Auditing 1: Deck 2 Flashcards Preview

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Flashcards in Auditing 1: Deck 2 Deck (20):
1

Departures in GAAP result in what kind of opinion?

Qualified or adverse opinion

2

Scope limitations pertain to what kind of opinion?

Disclaimer of opinion, qualified opinion

3

Failure of financial statements to contain adequate disclosure of related party transactions results in what kind of opinion?

Qualified or adverse opinion

4

Cutoff test

determine whether sales are recorded in the proper period

5

How long is the going concern period under ISA (International standards of auditing)?

At least one year from the time the financial statements were audited

6

What about under U.S auditing standards?

Can't exceed one year

7

What words must be included in the emphasis-of-matter paragraph?

"Substantial doubt" and "going concern"

8

When does an adverse opinion occur?

When there is a departure from GAAP

9

When is a disclaimer opinion issued?

When there is a departure from GAAS
Ex: When there is a significant scope limitation

10

Unmodified audit opinion

Occurs when the auditor concludes that the financial statements are presented fairly, in all material respects, in accordance with the applicable financial reporting framework

11

MR DIM

Management's responsibility,
design,
implementation,
maintenance

12

REPPORTS CRAME

Responsibility,
Express,
Plan and perform,
Performing,
obtain,
Risks,
Test internal controls,
Statements,
Control,
Reasonableness,
Accounting,
Management,
Evaluating

13

Unmodified opinion

Clean opinion, when everything is okay

14

Qualified opinion (GAAP)

GAAP problem that is material (Relates to accounting policies, presentation, disclosures, estimates)

15

Adverse Opinion

GAAP problem that is very material (pervasive);
Relates to accounting policies, presentation, disclosures, estimates

16

Qualified opinion (GAAS)

GAAS problem that is material (Relates to insufficient evidence, ex: scope limitation)

17

Disclaimer opinion

GAAS problem that is very material (pervasive) (significant);
Insufficient evidence, lack of independence, significant going concern uncertainty

18

GAAP Issues

financial statements are materially misstated

19

GAAS Issues

Inability to obtain sufficient appropriate audit evidence

20

Pervasive

very material (professional judgement call)