Test 1

Question 1

what three conditions must be met for auditors to issue a standard unqualified audit report?

Answer 1

1.
2.
3.

Question 2

describe the eight elements included in a standard unqualified audit report for public companies

Answer 2

1
2
3
4
5
6
7
8

Question 3

explain the two reporting options that auditors have when their opinion is based in part on the report of another auditor

Answer 3

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Question 4

in addition to an audit of internal controls describe three situations that require auditors to add an explanatory paragraph to the standard unqualified report

Answer 4

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Question 5

describe three conditions that might cause auditors to depart from an unqualified opinion

Answer 5

1
2
3

Question 6

describe three alternatives to the standard unqualified audit report that auditors could choose to use:

Answer 6

1
2
3

Question 7

describe the relationship between materiality audit risk and evidence:

Answer 7

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Question 8

what is materiality?

Answer 8

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Question 9

why is determining materiality important to auditors?

Answer 9

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Question 10

how does materiality influence the audit process?

Answer 10

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Question 11

what is audit risk?

Answer 11

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Question 12

how do auditors manage audit risk

Answer 12

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Question 13

what is management assertion?

Answer 13

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Question 14

what makes audit evidence sufficient?

Answer 14

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Question 15

what makes audit evidence appropriate?

Answer 15

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Question 16

why do you auditors have to rely on samples of evidence when they test assertions?

Answer 16

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Question 17

explain how evidence that auditors collect from the three different stages of clients accounting systems to evaluate whether accounts have been fairly stated

Answer 17

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Question 18

describe the seven faces of the audit process:

Answer 18

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2
3
4
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6
7

Question 19

what three different opinions about the fairness of financial statements might be expressed in the auditors report?

Answer 19

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Question 20

describe the primary focus of the following types of auditors:
P External auditors
P internal auditors
P governmental auditors
P Forensic auditors

Answer 20

1
2
3
4

Question 21

what three types of non-audit services are offered by most public accounting firms?

Answer 21

1
2
3

Question 22

what is the most important factor in choosing the organizational form for public accounting firm?

Answer 22

1

Question 23

describe the typical make up of an audit team

Answer 23

1
2
3

Question 24

would change occurred and public accounting profession star in the late 1990s and early 2000’s that became a great concern after the Enron debacle?

Answer 24

accounting firms aggressively saw opportunities to market a variety of high-margin non-audit services to the entities they audited which cause the consulting revenue of the largest public accounting firm is to grow very rapidly until in many instances consulting revenue from oddities far exceeded the fee for external audit.

Question 25

and what four ways did the Sarbanes-Oxley affect auditors who serve public companies?

Answer 25

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Question 26

what to misconceptions about auditors responsibilities are common among readers of financial statements?

Answer 26

that auditors are ultimately responsible for the financial statements or have the responsibility to detect all errors fraud and illegal acts

Question 27

what is corporate governance?

Answer 27

corporate governance consists of all the people processes and activities and a place to help ensure proper stewardship over and entities assets

Question 28

Who is primarily responsible for management oversight and US corporations?

Answer 28

board of Directors

Question 29

describe the seven components of business model

Answer 29

``` 1 2 3 4 5 6 7 ```

Question 30

``` describe how each of the following agencies influence the auditing profession: SEC PC AOB AICPA FASB ```

Answer 30

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Question 31

what are the three general standards for the generally excepted auditing standards

Answer 31

1) The audit is to be performed by a person or persons having adequate technical training and proficiency as an auditor 2) and all matters relating to the assignment and independence and mental attitude is maintained by the auditor 3) do professional care is to be exercise in the performance of the audit in the preparation of the report

Question 32

what are the three standard of fieldwork for the generally excepted auditing standards?

Answer 32

1) The work is to be adequately planned and assistance if any are to be properly supervised 2) a sufficient understanding of internal control is to be obtained to plan the audit and to determine the nature timing and extent of test to be performed 3) sufficient appropriate evidential matter is to be obtained through inspection observation inquiries and confirmations to afford a reasonable basis for an opinion regarding the financial statements under audit

Question 33

what are the four standards of reporting for the general excepted auditing standards

Answer 33

1) third porch I'll State whether the financial statements are presented in accordance with GAAP 2) Report shall identify those circumstances in which principles have not been consistently observed in the current period in relation to the preceding period 3) informative disclosures in the financial statements are to be regarded as reasonably adequate unless otherwise stated in the report 4) through report shall contain either an expression of opinion regarding the financial statements taken as a whole or an assertion to the effect that an opinion cannot be expressed. When an overall opinion cannot be expressed the reasons therefor should be stated. And all causes were an auditor's name is associated with financial statements the report should contain a clear-cut indication of the character of the auditors work if any and the degree of responsibility the auditor is taking