Auditing 1: Deck 1 Flashcards Preview

Audit > Auditing 1: Deck 1 > Flashcards

Flashcards in Auditing 1: Deck 1 Deck (20):
1

Auditor's Responsibility

Express an opinion on financial statements

2

What must the auditor obtain?

Sufficient and appropriate evidence to make a reasonable basis for the opinion

3

"Reasonable Assurance"

High, but not absolute, level of assurance

4

What is management's responsibility?

Preparation of financial statements and internal control

5

Purpose of an Audit

provide an opinion on whether financial statements are presented fairly, in all material respects, in accordance with the financial reporting framework

6

Nature of Audit Procedures

Fraud (intentional) or fraud (unintentional)

7

SAS

Statements on auditing standards

8

Auditor must conduct the audit according to which standards?

ASB standards

9

Examples of professional skepticism

Perform additional audit procedures, corroborating management's explanations, using third party confirmations

10

Who established the PCAOB?

The Sarbanes-Oxley Act of 2002

11

GAAS and who issues them?

Generally accepted auditing standards, issued by the Auditing standards board (ASB)

12

When are PCAOB standards required?

When auditing an "issuer"

13

Audits of Non-ssuers must comply with which auditing standard?

Statements on auditing standards published by the auditing standards board

14

Audits of issuers must comply with which auditing standard?

PCAOB Auditing Standards

15

Change in accounting estimate

-Accounted for prospectively
-Does not affect the comparability of financial statements

16

Factors that mitigate the "going concern" issue

1. Postponement of expenditures (including R&D)
2. Plans to dispose assets
3. Plans to borrow money or restructure debt
4. Plans to increase ownership equity (sell stock)

17

What should an auditor do when sufficient evidence about consistency is obtained?

No mention of consistency needs to be made

18

Disclaimer of Opinion

Unable to obtain sufficient appropriate audit evidence to provide a reasonable basis for an opinion; thus no opinion is expressed.

19

Consistency standards refers to what?

Changes in application of accounting practices between periods; affects comparability

20

Inadequate disclosure results in what kind of opinion?

Qualified opinion