WGU D215 Auditing – Questions With Objective
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Terms in this set (168)
Two primary types of audit services Historical financial statements and Internal Controls
What is the purpose of an audit of To provide financial statement users with an opinion
financial statements by the auditor on the design and operating
effectiveness of ICFR (Internal controls over financial
reporting)
What is the purpose of auditing ICFR The Purpose of an audit of ICFR is to provide
(Internal controls over financial financial statement users with an opinion by the
reporting)? auditor on the design and operating effectiveness of
ICFR. These Audit services enhance the degree of
confidence that intended users can place in the
financial statements
What is an auditor and what An independent certified public accountant, or CPA.
credentials do they require in order to The only professional who can sign an audit report
perform an audit? on historical financial statements and internal
controls for a public or private company is a CPA.
What is the applicable financial Rrefers to the set of standards used in preparing the
framework historical financial statements such as GAAP, IFRS, or
governmental accounting standards for
governmental entities.
What are intended users? Refers to any group that will be using the financial
statements to make decisions, such as investors and
creditors.
,What is attestation services? CPAs who are hired to report on the integrity of this
type of financial information.
What is involved with Attestation Performed when an independent practitioner, or
Services? CPA, is engaged to issue a report on subject matter
that is the responsibility of another party.
Why is the term practitioner used These services encompass more than just the audit of
instead of auditior in terms of audit historical financial statements and internal controls
services?
As another example of attestation Small private companies often do not want or need a
services, why are services still needed services as extensive as an audit of the financial
for small private companies? statements in which the auditor has to express an
opinion on the fair presentation of the financial
statements
What is a review engagement? The practitioner expresses limited assurance that no
material modifications need to be made to the
financial statements
Why is a review of historical financial Less extensive and therefore less expensive services
statements for small companies that can be very useful for smaller private companies.
good?
What are the three AICPA codes of Principles, Rules of Conduct Interpretations
professional conduct?
Explain the AICPA Principles Express the basic tenets of ethical conduct and
provide the framework for the rules that govern the
performance of the member's professional
responsibilities.
Explain the rules of conduct for the Establish minimum standards of acceptable conduct
AICPA in the performance of professional services.
Explain Interpretations in the AICPA Provide additional guidance regarding the scope
code of professional conduct and applicability of the rules of conduct.
,What is the purpose of the AICPA The ethical principles provide guidance to all its
ethical principles? Explain their members with respect to the performance of their
enforeability. professional responsibilities. The principles are
designed to provide the framework for the rules that
govern the member's performance. The principles
are not enforceable.
What is the purpose of the AICPA The code rules establish minimum standards of
ethical rules? Explain their acceptable conduct in a CPA's professional services.
enforeability The AICPA's bylaws require members to adhere to
the rules of conduct. The rules are enforceable and
members must be prepared to justify departures
from the rules of conduct.
What is the purpose of the AICPA Interpretations provide additional guidance
ethical interpretations? Explain their regarding the scope and applicability of the rules of
enforability conduct. A member who departs from the
interpretations shall have the burden of justifying
such departure in any disciplinary hearing.
What is an Adverse interest threat An Adverse interest threat means a CPA will not act
with objectivity because a CPA's interests are
opposed to the client's interests. If a client expresses
an intention to begin litigation against the CPA
regarding the quality of work performed will cause
an adverse threat
Advocacy threat The threat that a CPA will promote a client's interests
or position to the point that his or her objectivity or
independence is compromised.
Familiarity threat The threat that, due to a long or close relationship
with a client, a CPA will become too sympathetic to
the client's interests or too accepting of the client's
work or product.
Management participation threat The threat that a CPA will take on the role of client
management or otherwise assume management
responsibilities
, Self-interest threat The threat that a CPA could benefit, financially or
otherwise, from an interest in, or a relationship with, a
client or persons associated with the client.
Self-review threat The threat that a CPA will not appropriately evaluate
the results of a previous judgment made by, or
service performed by, an individual in the member's
firm, and that the CPA will rely on that work in
forming a judgment as part of an engagement.
Undue influence threat The threat that a CPA will subordinate his or her
judgment to an individual associated with a client or
any relevant third party due to that individual's
reputation or expertise, aggressive or dominant
personality, or attempts to coerce or exercise
excessive influence over the CPA.
What are the three safeguards Legistlation or regulation, Safeguards implemented
by a client, Safeguards within a firm
Integrity and objectivity In the performance of any professional service, a
member shall maintain objectivity and integrity, shall
be free of conflicts of interest, and shall not
knowingly misrepresent facts or subordinate his or
her judgment to others.
Which type of work performed by a Financial statement review
CPA is an attestation service?
Which entity may obtain audited Governments
financial statements to ensure a
company is complying with industry
regulations?
Which group performs an audit and Independent third-party auditors
review of financial statements to
ensure financial statement users'
needs are met?
Solutions
Save
Terms in this set (168)
Two primary types of audit services Historical financial statements and Internal Controls
What is the purpose of an audit of To provide financial statement users with an opinion
financial statements by the auditor on the design and operating
effectiveness of ICFR (Internal controls over financial
reporting)
What is the purpose of auditing ICFR The Purpose of an audit of ICFR is to provide
(Internal controls over financial financial statement users with an opinion by the
reporting)? auditor on the design and operating effectiveness of
ICFR. These Audit services enhance the degree of
confidence that intended users can place in the
financial statements
What is an auditor and what An independent certified public accountant, or CPA.
credentials do they require in order to The only professional who can sign an audit report
perform an audit? on historical financial statements and internal
controls for a public or private company is a CPA.
What is the applicable financial Rrefers to the set of standards used in preparing the
framework historical financial statements such as GAAP, IFRS, or
governmental accounting standards for
governmental entities.
What are intended users? Refers to any group that will be using the financial
statements to make decisions, such as investors and
creditors.
,What is attestation services? CPAs who are hired to report on the integrity of this
type of financial information.
What is involved with Attestation Performed when an independent practitioner, or
Services? CPA, is engaged to issue a report on subject matter
that is the responsibility of another party.
Why is the term practitioner used These services encompass more than just the audit of
instead of auditior in terms of audit historical financial statements and internal controls
services?
As another example of attestation Small private companies often do not want or need a
services, why are services still needed services as extensive as an audit of the financial
for small private companies? statements in which the auditor has to express an
opinion on the fair presentation of the financial
statements
What is a review engagement? The practitioner expresses limited assurance that no
material modifications need to be made to the
financial statements
Why is a review of historical financial Less extensive and therefore less expensive services
statements for small companies that can be very useful for smaller private companies.
good?
What are the three AICPA codes of Principles, Rules of Conduct Interpretations
professional conduct?
Explain the AICPA Principles Express the basic tenets of ethical conduct and
provide the framework for the rules that govern the
performance of the member's professional
responsibilities.
Explain the rules of conduct for the Establish minimum standards of acceptable conduct
AICPA in the performance of professional services.
Explain Interpretations in the AICPA Provide additional guidance regarding the scope
code of professional conduct and applicability of the rules of conduct.
,What is the purpose of the AICPA The ethical principles provide guidance to all its
ethical principles? Explain their members with respect to the performance of their
enforeability. professional responsibilities. The principles are
designed to provide the framework for the rules that
govern the member's performance. The principles
are not enforceable.
What is the purpose of the AICPA The code rules establish minimum standards of
ethical rules? Explain their acceptable conduct in a CPA's professional services.
enforeability The AICPA's bylaws require members to adhere to
the rules of conduct. The rules are enforceable and
members must be prepared to justify departures
from the rules of conduct.
What is the purpose of the AICPA Interpretations provide additional guidance
ethical interpretations? Explain their regarding the scope and applicability of the rules of
enforability conduct. A member who departs from the
interpretations shall have the burden of justifying
such departure in any disciplinary hearing.
What is an Adverse interest threat An Adverse interest threat means a CPA will not act
with objectivity because a CPA's interests are
opposed to the client's interests. If a client expresses
an intention to begin litigation against the CPA
regarding the quality of work performed will cause
an adverse threat
Advocacy threat The threat that a CPA will promote a client's interests
or position to the point that his or her objectivity or
independence is compromised.
Familiarity threat The threat that, due to a long or close relationship
with a client, a CPA will become too sympathetic to
the client's interests or too accepting of the client's
work or product.
Management participation threat The threat that a CPA will take on the role of client
management or otherwise assume management
responsibilities
, Self-interest threat The threat that a CPA could benefit, financially or
otherwise, from an interest in, or a relationship with, a
client or persons associated with the client.
Self-review threat The threat that a CPA will not appropriately evaluate
the results of a previous judgment made by, or
service performed by, an individual in the member's
firm, and that the CPA will rely on that work in
forming a judgment as part of an engagement.
Undue influence threat The threat that a CPA will subordinate his or her
judgment to an individual associated with a client or
any relevant third party due to that individual's
reputation or expertise, aggressive or dominant
personality, or attempts to coerce or exercise
excessive influence over the CPA.
What are the three safeguards Legistlation or regulation, Safeguards implemented
by a client, Safeguards within a firm
Integrity and objectivity In the performance of any professional service, a
member shall maintain objectivity and integrity, shall
be free of conflicts of interest, and shall not
knowingly misrepresent facts or subordinate his or
her judgment to others.
Which type of work performed by a Financial statement review
CPA is an attestation service?
Which entity may obtain audited Governments
financial statements to ensure a
company is complying with industry
regulations?
Which group performs an audit and Independent third-party auditors
review of financial statements to
ensure financial statement users'
needs are met?
