question

60 days

answer

How many days after year end do large accelerated filers have to file with the SEC? (greater than $700 million market cap)

question

75 days

answer

How many days after year end do accelerated filers have to file with the SEC? (greater than $75 million, less than $700 million market cap)

question

90 days

answer

How many days after year end do non accelerated filers have to file with the SEC? (less than $75 million market cap)

question

1. attorney letter
2. mgmt rep letter
3. audit opinion
4. mgmt letter
5. audit committee communications

answer

major documents at year end

question

revenue and expense accounts
attorney letters
management representations
audit documentation review
subsequent events

answer

activities between end of year and last day of fieldwork

question

inquiry of clients
minutes of meetings
review contracts/loan agreement
review taxing/governmental agencies
guarantees from bank confirmations
legal services documentation

answer

procedures for contingent liabilities, hidden liabilities, litigation, claims and assessments

question

cannot issue audit opinion unless you have management representations letter

answer

question

audit report date (aka audit completion date)

answer

what is the date of the management representations letter?

question

alleviates liability on auditors, shows management responsibility for the fairness of the financial statements and fraud program and controls

answer

purpose of the management representations letter?

question

rollover method

answer

considers the current period income effects of misstatement

question

iron curtain method

answer

considers the aggregate effect of the adjustments on the entity's balance sheet

question

review latest interim financial statements
inquire officers/other executives
read minutes of meetings
obtain attorney letters
obtain mgmt representations letter

answer

procedures in subsequent period

question

Type I subsequent events

answer

provide new information about conditions existing at balance sheet date

question

adjust financial statmenets to reflect new information

answer

What do you do with Type I subsequent events

question

Type II Subsequent Events

answer

involve events occurring after balance sheet date

question

disclose in financial statements
(if extreme, prepare pro forma financial statements)

answer

What to do with Type II subsequent events

question

Type II subsequent events

answer

non-recognized subsequent events

question

Type I Subsequent events

answer

recognized subsequent events

question

subsequent discovery of facts
omitted procedures
communication with audit committee
management letters

answer

activities following issuance of auditor's reports

question

significant deficiency

answer

a control deficiency that adversely affects the accounting and reporting function such that there is more than a remote likelihood that a more than inconsequential F/S misstatement will not be prevented or detected

question

material weakness

answer

significant deficiency that results in more than a remote likelihood that a material F/S misstatement will not be prevented or detected

question

management letters are NOT required under GAAS

answer

question

management letters

answer

provide recommendations to client for improving effectiveness and efficiency of operations, delivered by auditor to client following audit engagement

question

subseuent discovery of facts
omitted porcedures
communication with those charged with governance
management letters

answer

review following audit report release date

question

within 60 days of report release date

answer

documentation completion date for ALL audits (public and private)

question

1. all audit documentation is reviewed
2. F/S prepared (and footnotes)
3. signed mgmt rep letter by CEO/CFO

answer

3 requirements for the earliest the opinion date can be

question

test basis
materiality
significant estimates

answer

specific references in the scope paragraph of the standard report

question

unqualified opinion
adverse opinion (material weakness)
disclaimer

answer

types of internal control opinions

question

qualified

answer

issued when departure from GAAP is material but not pervasive

question

circumstance imposed scope limitation

answer

situation in which matters beyond auditors' and client's control limit procedures performed by the auditor

question

client imposed scope limitation

answer

situation in which client specifically limits auditors procedures (use disclaimer)

question

qualified opinion

answer

issued when scope limitation material, but not pervasive

question

disclaimer of opinion

answer

issued when pervasive scope limitation (usually client imposed)

question

disclaimer of opinion

answer

if serious going concern uncertainty, issue

question

rule 203

answer

allows for unqualified opinions on FS that are not in conformity with GAAP if GAAP would be misleading

question

financial relationships
management relationships

answer

two general types of relations that can compromise auditors independence

question

qualified
unqualified
disclaimer
adverse

answer

4 types of audit opinions

question

1. assess fraud risk
2. design the audit to detect fraud
3. report findings to appropriate persons

answer

3 SAS 99 activities that must be performed

question

nature of audit procedures

answer

effectiveness of tests; type of procedures preformed; quality of evidence

question

timing of audit procedures

answer

when the procedures are performed

question

extent of the audit procedures

answer

how many procedures are performed; quantity

question

early planning stages and wrap up

answer

when are analytical procedures required during audit engagements?

question

ar = ir * cr * dr

answer

audit risk model

question

effective internal controls;
increase detection risk

answer

what can lower assessment of control risk? how does this impact detection risk?

question

tracing

answer

are all transactions recorded? moving forward from original source documents to see if recorded in general ledger/FS

question

completeness

answer

what management assertion is associated with tracing?

question

vouching

answer

taking the accounts/transactions and looking back to determine their original source

question

existence

answer

management assertion associated with vouching

question

independence in fact

answer

auditors' mental attitude and impartiality with respect to the client

question

independence in appearance

answer

the extent to which others perceive auditors to be independent

question

detection risk

answer

the risk that the audit team's procdres will fail to detect a material misstatement

question

control risk

answer

the probability that material misstatement will not be prevented or detected on a timely basis by the entity's internal controls

question

inherent risk

answer

the probability that a material misstatement will occur

question

errors

answer

unintentional misstatements or omissions

question

fraud

answer

knowingly making material misrepresentations of fact with the intent of inducing someone to believe the falsehood and act on it and thus suffer loss or damage

question

schedules and analysis to be prepared by the client's employees

answer

an audit engagement letter should normally included what matters of agreement between the auditor and the client

question

identifying related parties

answer

would be performed during planning

question

1. attempt to contact the predecessor auditors
2. evaluate the integrity of management
3. assess the firm's resources to ensure that they are sufficient to permit them to accept the engagement

answer

prior to accepting a new audit engagement, a public accounting firm should:

question

performing tests of controls

answer

major stage of the audit that is closely related to attributes sampling

question

the expected population deviation rate with probability equal to the risk of over reliance that the population deviation rate is higher

answer

the interpretation of the upper limit rate of deviation in an attributes sampling application

question

use attributes sampling in selecting purchase orders for indication of proper authorization

answer

question

simpler to use

answer

primary benefit of using non statistical sampling

question

examine sample items and determine the sample estimate

answer

step normally performed last in a sampling application

question

provide objective basis for quantitatively evaluating sampel risk

answer

an advantage of statistical sampling over non statistical sampling methods is that statistical methods:

question

Compliance
Efficiency and effectiveness
Reliability

answer

The COSO provides a definition of internal controls which includes the following 3 categories from most important to least important

question

Observation
Inquiry
Document examination
Reperformance

answer

There are several phases to the auditor’s evaluation of a client’s internal controls. Phase 3 requires that auditors perform tests of controls and reassess risk of material misstatement rely on 4 different testing methods. What are they?

question

Custody
Authorization
Recording
Reconciliation

answer

List 4 different separation of duties

question

Vouching and Tracing

answer

Primary PCAOB assertion for each of the 2 cycles? (Revenue and Collection)

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