chance the f/s will at magnitude a material misstatement weakness.
174
what is auditor communication to governance
managements changes in applications of significant accounting policies
175
Where auditors communicate with governance on degree of reliance of the management rep letter
no..
just things on accounting policies, estimates , accounting principal
significant disclousures
176
are significants deficiencies noted in an audit f/s of non issuers shared separately to id those of significant deficiency that are material weakness
yes
177
if a company has a small staff would manager approve an employees work who = does bank recs, wire trans and j.e.s
yes this is called compensating controls. it limits the severity of control deficency due to segregation of duties due to small stafff and it limit fraud.
178
179
if a significant deficiency that was id in the prior year by non issurer that has not been corrected what is auditor appropriate method
in writing in current year ref. previous year written comm. date the communication. **does not have to add recipient communications**
180
181
for a non issurer auditor id significant deficiencies that were not material weakness. management corrected during the current audit. how should the correct be communicated
in writing , to governance by report release date or within 60 days after report release date.
182
if a auditor id a significant def and material weakness that was not material and management communicated it did not address due to cost what is auditor response
no report required due to cost and not signif def and material weak.
183
should managment response be included in auditors i/c report
no. that a separate response report by managment to bod and auditor.
184
when auditor communicate it findings to management during the audit of an issurer, auditor is not responsible for management's
requesting that management explan the uncorrected material misstatements
auditor responsible for communicating management bias i preparation of f/s
communicating uncorrected misstatements
communicating the effects of uncorrected material misstatments/
