Deck 28 Flashcards Preview

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Flashcards in Deck 28 Deck (22):

Self-interest threat

Threat that a financial or other interest will inappropriately influence an auditor’s judgment or behavior.


Bias threat

threat that an auditor will, as a result of political, ideological, social, or other convictions, take a position that is not objective


Management participation threat

threat that results from an auditor’s taking on the role of management or otherwise performing management functions on behalf of the entity undergoing an audit


A previously communicated significant deficiency that has not been corrected ordinarily should be communicated again:

In writing, during the current audit


Do agreed upon procedure reports provide assurance?

Do not provide assurance of any sort


Does a report on supplementary information need to be restricted?



When an independent accountant's report based on a review of interim financial information is presented in a registration statement, the prospectus should include a statement clarifying that the accountant's review report:

Is not part of the registration statement within the meaning of the Securities Act of 1933


What is the auditor's responsibility to report fraud?

The disclosure of fraudulent activities to parties other than the client's senior management and those charged with governance is not ordinarily part of the auditor's responsibility; Only fraud that causes a material misstatement of the financial statements or fraud involving senior management should be reported to those charged with governance.


What is required when an auditor uses the work of an actuary?

The auditor is required to understand the objectives and scope of the actuary's work


If the assessed level of fraud risk is high, the auditor should attempt to:

Reduce detection risk


Deposit in Transit

Disbursement recorded in one period with the receipt occurring in the subsequent period


How does an auditor detect kitting?

Review the bank transfer schedule (Kitting might occur if receipt date PER BANK is recorded in the accounting period before the disbursement date)


Acts Discreditable rule example

A cpa who fails to comply with applicable federal, state, or local laws, regarding filing their tax returns


The AICPA code of professional conduct's general standards include:

Due professional care, planning and supervision, and sufficient relevant data (Internal control is not a standard)


The standard compilation report on the financial statements of a nonissuer that omit substantially all disclosures should:

Include a paragraph disclosing such omissions; include a disclaimer of opinion; stat that if the omitted disclosures were included, they might influence the users conclusions


How does an auditor perform a search for unrecorded liabilities to ascertain that all payables have been recorded in the proper period?

Payments made subsequent to the end of the period; unbilled professional fees may not be properly recorded as year-end liabilities; unmatched invoices and unbilled receiving reports


A report on compliance with contractual or regulatory requirements related to audited financial statements provides what kind of assurance?

Negative assurance


What substantive test provides evidence for the classification and understandability assertion?



What assertion does this relate to? Inventory quantities include all products on hand or inventory quantities include all products stored at outside locations

Completeness of inventory


Mangement representation letter should disclose knowledge of actual fraud or suspected fraud impacting the firm involving:

members of management, and employees that have a primary role in the firm's internal controls


In auditing long-term bonds payable, an auditor most likely would:

Compare interest expense with the bonds payable amount for reasonableness


The primary responsibility of a bank acting as a registrar of capital stock is to:

Verify that stock is issued in accordance with the authorization of the board of directors and the articles of incorporation