Quiz Mods 1-3 Flashcards Preview

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Flashcards in Quiz Mods 1-3 Deck (69):
0

Regarding the company's annual stockholder meeting is...

Not an entity level control

1

Entity level controls include:

Controls related to...

Control environment

2

Entity level controls include:

Controls over...

Management override

3

Entity level controls include:

The company's...

Risk assessment process

4

Entity level controls include:

Centralized processing and...

Controls, including shared service environments

5

Entity level controls include:

Controls to monitor...

Results of operations

6

Entity level controls include:

Controls to monitor other controls including activities to monitor...3

1 internal audit function

2 audit committee

3 self assessment programs

7

Entity level controls include:

Controls over the...

Period end financial reporting process

8

Entity level controls include:

Policies that address...2

Significant business control and risk management practices

9

Additions may be made to audit documentation...

After report release date

10

Deletions and discarding of audit documentation are...

Not allowed after report release date

11

Any additions made to audit documentation must include...3

1 date info was added

2 name of person who prepared the additional documentation

3 the reason for the addition

12

The purchase and cash disbursements cycle requires that...3

1 procurements are properly authorized
2 goods and services actually received
3 invoice details regarding vendor, price, quantities, terms and
Arithmetic are correct

13

The purchase and cash disbursements cycle requires that
1 procurements are properly authorized
2 goods and services actually received
3 invoice details regarding vendor, price, quantities, terms and
Arithmetic are correct

This is best accomplished by having the accounts payable department...

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

14

Accounts receivable department establishing agreement with vendors invoice

Invoice details are correct

15

Accounts receivable department establishing agreement with receiving report

Goods and services actually received

16

Accounts receivable department establishing agreement with purchase order

Procurements are properly authorized

17

Rather than the accounts payable department, the person preparing and signing checks (usually treasurer) would...

Cancel supporting documentation

18

The purchasing department would verify that...

Requisitions are properly completed and authorized

As well as sending copies of purchase order to receiving
department

19

Disclosure of fraudulent activities to parties other than the client's senior management and those charge with governance is...2

1 Not ordinarily part of auditor's responsibility

2 normally not permitted due to confidentiality

20

Under what circumstances is the auditor required to disclose information to outside parties 4

1 comply with legal/regulatory requirements
2 subpoenaed
3 to respond to successor auditor
4 with grant requirements when client's receive governmental
Assistance

21

The auditor should communicate to those charged with governance all fraud...

Involving senior management and fraud that causes material
Misstatement

22

The auditor should report to those charged with governance and management...

Any significant deficiencies due to risk of material misstatement
Due to fraud

23

Auditor should inform the appropriate level of management of...

Evidence that fraud has occurred, even if matter is inconsequential

24

AU 339 Audit Documentation entitled "Providing Access to or Copies of Audit Documentation to a Regulator" does not apply to...5

1 request from IRS
2 firm practice monitoring programs to comply with AICPA
3 state professional requirements (peer or quality reviews)
4 proceedings related to alleged ethics violations
5 subpoenas

25

The vouchers payable department should not account for...

Unused prenumbered purchase orders and receiving reports

26

Accounting for unused prenumbered purchase orders and receiving reports is the responsibility of...

Purchasing and receiving departments respectively

27

If vouchers payable employee had access to unused purchase orders and receiving reports this would...

Be inadequate segregation of duties

28

If vouchers payable employee had access to unused purchase orders and receiving reports they could...3

1 write a fake purchase order

2 confirm receipt of the nonexistent goods

3 authorize payment to themselves

29

Vouchers payable department should match...

Vendor's invoice with the related receiving report, which ensures
Goods billed were received

Ex. The voucher is valid

30

Vouchers payable department should approve...

Vouchers for payment by having an authorized employee sign
The vouchers (authorization)

31

Vouchers payable department should indicate...

The asset and expense accounts to be debited (ensuring proper
Classification)

32

The purpose of an engagement letter is to...

Help avoid misunderstanding with respect to the engagement

33

The engagement letter serves as...

The contract between client and accountant regarding terms
Of engagement

34

The engagement letter helps avoid...

Legal liability claims that the auditor did not perform work as
Promised

35

While an engagement letter is not required by GAAS, it is...

Strongly recommended that such a letter be obtained for all types
of engagements

36

While the successor auditor must obtain permission from the client to communicate with the predecessor auditor, this is not done in...

The engagement letter

37

Assurances from management regarding assertions in the financial statements are contained in...

The client representation letter

38

The engagement letter is not designed to...

Release auditor from liability for errors and irregularities not
Detected by the audit

39

5 interrelated components of internal control

1 control environment
2 risk assessment
3 information and communication
4 control activities
5 monitoring

40

Materiality is not...

An interrelated component of internal control

41

Control environment

Sets tone of the organization

42

Risk assessment

Entity's identification and analysis of relevant risks to achievement
Of its objectives

43

Information and communication systems support the...

Identification, capture and exchange of info in form and timeframe

That enable people to carry out their responsibility

44

Control activities

Policies and procedures that help ensure that management
Directives are carried out

45

Monitoring

Process that assesses the quality of internal control performance
Over time

46

The quality control system of GAO auditor's should address...

Human resource policies and procedures

47

External peer review of GAO auditors is required...

Once every 3 years

48

Auditor's understanding of the entity and its environment consists of an understanding of the following aspects 5

1 industry, regulatory and other external factors
2 nature of the entity
3 objectives and strategies and the related business risks that may
Result in material misstatement of financial statements
4 measurement and review of entity's financial performance
5 internal control, which includes selection and application of
Accounting policies

49

Entity's accounting policies and procedures does...

Not fit into the category of industry, regulatory and other external factors

50

Relevant industry, regulatory and other external factors include industry conditions such as...3

1 competitive environment

2 supplier and customer relationship

3 technological developments

51

Regulatory environment encompasses...3

1 Relevant accounting pronouncements

2 political environment

3 environmental requirements affecting industry and entity

52

Factors that influence auditor's reliability of data 5

1 origin of data
2 independence of data source
3 strength of controls in system used to develop data
4 audited status of data
5 number of sources used to develop data

53

The PCAOB has the authority to enforce Section 303 of SOX in...

Civil proceedings

54

Examples of discrepancies in accounting records that could be used to assess the risk of material misstatement due to fraud include:

Transactions that are not recorded in...

A complete or timely manner

55

Examples of discrepancies in accounting records that could be used to assess the risk of material misstatement due to fraud include:

Transactions that are not recorded in a complete or timely manner or are improperly recorded as to...4 choices

1 amount
2 accounting period
3 classification
4 or entity policy

56

Examples of discrepancies in accounting records that could be used to assess the risk of material misstatement due to fraud include:

Unsupported or...

Unauthorized balances or transactions

57

Examples of discrepancies in accounting records that could be used to assess the risk of material misstatement due to fraud include:

Last minute adjustments that...

Significantly affect financial results

58

Examples of discrepancies in accounting records that could be used to assess the risk of material misstatement due to fraud include:

Evidence of employees' access to...

Systems and records inconsistent with that necessary to perform
Their authorized duties

59

Examples of discrepancies in accounting records that could be used to assess the risk of material misstatement due to fraud include:

Tips or...

Complaints to the auditor about alleged fraud

60

AU standards for fraud planning include...

Brainstorming among team members and importance of
maintaining proper state of mind

61

Examination of client records documenting use of EDP programs is an example of...

Examining records that could provide auditor info to determine if control activities are operating as designed

62

An auditor may chose to rely or not rely on the work of another auditor, in either case, the auditor should...

Inquire as to the reputation of the other auditor

63

A GAO structural threat is...

The threat that an audit organization's placement within a
government entity, in combination with structure of government
Entity being audited

Will impact audit organization's ability to perform work and report
Results objectively

64

What 7 circumstances has GAO identified that could lead to threats of independence?

1 self interest
2 self review
3 bias
4 familiarity
5 undue influence
6 management participation
7 structural threats

65

An auditor most likely perform in planning a financial statement audit would be...

Comparing the financial statements to anticipated results

66

Inquiring with client's legal counsel, examining computer generated exception reports to verify effectiveness of internal controls and searching for unauthorized transactions are all...

Part of obtaining sufficient appropriate evidence through inspection,
Observation, inquiries and confirmations

67

Mailing monthly statements to all customers with outstanding balances is the internal control, that if implemented properly, could...

Assist the client in preventing or detection misappropriation of
A customer's check

68

The customer provides an independent check on the customer account balance and is a...

Source of information which is external to organization