Deck 29 Flashcards Preview

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Flashcards in Deck 29 Deck (19):

What procedure would best detect a liability omission by management?

Review purchase contracts and other legal documents?


The primary purpose of sending a standard confirmation request to financial institutions with which the client has done business during the year is to:

Corroborate information regarding deposit and loan balances


For effective internal control, the accounts payable department generally should:

Establish the agreement of the vendor's invoice with the receiving report and purchase order


Who is in responsible for this? Stamp, perforate, or otherwise cancel supporting documentation after payment is mailed

The treasurer (Not the accounts payable department)


The independent auditor's procedures with respect to litigation, claims, and assessments should include:

Discussing with management the controls adopted for identifying, evaluating, and accounting for litigation, claims, and assessments


When disclaiming an opinion because of an insufficiency of audit evidence, an auditor should refer to the situation in the:

Auditor's responsibility paragraph and basis for disclaimer opinion paragraph


Which of the following procedures would an auditor most likely perform in searching for unrecorded liabilities?

Vouch a sample of cash disbursements recorded just after year-end to receiving reports and vendor invoices


In testing long-term investments, an auditor ordinarily would use analytical procedures to ascertain the reasonableness of the:

Completeness of recorded investment income


Reviewing interim financial data required to be filed by the SEC is covered under what standards?

PCAOB standards (not SSARS)


What procedure would an auditor most likely perform to obtain assurance that slow-moving and obsolete items included in inventories are properly identified?

Examining an analysis of inventory turnover


Ownership of bonds, even if not material, represent what kind of interest?

Direct financial interest


When unaudited financial statements are presented in comparative form with audited financial statements in documents filed with the SEC, such statements should be/should not be:

Should be clearly marked as unaudited
Should not be referred to in the auditor's report, need not be withheld until audited


PCAOB/SOX/SEC apply to who?

Issuers (public companies)


AICPA apply to who?

Nonissuers (private companies)


How is the sample size affected with an increase in the risk of incorrect acceptance?

Decrease the sample size


When issuing a report on the application of the requirements of an applicable financial reporting framework to a specific transaction, the reporting CPA should:

Consult with the continuing CPA to obtain information relevant to the transaction


The audit should be designed to identify material misstatements due to acts of noncompliance with laws and regulations that relate to _______ aspects rather than _______ aspects

Operating aspects, accounting aspects


Reviewing confirmations of loans receivable and payable is useful for determining the existence of:

Related party transactions


Journal entry for declaring dividends

Dr. Retained Earnings Cr. Dividends payable