According to PCAOB Auditing Standard
No. 5 (AS 5), the auditor should identify
significant accounts and disclosures and
their relevant assertions. Which of the
following financial statement assertions
is not explici
...
According to PCAOB Auditing Standard
No. 5 (AS 5), the auditor should identify
significant accounts and disclosures and
their relevant assertions. Which of the
following financial statement assertions
is not explicitly identified in AS 5?
Accuracy
According to Rule 203,
Accounting Principles, requires
the auditor to adhere to official
pronouncements except when
adherence to a
pronouncement would be
misleading.
According to Sarbanes-Oxley,
the audit committee must
pre-approve all audit and
non-audit services. This can
be done
Case-by-case basis: Yes;
Through established policies:
Yes; Delegating the
responsibility: No
According to the ethical
standards of the profession,
which of the following acts is
generally prohibited?
Retaining client records after
an engagement is terminated
prior to completion and the
client has demanded their
return
According to the ethical
standards of the profession,
which of the following acts is
generally prohibited?
Accepting a commission for
recommending a product to
an audit client
According to the profession's
ethical standards, an auditor
would be considered
independent in which of the
following instances?
The auditor's checking
account that is fully insured
by a federal agency is held at
a client financial institution.
The accounting, auditing, and
investigating agency of the U.S.
Congress, headed by the U.S.
Comptroller General is known
as
the U.S. General
Accountability Office (GAO).
The AICPA Council has
designated the following bodies
to pronounce accounting
principles under Rule 203,
except the
Auditing Procedures Board.
All of the following are
examples of procedures a
firm can use to monitor its
system of quality control
except
devoting sufficient resources
to developing a system of
quality control.
All of the following statements
are true regarding generally
accepted auditing standards
(GAAS) except
departures from auditing standards
that impose presumptively
mandatory requirements on
auditors are not permitted under
any circumstances.
As it relates to audit
evidence, appropriateness
refers to the
quality of evidence gathered.
Assurance is...
-improving the quality of
information
-for decision makers
Assurance services involve all
of the following, except
providing absolute rather
than reasonable assurance.
An attestation engagement is
one in which a CPA is
engaged to...
issue, or does issue, a report on
subject matter or an assertion
about the subject matter that is
the responsibility of another
party.
Attestation is...
-a practitioner is engaged
-to issue a report on subject
matter or an assertion
-that is the responsibility of
another party
An audit client hires a member
of the audit engagement team
to be its new controller.
Sarbanes-Oxley rules require
that
the client find a new audit
firm.
Audit evidence is usually
considered sufficient when
there is enough quantity to
afford a reasonable basis for
an opinion on financial
statements.
The audit failures of both Enron and
WorldCom were examples in which
the leadership responsibilities for
quality work within the accounting
firm were overshadowed by fears
that losing a key client would
negatively impact individual
auditors' performance
evaluations.
Auditing is...
-systematic process of
obtaining and evaluating
evidence regarding assertions
made by management
The audit objective that all
balances include all items that
should be recorded in that account
is related most closely to which
one of the ASB balance assertions?
Completeness
The audit objective that all
balances include items owned
by the client is related most
closely to which one of the ASB
balance assertions?
Rights and obligations
The audit objective that all the
transactions and accounts presented in
the financial statements represent real
assets, liabilities, revenues, and
expenses is related most closely to
which of the PCAOB assertions?
Existence or occurrence
The audit objective that all
transactions and accounts that
should be presented in the financial
statements are in fact included is
related to which of the PCAOB
assertions?
Completeness
The audit objective that all
transactions are recorded in the
proper account is related most
closely to which one of the ASB
transaction assertions?
Classification
The audit objective that all
transactions are recorded in the
proper period is related most
closely to which of the Audit
Standards Board (ASB) transaction
assertions?
Cutoff
The audit objective that footnotes in the
financial statements should be clear and
expressed such that the information is easily
conveyed to the readers of the financial
statements is related most closely with which
of the ASB presentation and disclosure
assertions?
Understandability
An audit of the financial
statements of Camden
Corporation is being conducted by
external auditors. The external
auditors are expected to
give an opinion on the fair
presentation of Camden's financial
statements in conformity with the
applicable financial reporting
framework (e.g., GAAP, IFRS).
An auditor has substantial doubt about
the entity's ability to continue as a going
concern for a reasonable period of time
because of negative cash flows and
working capital deficiencies. Under
these circumstances, the auditor would
be most concerned about the
possible effects on the
entity's financial statements
An auditor selected items for test counts from
the client's warehouse during the physical
inventory observation. The auditor then traced
these test counts into the detailed inventory
listing that ultimately agreed to the financial
statements. This procedure most likely provided
evidence concerning management's assertion of
completeness.
An auditor selected items from the client's detailed
inventory listing (that agreed to the financial
statements). During the physical inventory observation,
the auditor then found each item selected and counted
the number of units on hand. Assuming that the amount
on hand was the same as the amount in the client's
detailed inventory listing, this procedure most likely
would provide evidence concerning management's
assertion of
existence
The auditor's judgment concerning
the overall fairness of the
presentation of financial position,
results of operations, and cash
flows is applied within the
framework of
the applicable financial
reporting framework (i.e.,
GAAP in the United States).
The auditors' responsibility to
express an opinion on the
financial statements is
explicitly represented in the
introductory paragraph of the
auditors' standard report.
Auditors try to achieve
independence in appearance
in order to
maintain public confidence in
the profession.
An auditor traces the serial
numbers on equipment to a
nonissuer's sub-ledger. Which of
the following management
assertions is supported by this test?
Completeness
Audit Quality Control
-SQCS 8 - specifies six elements
--Leadership 'tone' at the top
--Compliance to relevant ethical requirements
--Acceptance and continuance of engagements
--Human resources
--Engagement performance
--Monitoring
Based on Sarbanes-Oxley,
who is ultimately responsible
for the independence of the
external auditor?
The audit committee
Because of the risk of material
misstatement, an audit of financial
statements in accordance with
generally accepted auditing
standards should be planned and
performed with an attitude of
professional skepticism.
A client has omitted a significant disclosure
from the financial statements. The auditor has
asked the client to include the information,
but the client refuses and claims the
information is confidential. The position of the
CPA should be that the information
cannot be considered
confidential if it is necessary
to the completeness of the
financial statements.
The concept of _________
recognizes that a GAAS audit
may fail to detect all material
misstatements.
reasonable assurance
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