cpa final audit review 2

Card Set Information

Author:
Joens1313
ID:
289297
Filename:
cpa final audit review 2
Updated:
2014-11-15 18:08:04
Tags:
cpa final audit review
Folders:

Description:
cpa final audit 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 circumstances would not be considered a departure from the auditor’s unmodified report?

    A.The financial statements are affected by a departure from a generally accepted accounting principle.

    B.The auditor’s opinion is based in part on the report of another auditor.

    C.The auditor wishes to emphasize a particular matter regarding the financial statements.

    D.The auditor is asked to report only on the balance sheet, and the auditor can comply with relevant standards.
    D.The auditor is asked to report only on the balance sheet, and the auditor can comply with relevant standards.

    The auditor may report on one basic financial statement and not on the others if (1) the auditor complies with all AU-C sections relevant to the audit, (2) the audit is feasible, and (3) the auditor can perform procedures on interrelated items. For example, (1) sales and receivables, (2) inventory and payables, and (3) equipment and depreciation are interrelated.
  2. Which of the following statements is true regarding analytical procedures in a review engagement?

    A.Analytical procedures involve the use of both financial and nonfinancial data.

    B.Analytical procedures are required to be used to assist in forming an overall conclusion.

    C.Analytical procedures do not involve comparisons of recorded amounts to expected amounts.

    D.Analytical procedures are not required to be used as a substantive test.
    A.Analytical procedures involve the use of both financial and nonfinancial data.

    Comparisons of financial data may be made between current-year account balances and balances of one or more comparable periods. Nonfinancial information may be used to consider the relationships of current-year account balances with relevant nonfinancial information, such as physical production statistics.
  3. In obtaining an understanding of internal control, the auditor may trace several transactions through the control process, including how the transactions interface with any service organizations whose services are part of the information system. The primary purpose of this task is to

    A.Replace substantive procedures.

    B.Determine the effectiveness of the control procedures.

    C.Detect fraud.

    D.Determine whether the controls have been implemented.
    D.Determine whether the controls have been implemented.

    The understanding should include information about the design of relevant controls and determining whether they have been implemented by the entity and by service organizations whose services are part of the entity’s information system. Tracing a few transactions through the control process (a walkthrough) should provide that evidence. A walkthrough follows transactions from origination through the entity’s processes, including IT systems, until they are reflected in the entity’s financial records (AS No. 12).
  4. Which of the following must an auditor document with respect to the consideration of fraud in a financial statement audit?

    A.Instances of the auditor’s exercise of professional skepticism during the consideration of fraud.

    B.Reasons for not identifying collusion as a fraud risk.

    C.Reasons for not identifying improper revenue recognition as a fraud risk.

    D.Reasons for not identifying management override as a fraud risk.
    C.Reasons for not identifying improper revenue recognition as a fraud risk.

    The auditor presumes the existence of a risk of material misstatement due to fraud related to revenue recognition. If the auditor concludes that the presumption is overcome in the circumstances of the engagement, the auditor should document the reasons for the conclusion (AU-C 240).
  5. After making inquiries about credit granting policies, an auditor selects a sample of sales transactions and examines evidence of credit approval. This test of controls most likely supports management’s financial statement assertion(s) of
    Valuation and allocation

What would you like to do?

Home > Flashcards > Print Preview