ACCT 543 TEST 1 STUDY SET WITH COMPLETE SOLUTIONS 100%
VERIFIED!!
Business Risk - ANSWER The risk an entity will fail to meet its state business objectives /
make money
Information Risk - ANSWER The risk that the information disseminated by a company
will be materially false or misleading. You mitigate this risk with an audit.
Auditing - ANSWER the systemic process of objectively obtaining and evaluating
evidence regarding assertions about economic action and events to communicate the
results to interested users
Attestation engagement - ANSWER a practitioner assesses and reports on "subject
matter or an assertion about the subject matter that is the responsibility of another
party"
Assurance services - ANSWER independent professional services that improve the
quality or information, or its context, for decision makers
Relationship among auditing, attestation, and assurance - ANSWER all audits are
attestation services, but not all attestation services are an audit
The assertions - ANSWER 1) existence / occurrence
2) completeness
3) valuation
4) rights / obligations
5) presentation / disclosure
, What you overstate and understate in fraut - ANSWER 1) Overstate assets (existence)
2) Understate liabilities (completeness)
must make sure revenue occurred and assets exist
Sarbanes-Oxley Act of 2002 (SOX) - ANSWER Section 302 states CEO and CFO must
sign and attest to the financial statements.
Professional Skepticism - ANSWER is an auditor's questioning mindset towards
representations made by management and evidence gathered. Inquiry alone is never
enough, usually financial trends need investigation.
Types of audits and auditors - ANSWER -Financial (External Auditors/ CPAs)
-Operational (internal and governmental auditors/CIAs)
-Compliance (internal and governmental auditors)
-Forensic (Fraud auditors/ CFEs)
Prohibited professional services by an auditor - ANSWER Professional service firms may
provide client tax services (with some restrictions)
Examples of the assertions - ANSWER -Existence/ occurrence = is this real or fake, who
gave it to you?
-Completeness = is this everything there is?
- Valuation = did they mess this up?
Rights / obligations = did you steal this? Should you have this document?
Generally Accepted Auditing Standards (GAAS) - ANSWER They identity the necessary
qualifications of auditors and guide the conduct of the audit. Their purpose is to obtain
reasonable assurance about the financial statements and communicate it in accordance
with auditors findings.
VERIFIED!!
Business Risk - ANSWER The risk an entity will fail to meet its state business objectives /
make money
Information Risk - ANSWER The risk that the information disseminated by a company
will be materially false or misleading. You mitigate this risk with an audit.
Auditing - ANSWER the systemic process of objectively obtaining and evaluating
evidence regarding assertions about economic action and events to communicate the
results to interested users
Attestation engagement - ANSWER a practitioner assesses and reports on "subject
matter or an assertion about the subject matter that is the responsibility of another
party"
Assurance services - ANSWER independent professional services that improve the
quality or information, or its context, for decision makers
Relationship among auditing, attestation, and assurance - ANSWER all audits are
attestation services, but not all attestation services are an audit
The assertions - ANSWER 1) existence / occurrence
2) completeness
3) valuation
4) rights / obligations
5) presentation / disclosure
, What you overstate and understate in fraut - ANSWER 1) Overstate assets (existence)
2) Understate liabilities (completeness)
must make sure revenue occurred and assets exist
Sarbanes-Oxley Act of 2002 (SOX) - ANSWER Section 302 states CEO and CFO must
sign and attest to the financial statements.
Professional Skepticism - ANSWER is an auditor's questioning mindset towards
representations made by management and evidence gathered. Inquiry alone is never
enough, usually financial trends need investigation.
Types of audits and auditors - ANSWER -Financial (External Auditors/ CPAs)
-Operational (internal and governmental auditors/CIAs)
-Compliance (internal and governmental auditors)
-Forensic (Fraud auditors/ CFEs)
Prohibited professional services by an auditor - ANSWER Professional service firms may
provide client tax services (with some restrictions)
Examples of the assertions - ANSWER -Existence/ occurrence = is this real or fake, who
gave it to you?
-Completeness = is this everything there is?
- Valuation = did they mess this up?
Rights / obligations = did you steal this? Should you have this document?
Generally Accepted Auditing Standards (GAAS) - ANSWER They identity the necessary
qualifications of auditors and guide the conduct of the audit. Their purpose is to obtain
reasonable assurance about the financial statements and communicate it in accordance
with auditors findings.
