cpa audit review ch1 to ch20 review 2

Card Set Information

Author:
Joens1313
ID:
287416
Filename:
cpa audit review ch1 to ch20 review 2
Updated:
2014-10-29 00:06:25
Tags:
cpa audit review ch1 ch20
Folders:

Description:
cpa audit review ch1 to ch20 review 2
Show Answers:

Home > Flashcards > Print Preview

The flashcards below were created by user Joens1313 on FreezingBlue Flashcards. What would you like to do?


  1. Which of the following might be detected by an auditor’s review of the client’s sales cutoff?

    A.Excessive goods returned for credit.

    B.Lapping of year-end accounts receivable.

    C.Inflated sales for the year.

    D.Unrecorded sales discounts.
    C.Inflated sales for the year.

    Sales cutoff tests are designed to detect the client’s manipulation of sales. By examining recorded sales for several days before and after the balance sheet date and comparing them with sales invoices and shipping documents, the auditor may detect the recording of a sale in a period other than that in which title passed.
  2. The most effective audit procedure for determining the collectibility of an account receivable is the

    A.Review of authorization of credit sales to the customer and the previous history of collections.

    B.Review of the subsequent cash collections.

    C.Confirmation of the account.

    D.Examination of the related sales invoice(s).
    B.Review of the subsequent cash collections.

    Collectibility pertains to the assertion of valuation. It is the principal issue with regard to the adequacy of the allowance for doubtful accounts. The best way to determine collectibility is to learn whether the receivable was subsequently collected. A confirmation provides evidence that a contract exists and that the debtor acknowledges the debt, but the subsequent collection of the receivable is the only means of gaining complete assurance that the amount will be paid.
  3. Generally accepted government auditing standards use which of the following terms to describe a professional requirement to comply with a standard or provide a special explanation for not doing so?

    A.Explanatory requirement.

    B.Unconditional requirement.

    C.Conditional requirement.

    D.Presumptively mandatory requirement.
    D.Presumptively mandatory requirement.

    Auditors and audit organizations must comply with a presumptively mandatory requirement whenever it is relevant except in rare circumstances. GAGAS use the word should to indicate a presumptively mandatory requirement. When auditors and audit organizations determine that a departure from a relevant presumptively mandatory requirement is necessary, auditors should perform alternative procedures to achieve the intent of the requirement. The need to depart from a relevant presumptively mandatory requirement is expected to arise only when (1) it is for a specific procedure to be performed and (2), in the specific circumstances, the procedure would be ineffective in achieving the intent of the requirement. The auditors must document their justification for the departure and how the alternative procedures performed in the circumstances were sufficient to achieve the intent of that requirement.
  4. When few property and equipment transactions occur during the year, the continuing auditor usually obtains an understanding of the related internal controls and performsA.

    A thorough examination of the balances at the beginning of the year.

    B.Extensive tests of current year property and equipment transactions.

    C.Analytical procedures to verify current year additions to property and equipment.

    D.Tests of controls.
    B.Extensive tests of current year property and equipment transactions.

    Testing the details of transactions is the preferable procedure for property, plant, and equipment. The beginning balance has been audited, and subsequent transactions in the account ordinarily are few. The auditor also may not rely on controls after obtaining an understanding of internal control because (s)he believes that (1) no effective controls are relevant to the assertion or (2) testing controls would be inefficient.
  5. A --------------- does not involve obtaining an understanding of internal control or assessing the RMMs. It also does not involve testing accounting records or performing other procedures ordinarily performed in an audit (AR 90). Because a review consists of making inquiries, applying analytical procedures, and obtaining management representations, the ------------------ report need not be modified for the matters specified in the question.
    review, review

What would you like to do?

Home > Flashcards > Print Preview