Chapter 11 - Finishing the Audit

Question 1

what occurs during the beginning of the year?

Answer 1

interim testing

Question 2

interim testing includes..

Answer 2

test of controls and substantive procedures

Question 3

what occurs at year end?

Answer 3

going concern review, adjusting JE, review subsequent events substantive procedures

Question 4

roll forward procedures:

Answer 4

extended work from intern period to date of financial statement s

Question 5

roll forward procedures include…

Answer 5

both substantive and test of controls

Question 6

roll forward procedures are performed…

Answer 6

following the date of FS

Question 7

idea of roll forward is to…

Answer 7

obtain evidence through the date of FS

Question 8

roll forward usually changes method for _____ risk areas

Answer 8

low

Question 9

there is a high level of analytical procedure at…

Answer 9

year end

Question 10

analytical procedures are required at…

Answer 10

interim testing and year end

Question 11

near the end of the audit, analytical procedures identify…

Answer 11

unusual or unexpected relationships not previously identified

Question 12

analytical procedures:

Answer 12

study of relationships between financial and non financial data

Question 13

analytical procedures review accounts for…

Answer 13

“miscellaneous”, “other,” and “cleaning” accounts

Question 14

accounting estimates review…

Answer 14

managements process for developing estimates and the reasonableness

Question 15

to audit accounting estimates, we must…

Answer 15

have a high understanding of management

Question 16

flow of attorney letter

Answer 16

1. auditors request from client
2. audit mails it
3. attorney replies

Question 17

attorney letters can come from both…

Answer 17

internal and external lawyers

Question 18

written representative are provided by _____ to ____

Answer 18

management; auditor

Question 19

WR are dated using…

Answer 19

date of auditors reports (audit completion date)

Question 20

broad purposes of WR

Answer 20

1. impress on management their responsibility for FS
2. may establish auditors defense if a question related to inquiries subsequently arises

Question 21

what happens if WR is not provided?

Answer 21

qualify or disclaim opinion

Question 22

3 major parts of WR

Answer 22

1. info related to FS
2. info provided to auditors by management
3. IC over financial reporting (public)

Question 23

what is included in the info related to FS section of WR?

Answer 23

1. management responsibility for FS and IC over FR
2. appropriate disclosure, presentation, and reasonableness of items
3. statement that uncorrected misstatements are immaterial

Question 24

if concerns for going concern do not remain…

Answer 24

do nothing

Question 25

if concerns for going concern continue...

Answer 25

disclose in FS and modify report

Question 26

accumulate $ effect of...

Answer 26

identified misstatements

Question 27

2 methods for evaluating materiallity

Answer 27

roll over, iron curtain

Question 28

rollover method considers...

Answer 28

just the current period

Question 29

iron curtain method considers..

Answer 29

aggregate effect of the adjustments on the BS

Question 30

audit supervisor asks...

Answer 30

have all the steps been performed? is referencing clean? are explanations understandable?

Question 31

manger/partener ask..

Answer 31

is the overall scope adequate? do overall conclusions support the opinion?

Question 32

reviewing partner asks...

Answer 32

is quality consistent with firm? engagement quality review

Question 33

pushing back date of FS increases...

Answer 33

liability

Question 34

procedures following audit report release date

Answer 34

1. omitted procedures 2. communication with those charged with governance 3. management letters

Question 35

perform omitted procedures if..

Answer 35

they are important and individuals are currently relying on that info

Question 36

no further action is neccessey for omitted procedures if...

Answer 36

previous opinion is supported

Question 37

with omitted procedures, if previous opinion cannot be supported...

Answer 37

withdraw original report, issue revised reports, inform persons relying on FS

Question 38

what needs to be communicated with individuals charged with governance?

Answer 38

significant Ic deficiencies and material weakness

Question 39

for public companies, communication to governance must be...

Answer 39

before audit report date

Question 40

for non public companies, communication to governance must be..

Answer 40

within 60 days after audit report date

Question 41

management letters are from ____ to _____

Answer 41

auditor to management

Question 42

are management letters required?

Answer 42

no

Question 43

management letters are prepared as a by-product of...

Answer 43

procedures performed in audit

Question 44

management letter provide...

Answer 44

recommendation to client for improving effectiveness and efficiency of operations