A square in a flow chart indicates
terminator
decision
manual loop
process
Which of the following is not a Generally Accepted Privacy Principle (GAPP)?
Retention and disposal
Quality
Processing integrity
Collection
The objective of AU-C 500 is to obtain written representations from management that they believe they have fulfilled their responsibilities in regards to the financial statements.
Which type of opinion means that there is sufficient appropriate evidence, but there is a material misstatement and it is pervasive through the financial statements?
unqualified
adverse
disclaimer of opinion
qualified
Which of the following are components of the control environment? (more than 1)
risk assessments
commitment to integrity and ethical values
notice
monitoring activities
financial reporting competencies
management's philosophy
What does a parallelogram represent in a flow chart?
document
internal process
data
Susceptibility to loss, nature of the account, accounting complexities, and planning materiality are all qualitative factors in determining if an account is significant.
If the company being audited is a publicly listed corporation, the auditor must put an opinion as to the effectiveness of internal controls.
The objective of the audit of GAAP-based financial statements is to
Express an opinion on the accuracy with which the statements present financial position, results of operations, and cash flows in accordance with generally accepted accounting principles.
Express an opinion on the fairness with which the statements present financial position, results of operations, and cash flows in accordance with generally accepted accounting principles.
Make suggestions as to the form or content of the financial statements or to draft them in whole or in part
Ensure adoption of sound accounting policies and the establishment and maintenance of internal control
Which of the following statements about audit evidence is true?
A client’s accounting records can be sufficient audit evidence to support the financial statements
The sufficiency and appropriateness of audit evidence is a matter of professional judgment.
To be appropriate, audit evidence should be either persuasive or relevant but need not be both.
The difficulty and expense of obtaining audit evidence about an account balance is a valid basis for omitting the test.
How many Generally Accepted Privacy Principles are there?
5
7
10
4
A company has made a material change in its method of inventory measurement from an unacceptable one to one in accordance with the applicable financial reporting framework. The auditor’s report on the financial statements of the year of the change should include
Justification for the change and the effect of the change on reported net income.
A reference to the entity’s disclosure of the correction.
A note explaining the change.
No reference to consistency.
It is the duty of management to maintain internal controls, prepare the financial statements, and to provide all the information the auditor needs.
The auditor should issue written communication stating that no significant deficiencies were identified.
Who developed the Systrust service
Canadian Institute of Chartered Accountants
PCAOB and AICPA
AICPA
PCAOB
AICPA and Canadian Institute of Chartered Accountants
When considering the use of management’s written representations as audit evidence about the completeness assertion, an auditor should understand that such representations
Constitute sufficient appropriate evidence to support the assertion when considered in combination with sufficiently low assessed risks of material misstatement.
Complement, but do not replace, substantive procedures designed to support the assertion.
Replace low assessed risks of material misstatement as evidence to support the assertion.
Are not part of the evidence considered to support the assertion.
A limitation on the scope of an audit sufficient to preclude an unmodified opinion will usually result when management
Does not make the minutes of the board of directors’ meetings available to the auditor.
Asks the auditor to report on the balance sheet and not on the other basic financial statements.
Presents financial statements that are prepared in accordance with the cash receipts and disbursements basis of accounting
States that the financial statements are not intended to be presented in accordance with generally accepted accounting principles
A continuing auditor should update the report on prior financial statements by issuing a report modified for the
Resolution of an uncertainty related to and discovered in the current period.
Determination in the current period that a substantial doubt exists about the entity’s ability to continue as a going concern for a reasonable time.
Removal in the current period of doubt about the entity’s ability to continue as a going concern.
Purchase and consolidation of a new company by the client.
Which of the following statements about internal control is true?
The establishment and maintenance of internal control are important responsibilities of the internal auditor
A limitation of internal control is that management makes judgments about the extent of controls it implements
Exceptionally effective internal control is enough for the auditor to eliminate substantive procedures on a significant account balance
Properly maintained internal control reasonably ensures that collusion among employees cannot occur
A CPA has previously communicated a significant control deficiency in connection with an audit of prior financial statements of a non-issuer. As of the current audit date, the deficiency has not been corrected. What communication should be made by the CPA?
A new communication is required only if the auditor has relied on the controls
A new communication is required only if it involves an area in which the auditor has not relied on the controls
The condition should be reported
None, because management has been previously put on notice and now has sole responsibility
An auditor should communicate misstatements to those charged with governance
even if they are clearly trivial
if they were not recorded before the end of the auditor's field work
if they are uncorrected
if they are immaterial and corrected but frequently recurring
