ACCT 3222-3, Wiley, LSU, Exam 1/ Study Guide
Questions with Definitive Solutions.
Terms in this set (270)
Audit Services services by an independent CPA that provide financial
statement users with (1) an opinion on whether the financial
statements are presented fairly, in all material respects, in
accordance with an applicable financial reporting framework
and (2) an opinion on the effectiveness of ICFR, which
enhance the degree of confidence that intended users can
place in the financial statements
Attestation Services Service Study Guides performed when an independent
practitioner, or CPA, is engaged to issue a report on
subject matter that is the responsibility of another party
Relationship of assurance, Audit - highest quality/reasonable assurance (i.e., historical
attestation, and auditing financial statements)
services from most to least Attestation - mid quality/limited assurance (i.e., review of
improved of quality historical financial statements, examination of internal
controls, review of financial forecast) Assurance - lowest
(i.e., assurance)
quality (i.e., compilation of historical financial statements,
website security, IT operations, non-financial information)
Assurance Services independent professional services that improve the quality of
information, or its context, for decision makers
Applicable financial the set of standards used in preparing the historical
reporting framework financial statements (i.e., GAAP, IFRS, or federal income
refers to tax basis of accounting)
,Independent implies that someone who was not involved with the creation of the
the service is performed information and who is objective in the evaluation of the
information
by
Quality refers to the relevance and realiability of the information
Information refers to subject matter that can be financial or nonfinancial, historical or
prospective, standalone data or entire systems of data, internal
or external to a company
CPAs are the only Licensed accounting professionals in the US.
_________ accounting Licenses are issued at the state level, not federal
professionals in the US and
the ________ are issued at
the ____________ level
A state board of a licence to practice after all three Es have been earned
accountancy will only
issue
CPA Es Education, Exam, and Experience
Public companies, or an annual financial statement audit and an ICFR audit
issuers, in the US are
required by federal
government to have
Private companies, or non- Not required by law, other interested users may request
issuers, are _______ to have audited financial statements (i.e., lenders)
an annual audit by federal
government, but
ICFR Internal Control over Financial Reporting
Integrated Audit An audit that combines the financial statement audit with an
audit of the effectiveness of ICFR
1. the nature of financial reporting
The limitations of an audit 2. the nature of audit procedures
are cause by 3. the need for the audit to be conducted within areasonable
period of time at a reasonable cost
,The nature of financial the use of judgment when preparing financial statements
reporting refers to due to the subjectivity required when arriving at accounting
estimates and judgment required when selecting and
applying accounting methods
The nature of audit Reliance on evidence provided by the client and its managements,
procedures refers to as well as the concept of materiality
Materiality the ability of information to influence decisions that users
make on the basis of the financial information of a specific
reporting entity
Compliance Audit an audit to determine whether the entity has conformed with
regulations, rules, or processes
Operational An assessment of the economy, efficiency, and effectiveness of an
(Performance) Audit organization's operations
Operational Audit Economy refers to the cost of inputs
economy, efficiency, and Efficiency refers to the relationship between inputs and
effectiveness refer to
outputs
Effectiveness refers to the achievement of certain goals or
the production of a certain level of outputs
Internal Audit A function within an entity which generally evaluates and
improves risk management, internal control procedures, and
elements of the governance process
Those charged with Persons with responsibility for overseeing the strategic
governance direction of the entity and the obligations related to the
accountability of the entity
The external auditor may Internal auditors when evaluating the evidence needed to
rely on the work done by form an opinion on the financial statements or on ICFR
Financial Statement Users Investors, suppliers, customers, lenders, employees, governments,
include and the general public
, Sources of demand for Remoteness (users do not have access to the company)
audit and assurance Complexity (amounts affected by significant estimates
services
requiring knowledge and experience to evaluate)
Competing incentives (determine biased information)
Reliability
Management is 1. Ensuring the information included in the
responsible for financialstatements is presented fairly and complies with
the applicable financial reporting frameowrk
2. Designing, implementing, and maintaining
internalcontrol relevant to the preparation and fair
presentation of the financial statements
3. Providing the auditor with access to all
records,documentation, and personnel relevant to the
preparation and fair presentation of the financial
statements, and any additional information the auditors
may consider relevant to complete the audit Also, mgmt is
responsible for making estimates for some f/s items and
selecting appropriate accounting policies within the
applicable financial reporting framework
Auditors are responsible 1. Conducting the audit in accordance with theappropriate
for auditing standards
2. Planning and performing the audit with professionalskepticism
3. Planning and performing the audit with professionaljudgment
Professional Skepticism An attitude that includes a questioning mind, being alert to
conditions that may indicate possible misstatement due to
fraud or error, and a critical assessment of audit evidence
The application of relevant training, knowledge, and experience
Professional judgment in making informed decisions about the courses of action that
are appropriate in the circumstances of the audit engagement
Questions with Definitive Solutions.
Terms in this set (270)
Audit Services services by an independent CPA that provide financial
statement users with (1) an opinion on whether the financial
statements are presented fairly, in all material respects, in
accordance with an applicable financial reporting framework
and (2) an opinion on the effectiveness of ICFR, which
enhance the degree of confidence that intended users can
place in the financial statements
Attestation Services Service Study Guides performed when an independent
practitioner, or CPA, is engaged to issue a report on
subject matter that is the responsibility of another party
Relationship of assurance, Audit - highest quality/reasonable assurance (i.e., historical
attestation, and auditing financial statements)
services from most to least Attestation - mid quality/limited assurance (i.e., review of
improved of quality historical financial statements, examination of internal
controls, review of financial forecast) Assurance - lowest
(i.e., assurance)
quality (i.e., compilation of historical financial statements,
website security, IT operations, non-financial information)
Assurance Services independent professional services that improve the quality of
information, or its context, for decision makers
Applicable financial the set of standards used in preparing the historical
reporting framework financial statements (i.e., GAAP, IFRS, or federal income
refers to tax basis of accounting)
,Independent implies that someone who was not involved with the creation of the
the service is performed information and who is objective in the evaluation of the
information
by
Quality refers to the relevance and realiability of the information
Information refers to subject matter that can be financial or nonfinancial, historical or
prospective, standalone data or entire systems of data, internal
or external to a company
CPAs are the only Licensed accounting professionals in the US.
_________ accounting Licenses are issued at the state level, not federal
professionals in the US and
the ________ are issued at
the ____________ level
A state board of a licence to practice after all three Es have been earned
accountancy will only
issue
CPA Es Education, Exam, and Experience
Public companies, or an annual financial statement audit and an ICFR audit
issuers, in the US are
required by federal
government to have
Private companies, or non- Not required by law, other interested users may request
issuers, are _______ to have audited financial statements (i.e., lenders)
an annual audit by federal
government, but
ICFR Internal Control over Financial Reporting
Integrated Audit An audit that combines the financial statement audit with an
audit of the effectiveness of ICFR
1. the nature of financial reporting
The limitations of an audit 2. the nature of audit procedures
are cause by 3. the need for the audit to be conducted within areasonable
period of time at a reasonable cost
,The nature of financial the use of judgment when preparing financial statements
reporting refers to due to the subjectivity required when arriving at accounting
estimates and judgment required when selecting and
applying accounting methods
The nature of audit Reliance on evidence provided by the client and its managements,
procedures refers to as well as the concept of materiality
Materiality the ability of information to influence decisions that users
make on the basis of the financial information of a specific
reporting entity
Compliance Audit an audit to determine whether the entity has conformed with
regulations, rules, or processes
Operational An assessment of the economy, efficiency, and effectiveness of an
(Performance) Audit organization's operations
Operational Audit Economy refers to the cost of inputs
economy, efficiency, and Efficiency refers to the relationship between inputs and
effectiveness refer to
outputs
Effectiveness refers to the achievement of certain goals or
the production of a certain level of outputs
Internal Audit A function within an entity which generally evaluates and
improves risk management, internal control procedures, and
elements of the governance process
Those charged with Persons with responsibility for overseeing the strategic
governance direction of the entity and the obligations related to the
accountability of the entity
The external auditor may Internal auditors when evaluating the evidence needed to
rely on the work done by form an opinion on the financial statements or on ICFR
Financial Statement Users Investors, suppliers, customers, lenders, employees, governments,
include and the general public
, Sources of demand for Remoteness (users do not have access to the company)
audit and assurance Complexity (amounts affected by significant estimates
services
requiring knowledge and experience to evaluate)
Competing incentives (determine biased information)
Reliability
Management is 1. Ensuring the information included in the
responsible for financialstatements is presented fairly and complies with
the applicable financial reporting frameowrk
2. Designing, implementing, and maintaining
internalcontrol relevant to the preparation and fair
presentation of the financial statements
3. Providing the auditor with access to all
records,documentation, and personnel relevant to the
preparation and fair presentation of the financial
statements, and any additional information the auditors
may consider relevant to complete the audit Also, mgmt is
responsible for making estimates for some f/s items and
selecting appropriate accounting policies within the
applicable financial reporting framework
Auditors are responsible 1. Conducting the audit in accordance with theappropriate
for auditing standards
2. Planning and performing the audit with professionalskepticism
3. Planning and performing the audit with professionaljudgment
Professional Skepticism An attitude that includes a questioning mind, being alert to
conditions that may indicate possible misstatement due to
fraud or error, and a critical assessment of audit evidence
The application of relevant training, knowledge, and experience
Professional judgment in making informed decisions about the courses of action that
are appropriate in the circumstances of the audit engagement
