CPA AUD NEW EXAM 100% CORRECT SOLUTIONS!!!
Top-down approach: - ANSWER Financial statement level -> entity level -> account
balance
Who is responsible to count the inventory in substantive test? - ANSWER Client, Not
Auditor
Use proof of authorization of BOD about investment -> - ANSWER -> controls related to
investment
Unqualified opinion maybe expressed if auditor did not find any (Integrated audit) -
ANSWER Material weaknesses in internal controls (significant deficiences still okay)
Significant deficiencies - ANSWER Important enough to merit attention by those
charged with governance.
Material weaknesses - ANSWER Reasonable possibility that material misstatement of
entities financial statement will not be prevented or detected or corrected in timely
basis.
Pro forma FS - ANSWER show effect of hypothetical event on historical FS if it had
occurred during the past period.
Financial forecast - ANSWER expected financial results of a future period.
Finacial projections - ANSWER "What-if" for future event
Review of prospective FS - ANSWER is not allowed
, Does SOC report include opinion whether the control was suitably designed? - ANSWER
Yes
Does SOC report provide assurance regarding the achievement of user's organization?
- ANSWER No
SOC report: be careful with Type 1 and Type 2: - ANSWER Type 1: report on controls
placed in operation.
Type 2: report on controls placed in operation & tests of operating effectiveness.
Yellow Book needs opinion on? - ANSWER consideration of program results/ compliance
with laws and regulation, economy efficiency
What is most difference of Yellow Book vs. GAAS? - ANSWER needs written
communication regarding work on IC (GAAS only need written if significant/ material
weaknesses)
When required single audit? - ANSWER When spend more than 750,000
Peer review standards? - ANSWER GAGAS and GAAS
Where GAAP mentioned in audit report? - ANSWER Opinion and management's
reponsibility
Where GAAS mentioned in audit report? - ANSWER Basis of opinion and auditor's
responsibility
Do not use what in KAMS? - ANSWER "disclaim", "qualified".
Top-down approach: - ANSWER Financial statement level -> entity level -> account
balance
Who is responsible to count the inventory in substantive test? - ANSWER Client, Not
Auditor
Use proof of authorization of BOD about investment -> - ANSWER -> controls related to
investment
Unqualified opinion maybe expressed if auditor did not find any (Integrated audit) -
ANSWER Material weaknesses in internal controls (significant deficiences still okay)
Significant deficiencies - ANSWER Important enough to merit attention by those
charged with governance.
Material weaknesses - ANSWER Reasonable possibility that material misstatement of
entities financial statement will not be prevented or detected or corrected in timely
basis.
Pro forma FS - ANSWER show effect of hypothetical event on historical FS if it had
occurred during the past period.
Financial forecast - ANSWER expected financial results of a future period.
Finacial projections - ANSWER "What-if" for future event
Review of prospective FS - ANSWER is not allowed
, Does SOC report include opinion whether the control was suitably designed? - ANSWER
Yes
Does SOC report provide assurance regarding the achievement of user's organization?
- ANSWER No
SOC report: be careful with Type 1 and Type 2: - ANSWER Type 1: report on controls
placed in operation.
Type 2: report on controls placed in operation & tests of operating effectiveness.
Yellow Book needs opinion on? - ANSWER consideration of program results/ compliance
with laws and regulation, economy efficiency
What is most difference of Yellow Book vs. GAAS? - ANSWER needs written
communication regarding work on IC (GAAS only need written if significant/ material
weaknesses)
When required single audit? - ANSWER When spend more than 750,000
Peer review standards? - ANSWER GAGAS and GAAS
Where GAAP mentioned in audit report? - ANSWER Opinion and management's
reponsibility
Where GAAS mentioned in audit report? - ANSWER Basis of opinion and auditor's
responsibility
Do not use what in KAMS? - ANSWER "disclaim", "qualified".
