it's all a reading game Flashcards
for a non-issuer, an auditor should issue a written communication of internal control matters no later than:
60 days after the audit report release date
if a successor auditor discovers material errors in the PY financial statements that were audited by a predecessor auditor, what should the successor auditor do first?
request the client to arrange a meeting amount the 3 parties to resolve the matter
what is considered interim financial information?
financial information comprised of complete or condensed FS covered a period of less than a year or a 12 month period ending on a date other than the entity’s fiscal YE
an auditor’s report on significant deficiencies noted in an audit
A. should include a restriction on the distribution of the communication
B. should NOT include significant deficiencies previously communicated in the PY audit
C. Both
D. Neither
A - restrict distribution of communication
- if PY’s significant deficiency is uncorrected, it carries over to the CY
why would selling inventory on account increase a 2:1 current ratio?
inventory is recorded at cost while AR is recorded at the sales amount. sales amount is higher than cost so will increase CA
as a result of test of controls, the auditor assessed control risk too low and decreased substantive testing. the assessment occurred because the true deviation rate in the population was
more than the deviation rate in the sample
can an auditor provide internal audit outsourcing services to an audit client?
no
a sudden bankruptcy filing in the subsequent period would need an
- accrual + disclosure if:
- disclosure only if:
- the customer was experiencing financial difficulties at year end
- the customer was not experiencing financial difficulties at year end
when should the statement “no material weaknesses were identified” be stated?
FS audit of a non-issuer where no opinion on IC is given
(not stated in an integrated audit because it could mislead readers of absolute assurance)
audit documentation should be sufficient to show:
that accounting records agree/reconcile with the financial statements
assessing control risk too low causes an audit to be
ineffective
why might an auditor assess control risk too low?
when the sample looks good but the population does not look fine
assessing control risk too high causes an audit to be
inefficient
why might an auditor assess control risk too high?
when the sample does not look good but the population is actually fine
a risk of incorrect acceptance is the risk that
a sample of account balances are correct when in fact, the population is not
