Concepts and Standards - Audit Documentation Flashcards
Which of the following statements is most accurate regarding sufficient and appropriate documentation?
Sufficient and appropriate documentation should include evidence that the audit working papers have been reviewed.
Why?
the review of audit working papers (and its documentation) are required.
The current file of an auditor’s working papers most likely would include a copy of the
Bank reconciliation.
Why?
Current file will include items of particular significance to the current year’s audit, such as bank reconciliations.
An auditor finds several errors in the financial statements that the client prefers not to correct. The auditor determines that the errors are not material in the aggregate. Which of the following actions by the auditor is most appropriate?
Document the errors in the summary of uncorrected errors, and document the conclusion that the errors do not cause the financial statements to be misstated.
Note:
A summary is always required
Which of the following factors most likely would affect an auditor’s judgment about the quantity, type, and content of the auditor’s working papers?
The assessed level of control risk.
Why?
Is correct because the Professional Standards state that the assessed level of control risk will affect the quantity, type and content of working papers. AU-C 230 provides a listing of this and other factors. For example, the quantity, type and content of working papers will be affected by whether tests of controls have been performed.
Audit documentation should be prepared so as to enable an individual to understand the procedures performed, audit evidence obtained, and conclusions reached. The individual is
An experienced auditor with no previous connection to the audit.
An auditor ordinarily uses a working trial balance resembling the financial statements without footnotes, but containing columns for
Reclassifications and adjustments.
An auditor’s working papers serve mainly to
Provide the principal support for the auditor’s report.
Support the auditor’s opinion.
Why?
AU-C 230 states that working papers serve mainly to provide the principal support for the auditor’s report and to aid the auditor in the conduct and supervision of the audit.
No deletions of audit documentation are allowed after the
Documentation completion date.
Although the quantity and content of audit working papers vary with each particular engagement, an auditor’s permanent files most likely include
Analyses of capital stock and other owners’ equity accounts.
Why?
permanent files include information affecting more than 1 year, such as analyses of capital stock and other owners’ equity accounts. While these accounts include few transactions annually, they have substantial balances which carry over to each following year.
An auditor’s working papers will generally be likely to include documentation showing how the
Engagement had been planned.
Client’s internal control had been reviewed and evaluated.
Unusual matters were resolved.
Which of the following eliminates voluminous details from the auditor’s working trial balance by classifying and summarizing similar or related items?
Lead schedules.
The audit working paper that reflects the major components of an amount reported in the financial statements is the
Lead schedule.
Why?
Lead schedules aggregate the major components to be reported in the financial statements.
In creating lead schedules for an audit engagement, a CPA often uses automated workpaper software. What client information is needed to begin this process?
General ledger information such as account numbers, prior year account balances, and current year unadjusted information.
Note:
Lead schedules include information such as account numbers, prior year account balances, and current year unadjusted information.
Which of the following is generally included or shown in the auditor’s working papers for the audit of a nonpublic company?
The manner in which exceptions and unusual matters disclosed by the auditor’s procedures were resolved or treated.
Note:
Audit workpapers generally include the manner in which exceptions and unusual matters were resolved. The workpapers should contain support for the auditor’s conclusions concerning significant aspects of the examination.
Which statement is correct concerning the deletion of audit documentation?
After the audit file has been completed, the auditor should not delete or discard audit documentation.
