CPA Auditing and Attestation (AUD) › CPA Auditing and Attestation (AUD)
A member of the AICPA performing an audit, review, compilation, or other professional services must abide by:
Professional competence
Strict audit procedures
PCAOB procedures
All of the answer choices are correct
PCAOB procedures are to be obeyed for public company engagements. In addition to professional competence, there is due professional care, planning and supervision, and sufficient relevant data.
When a preparer conducts a preparation engagement, the accountant should:
Issue a disclaimer of opinion if he or she is unable to include a statement on each page of the financial statements
Perform a compilation engagement if he or she is unable to include a statement on each page of the financial statements
Both
Neither
With a preparation requirement, the preparer must include a statement on each page of the financials. If he or she cannot, these two options are the only options.
A review engagement should express which of the following terms:
Managements objectives
Managements responsibilities
Auditors Responsibilities
All of the answer choices are correct
AR Section 90; review of financial statements. Section .04 states that the engagement determines: management responsibility, the auditor’s responsibility, and management objectives.
Agreed-upon procedures can be performed as long as the following conditions are present:
Practitioner independence
Party agreement
Sufficient procedures
All of the answer choices are correct
All of these factors must be present for an agreed-upon procedure engagement to be conducted.
Government Accounting Standards
Require a written report on internal control
Require a written report on compliance with applicable laws and regulations
May require a duty to report fraud
All of the answer choices are correct
Under GASB standards the auditor is required to report on internal control. The written report is also required to establish compliance with applicable laws and regulations and may require a duty to report fraud.
Each of the following types of controls is considered to be an entity-level control, except those:
Pertaining to the company's risk assessment process
Regarding the company's annual shareholder meeting
Addressing policies over significant risk management policies
Relating to the control environment
Entity level controls include controls related to the control environment, the risk assessment process, and the policies over risk management policies. Controls regarding the company's annual shareholder meeting are controls related to a specific event rather than the entity as a whole.
“Responsibilities Principle” requires a member to:
uphold a client’s wishes
maintain public confidence
Provide information to those requesting
All of the above
Under the AICPA code of professional conduct, the responsibility principle refers to maintaining public trust.
Sufficient evidence refers to:
Type of evidence
Amount of evidence
Quality of evidence
Approved evidence
Sufficient evidence refers to the amount of evidence. It is sufficient in quantity to enable the auditor to express a reasonable judgment.
Of the following duties included in the inventory cycle, which should be segregated to maintain proper internal controls?
Purchasing
Receiving
Warehousing
All of the answer choices are correct
All of these duties, in addition to shipping, would need to be segregated in order to maintain proper internal controls.
In developing an overall audit strategy, the auditor should consider:
Findings from substantive tests performed at interim dates
Preliminary evaluations of materiality, audit risk, and internal control
Whether the inquiry of the client's attorney identifies any litigation, claims, or assessments not disclosed in the financial statements
Whether the allowance for sampling risk exceeds the achieved upper precision limit
In developing an overall audit strategy, an auditor should consider preliminary evaluations of materiality, audit risk, and internal control.