See chapter 28 What are the objectives of an examination to report on prospective financial information PFI? The ensure that PFI has been properly prepared and presented:
Enter X in the appropriate box Standards and related topics 1. Which of the following best describes which is meant by the term generally accepted auditing standards?
Procedures to be used to gather evidence to support financial statements.
Measures of the quality of the auditor's performance. Pronouncements issued by the Auditing Standards Board. Rules acknowledged by the accounting profession because of their universal application.
Although the scope of audits of recipients of federal financial assistance in accordance with federal audit regulations varies, these audits generally have which of the following elements in common? The auditor is to determine whether the federal financial assistance has been administered in accordance with applicable laws and regulations.
The materiality levels are lower and are determined by the government entities that provided the federal financial assistance to the recipient. The auditor should obtain written management representations that the recipient's internal auditors will report their findings objectively without fear of political repercussions.
The auditor is required to express both positive and negative assurance that illegal acts that could have a material effect on the recipient's financial statements are disclosed to the inspector general. In reporting under Government Auditing Standards, an auditor most likely would be required to report a falsification of accounting records directly to a federal inspector general when the falsification is a.
Discovered after the auditor's report has been made available to the federal inspector general and the public b. Reported by the auditor to the audit committee as a significant deficiency in internal control c.
Voluntarily disclosed to the auditor by low level personnel as a result of the auditor's inquiries d. Communicated by the auditor to the auditee and the auditee fails to make a required report of the matter Planning 1.
An auditor's engagement letter most likely would include a. Management's acknowledgement of its responsibility for maintaining effective internal control b. The auditor's preliminary assessment of the risk factors relating to misstatements arising from fraudulent financial reporting c.
A reminder that management is responsible for illegal acts committed by employees d. A request for permission to contact the client's lawyer for assistance in identifying litigation, claims, and assertions 2.
An auditor obtains knowledge about a new client's business and its industry to a. Make constructive suggestions concerning improvements to the client's internal control b.
Develop an attitude of professional skepticism concerning management's financial statements assertions c.
Evaluate whether the aggregation of known misstatements causes the financial statements taken as a whole to be materially misstated X d. Understand the events and transactions that may have an effect on the client's financial statements. Which of the following factors most likely would lead a CPA to conclude that a potential audit engagement should be rejected?
The details of most recorded transactions are not available after a specified period of time b. Internal control activities requiring the segregation of duties are subject to management override c. It is unlikely that sufficient competent evidence is available to support an opinion on the financial statements d.
Management has a reputation for consulting with several accounting firms about significant accounting issues.
Whether you're fresh out of school or an executive in need of a definition, our accoutning terminology guide will provide you the information you need on accounting terms and definitions. Audit risk and materiality affect the application of generally accepted auditing standards, especially the Professional Care in the Performance of Work, for a further discussion of reasonable assurance. opinion on the ﬁnancial statements. As . Jul 13, · Matt Levine is a Bloomberg Opinion columnist covering finance. He was an editor of Dealbreaker, an investment banker at Goldman Sachs, a mergers and acquisitions lawyer at .
Which of the following procedures would an auditor most likely include in the planning phase of a financial statement audit? Obtain an understanding of the entity's risk assessment process X b. Identify specific internal control activities designed to prevent fraud c. Evaluate the reasonableness of the entity's accounting estimates d.
Perform cutoff tests of the entity's sales and purchases. A successor auditor most likely would make specific inquiries of the predecessor auditor regarding a.
Specialized accounting principles of the client's industry b. The competency of the client's internal audit staff c.AU Section - Audit Risk and Materiality. Audit Risk.
AU Section and of the AICPA Professional Standards recognize that there is some uncertainty when an auditor provides an opinion on whether an entity's financial statements are fairly presented. This uncertainty is referred to as audit risk. Audit risk is a function of three risks.
The District Court held that the statute of limitations runs from the time that the fraud is detected, and barred further prosecution of the case.
Kelly first became aware that he might. Suppose you work for a client or are on its board of directors and become a partner or employee of the firm that performs its annual audit engagement.
The Code does not define or otherwise provide guidance on determining materiality. In determining materiality, you should apply professional judgment to all relevant facts and circumstances.
Various factors such as owning stock in the client or having a close relative work for the client potentially affect auditor independence. Subtle factors such as relationships between client and audit staff members, however, are difficult to eliminate and often remain present.
Not Training the Client to do More of the Work The most effective way to reduce the time spent on an engagement AND to help the client understand the costs of performing the engagement, is to train client personnel to prepare more of the preliminary working papers.
In the current year’s audit, a dispute has arisen between you and the management of your largest client over the materiality of certain unrecorded liabilities discovered by you during the audit. Professional and firm guidelines do not provide a definitive answer on the materiality of the amount involved.