Audit Review Flash Cards

Question 1

Preparation and Fair presentation of F/S requires: (3 things)

Answer 1

1. ) Applicable Framework
2. ) Preparation and fair presentation
3. ) Inclusion of adequate description of the framework in the F/S

Question 2

What is GAAS

Answer 2

Generally Accepted Auditing Standards

Question 3

What is GAGAS

Answer 3

Generally Accepted Government Auditing Standards

Question 4

PCAOB facts!

Answer 4

Sarbanes Oxley Act of 2002

Issuers must register with PCAOB

Question 5

What does IASB

Answer 5

International Standards on Auditing

Question 6

Attestation Engagements

Answer 6

SSAE issued by AICPA

Question 7

Accounting and Review services

Answer 7

SSARS - For reviews and compilations for non-issuers ONLY

Question 8

GAAS Heirarchy

Answer 8

SAS – Non issuers
PCAOB – Issuers
Interpretive Publications – Help auditors help professional skepticism, but not audit standards
Other auditing publications – No Authoritative status.

Question 9

MR DIM – Unmodified Report

Answer 9

Management’s Responsibility: Detection, Implementation and Maintenence of Internal control

Question 10

REPPORTS – Auditor’s Responsibility paragraph

Answer 10

Responsibility, Express, Plan (Audit), Perform (procedures), Obtain (audit evidence), Risks (of MM), “Test” (I/C), statements,

Question 11

CRAME – Auditor’s Responsibility Paragraph

Answer 11

(internal) control, (policies/estimates) reasonable, accounting (estimates), made by Management, evaluating (overall presentation).

Question 12

What is the structure for Unmodified Opinion report

Answer 12

Title
Addresse: not to management
MR
AR
Opinion
Signature
Auditor's address
Date of Report

Question 13

What are the reference to audit standards

Answer 13

Issuers = PCAOB
Non Issuers = GAAP
International = ISA

Question 14

Reference to GAAS and GAAP are in what paragraphs of a standard report?

Answer 14

GAAS = SCOPE

GAAP = oPinion paragraph

Question 15

What are the key terms for Auditing Group of F/S

Answer 15

It requires components, Component auditor, Group engagement team etc.

Question 16

Referencing a Component Auditor only made with what guidelines?

Answer 16

Not restricted, and conducted in PCAOB issuers, GAAS non issuers.

The framework is similar.

Question 17

If the Group Auditor Assumes responsibility what needs to be done?

Answer 17

No reference should be made. Must audit anything that are risk of MM. Basically takes responsibility but not really. No permission is needed.

Question 18

When is an Emphasis of Matter required?

4 Requirements

Answer 18

1. ) Substantial doubt going concern
2. ) Justified Accounting principle change (consistency)
3. ) Subsequent discovered facts that change opinion
4. ) F/S are prepared in special framework

Question 19

When is an Emphasis of Matter a Professional judgement?

There are 4

Answer 19

1. ) Uncertainty (litigation)
2. ) Major Catastrophe
3. ) Related party transactions.
   4) Subsequent events

Question 20

When is Other matter paragraph required?

9 Requirements!

Answer 20

1. ) Restricts the use
2. ) change in audit opinion on subsequently discovered facts
3. ) audited by predecessor and not reissued
4. ) comparative that is compiled/or reviewed and prior wasn’t audited/reviewed or compiled.
5. ) Material inconsistenty in other information
6. ) Supplementary information is included
7. ) required supplementary information
8. ) restrict use of special purpose financials
9. ) compliance is included in auditors report

Question 21

Going Concern Procedures (acronym)

Answer 21

CPA “ADMITS” there’s a going concern problem:

Analytical Procedures
Debt compliance - Review Debt/loan Agreements
Minutes for meetings
Inquire legal council
Third parties 
Subsequent Events review

Question 22

Going Concern Procedures (acronym)

Answer 22

CPA “ADMITS” there’s a going concern problem:

Analytical Procedures
Debt compliance - Review Debt/loan Agreements
Minutes for meetings
Inquire legal council
Third parties 
Subsequent Events review

Question 23

An Emphasis of matter paragraph for going concern includes which two phrases?

Answer 23

Substantial doubt – Going concern

Question 24

Going Concern stuff:

When do you use an unmodified opinion vs adverse/disclaim?

Answer 24

Depending on the disclosure: If adequate Unmodified with emphasis of matter paragraph

Question 25

Which paragraphs are changed in Qualified/Adverse report?

Answer 25

Intro and MR paragraph is unchanged Auditor's responsibility (last sentence/paragraph) Basis for ____ opinion paragraph is added Opinion paragraph is changed indicating except for Qualified Opinion paragraph is changed indicating because of not presented fairly for Adverse

Question 26

Which paragraphs are changed in Disclaimer?

Answer 26

Intro paragraph is changed: "Auditor was engaged in audit" MR no change AR paragraph: Disclaimer: Not able to obtain sufficient appropriate evidence Basis for Disclaim Opinion paragraph: Disclaimer of opinion If not independent: state in seperate paragraph

Question 27

Which paragraphs are changed in Qualified (Scope?)

Answer 27

Auditor's responsibility: Audit evidence is sufficent and appropriate to provide qualified opinion Basis for Qual opinion Opinion paragraph: Qualified: “except for..” “presented fairly”

Question 28

Which paragraphs are changed in Qualified (Scope?)

Answer 28

Auditor's responsibility: Audit evidence is sufficent and appropriate to provide qualified opinion Basis for Qual opinion Opinion paragraph: Qualified: “except for..” “presented fairly”

Question 29

Comparative Financials: When they update the opinion (acronomyn)

Answer 29

Required disclosure: DORCS change their mind in the other matter paragraph ``` Date of auditors previous report Opinion previously issued Reason for prior opionon Changes that have occured Statement that opinion is different ```

Question 30

Predecessor Auditor: What are all the things the successor auditor must understand?

Answer 30

1. ) Reissue the Predecessor report 2. ) Not reissue the report 3. ) Prior period is reviewed/compiled

Question 31

Predecessor Auditor: What are the requirements to Reissue Predecessor report?

Answer 31

Old CPA should: 1. )Read the statement for current period, 2. )Compare the statements audited, 3. )Obtain a letter of representation from Successor auditor. 4. )Inquire of and obtain a letter of representation from management. report should be dual dated if revised, unrevised = original report

Question 32

Report of Predecessor auditor is not issued, what must be done?

Answer 32

New CPA should: 1. ) Predecessor should not be named 2. ) Type of opinion expressed by predecessor and reasons 3. ) Any emphasis or other matters 4. ) Date of predecessor report

Question 33

If predecessor auditor compiled/reviewed what must be done?

Answer 33

Include other matter paragraph: Service, Date, description of any modifications. Statement that it was less in scope of an audit and does not provide any basis.