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Flashcards in Other AUD Materials Deck (22):
1

10 GAAAS - WHAT ARE THEY?

GENERAL TIP, FIELD PIC, REPORT ACDE (3,3,4)

T - TRAINING & PROFICIENCY
I - INDEPENDENCE
P - DUE PROFESSIONAL CARE

P - PLANNING & SUPERVISION
I - INTERNAL CONTROL
C - CORROBORATIVE AUDIT EVIDENCE

A - ACCT PRINCIPLES IN ACCORDANCE WITH GAAP (EXPLICIT)
C - CONSISTENCY YOY (IMPLIED)
D - DISCLOSURES (IMPLIED)
E - EXPRESS OPINION (EXPLICIT)

2

IF TESTS OF CONTROLS = HIGH (STRONG), HOW ARE SUBSTANTIVE TESTING, EVIDENCE, AND RMM AFFECTED?

HIGH RELIANCE ON I/C = LESS SUB TESTS & LESS EVIDENCE NEEDED & LESS RMM

3

IF TESTS OF CONTROLS = LOW (WEAK), HOW ARE SUBSTANTIVE TESTING, EVIDENCE, AND RMM AFFECTED?

LOW RELIANCE ON I/C = MORE SUB TESTS & MORE EVIDENCE NEEDED & HIGH RMM

4

DO WEAK INTERNAL CONTROLS = FS MISTATED?

NO, MEANS NEED MORE TO SUPPORT OPINION

5

GAAS

GENERALLY ACCEPTED AUDITING STANDARDS

6

AUDITING:
WHAT?
WHY?
WHEN?
WHO?
HOW?
WHERE?

WHAT: EXAMINATION OF F/S
WHY: EXPRESS OBJ OPINION IF F/S FAIRLY STATED
WHEN: MGMT PROVIDES F/S IN GAAP
WHO: AUDITOR FORMS OPINION
HOW: USING GAAS FOR AUDIT PROCEDURES
WHERE: RESULTS ARE PRESENTED IN AUDIT REPORT

7

TYPES OF AUDIT REPORT OPINIONS

UNMODIFIED = CLEAN
QUALIFIED "EXCEPT FOR" = FISHY
ADVERSE = SHITTY
DISCLAIMER = NO OPINION

8

11 ATTESTATION STANDARDS

(GENERAL) TKCID (FIELD) PE (REPORTING) NCRL

T - TECHNICAL TRAINING
K - KNOWLEDGE OF SUBJECT MATTER
C - CRITERIA TO EVALUATE AGAINST
I - INDEPENDENCE
D - DUE PRO. CARE

P - PLANNING & SUPERVISION
E - EVIDENCE

N - NATURE OF ENGAGEMENT (EXAM|REVIEW|AUPs)
C - CONCLUSIONS
R - RESERVATIONS, STATE THEM
L - LIMITED USE REPORTS (AUPs)

9

AUDIT RISK =

AR = IR X CR X DR

10

WITHIN AR, WHAT CAN AND CANT AN AUDITOR CONTROL?

IR OR CR = CANT CONTROL
DR = CAN CONTROL

11

Control activities in a strong system of internal control

PAID TIPS

P - Prenumbering Documents
A - authorization of Transactions
I - independent checks to maintain asset accountability
D - documentation

T - Timely and Appropriate Performance Budget vs Act.
I - Info Processing Controls – transactions are valid
P - Physical controls for safeguarding assets
S - Segregation of Duties

12

Segregation of Duties

A - Authorizing transactions
R - Recording transactions
C - Custody of Assets

13

Going Concern Mnemonics

ADMITS

A - Analytical Procedures
D - Debt Compliance
M - Minutes
I - Inquiry of client's counsel
T - Third parties confirmation
S - Subsequent event review

14

What is not covered under Attest engagements? AND
How is different from GAAS?

ACRAPO

A - Audits
C - Compilations and Reviews
R - Return Prep
A - Advocation ( litigation Services )
P - Providing consulting /Advisory services
O - Operational Audits normally performed by Internal Auditor

No reference to FS
No reference to GAAP
Assurance below GAAS Audit
Limited Use when Agreed upon Procedures
Limited Use when subject matter and written assertion not present

15

What are the three conclusions possible for Attestation services?

ERA

E - Examination – Positive Assurance
R – Review – Negative Assurance
A – Agreed upon Procedures – No assurance

16

What are the 6 interrelated elements of quality control?

HELP ME

H - Human resources;
E - Engagement/client acceptance and continuance;
L - Leadership responsibilities;
P - Performance of the engagement; Monitoring;
E - Ethical requirements

17

14 audit procedures used in every audit?

FIVE CARROT CARS

F - Footing;
I - Inquiry;
V - Vouching;
E - Examination;

C - Confirmation;
A - Analytical procedures;
R - Reperformance;
R - Recon;
O - Observation;
T - Tracing;

C - Cut-off review;
A - Auditing related accounts simultaneously;
R - Representation letter;
S - Subsequent events review

18

Explain the difference between auditing standards and auditing procedures.

Auditing standards measure the quality of the performance of the audit.

Auditing procedures are the acts to be performed during the audit.

19

Which standards provide the most authoritative US auditing guidance for nonissuers and issuers and who issues those standards?

Nonissuers: Statements on Auditing Standards (SASs), issued by the AICPA Auditing Standards Board

Issuers: Auditing Standards (ASs), issued by the Public Company Accounting Oversight Board (PCAOB) plus all SAS adopted by the PCAOB

20

How is a lack of consistency handled in the auditor's report?

An emphasis of matter paragraph is added (following the opinion paragraph) describing the change and referring the reader to the appropriate note in the financial statements.

If GAAP is followed, the opinion is unmodified. If GAAP is not followed (no reasonable justification, change to a principle not conforming to GAAP, or an unacceptable method of accounting for the change), either a qualified or adverse opinion, depending on materiality, is required. Basis for paragraph is used before the opinion.

21

Risk of Material Misstatement

risk that the financial statements are materially misstated

IR x CR

22

Auditor should assess RMM at two levels:

(1) at the financial statement level and (2) at the assertion