Flashcards in Deck 6 Deck (20):
Each page of a nonissuer's financial statements reviewed by an accountant should include the following reference:
See Independent Accountant's Review Report
When an auditor is requested to change the engagement from an audit to a compilation, the auditor must consider:
The effort needed to complete the audit, the cost of completing the audit, and the reasons for the client's request
Unlikely inquiries to made in a review
- Please prepare and sign confirmations
- Please provide an outstanding check list
- Please provide the following sample of account reconciliations for reperformance
- Please provide the interest income report for recalculation
- Observation of inventory and substantive procedures
Before accepting an engagement to audit a new client, a CPA is required to obtain:
The prospective client's consent to make inquiries of the predecessor auditor
What would a successor auditor ask the predecessor auditor to provide after accepting an audit engagement?
Matters that may facilitate the evaluation of financial reporting consistency between the current and prior years
Performing an audit of the client's financial statements and internal control over financial reporting
What is management responsible for?
- Fair preparation and fair presentation of the financial statements
- For the design, implementation, and maintenance of internal control
Three types of fraud
- Financial statement fraud
- asset misappropriation
In assessing the objectivity of internal auditors, the independent CPA who is auditing the entity's financial statements most likely would consider the:
- information obtained from previous experience, from discussions with management,
- from external quality reviews (if performed), and
- from professional internal auditing standards (such as those developed by The Institute of Internal Auditors).
What would an auditor most likely use in determining the auditor's preliminary judgment about materiality?
Annualized interim financial statements or annual financial statements from a prior period
What is the purpose of a pre-audit planning meeting?
Held to plan technical and personnel aspect of the audit . Assistants should be informed of their responsibilities and objectives
Review of assistants' work is necessary to determine:
Whether it was performed in a satisfactory manner and to determine whether the work supports the conclusions presented in the auditor's report
Which of the following is required documentation in an audit in accordance with generally accepted auditing standards?
An audit plan setting forth in detail the procedures necessary to accomplish the engagement's objectives
What documentation is required in an audit in accordance with GAAS?
An audit plan setting forth in detail the procedures necessary to accomplish the engagement's objectives.
A decrease in the amount of misstatements in a class of transactions that an auditor could tolerate most likely would cause the auditor to:
Perform the planned auditing procedures closer to the balance sheet date
An auditor should establish specific audit objectives that relate primarily to the:
Financial statement assertions
What factor most likely would assist an independent auditor in assessing the objectivity of the internal auditor?
Objectivity is reflected by the organizational level to which the internal auditor reports
When assessing internal auditors' objectivity, an independent auditor should:
Consider the policies that prohibit the internal auditors from auditing areas where they were recently assigned.
The maximum error in a population that the auditor is willing to accept