Audit CPA Exam Review || solved correctly.
Subsequent Event Procedures that auditor should perform (acronym) correct answers PRIME
P - Post balance sheet transactions
R - Representation Letter (management rep. letter)
I - Inquiry
M - Minutes (review minutes)
E - Examine latest interim financial statements
"Prime" responsibility for subsequent events
U LIAR CPA correct answers Review performance requirements:
Understanding with the client
Learn and/or obtain knowledge of the entity's business
Inquiry of management with financial and accounting responsibilities
Analytical procedures
Review - other procedures
Client rep letter from management
Professional judgement
Accountant (CPA) should communicate results
How many days does an auditor have to complete the assembly of the final audit file following
the report release date for a nonissuer? Issuer? correct answers Nonissuer - 60 days to complete
final audit file after report release date.
Issuer - 45 days
,Footed tickmark correct answers Sum a column
Cross-footed tickmark correct answers Sum a row (think across)
Current File correct answers Audit documentation applicable to the year under audit
Examples:
audit plan, financial statements, audit report, working trial balance, adjusting journal entries,
reclassification entries, letters of confirmation and representation,
worksheets/schedules/commentaries prepared or obtained by auditor, copies of entity documents
like contracts or agreements, summaries of significant audit findings or issues, tests of control
records, substantive test records
Permanent File correct answers audit documentation that has a continuing interest from year to
year
Examples:
Minutes from BOD meetings, Articles of incorporation, stock options, contracts, pension plans,
leases, bylaws, bond indentures, and internal information
Audit documentation must be retained for _________ years for Issuers? Nonissuers? correct
answers Issuers - 7 years
Nonissuers - 5 years
Variable Sampling correct answers Used to estimate a numerical measurement of a population.
This method is used in substantive testing.
, Attribute Sampling correct answers Used to estimate the rate of occurrence of a specific
characteristic.
This sampling method is used in control testing.
Random Number Sampling correct answers Method used to select a sample for evaluation.
May be used with variable sampling OR attribute sampling.
EDP programs correct answers Executive Development Program
Can help determine whether internal controls are operating as designed
Examining the EDP program is a control test
Audit Risk Model correct answers AR = (IR) x (CR) x (DR)
Which type of risk can an auditor control? correct answers Detection Risk
Prescriptive Analytics correct answers prescribe or recommend actions to be taken based on
analytics to reach a desired goal
Examples:
- what-if analysis
- decision support and automation
- machine learning
- natural language processing
Descriptive Analytics correct answers describe what happened within the data
Subsequent Event Procedures that auditor should perform (acronym) correct answers PRIME
P - Post balance sheet transactions
R - Representation Letter (management rep. letter)
I - Inquiry
M - Minutes (review minutes)
E - Examine latest interim financial statements
"Prime" responsibility for subsequent events
U LIAR CPA correct answers Review performance requirements:
Understanding with the client
Learn and/or obtain knowledge of the entity's business
Inquiry of management with financial and accounting responsibilities
Analytical procedures
Review - other procedures
Client rep letter from management
Professional judgement
Accountant (CPA) should communicate results
How many days does an auditor have to complete the assembly of the final audit file following
the report release date for a nonissuer? Issuer? correct answers Nonissuer - 60 days to complete
final audit file after report release date.
Issuer - 45 days
,Footed tickmark correct answers Sum a column
Cross-footed tickmark correct answers Sum a row (think across)
Current File correct answers Audit documentation applicable to the year under audit
Examples:
audit plan, financial statements, audit report, working trial balance, adjusting journal entries,
reclassification entries, letters of confirmation and representation,
worksheets/schedules/commentaries prepared or obtained by auditor, copies of entity documents
like contracts or agreements, summaries of significant audit findings or issues, tests of control
records, substantive test records
Permanent File correct answers audit documentation that has a continuing interest from year to
year
Examples:
Minutes from BOD meetings, Articles of incorporation, stock options, contracts, pension plans,
leases, bylaws, bond indentures, and internal information
Audit documentation must be retained for _________ years for Issuers? Nonissuers? correct
answers Issuers - 7 years
Nonissuers - 5 years
Variable Sampling correct answers Used to estimate a numerical measurement of a population.
This method is used in substantive testing.
, Attribute Sampling correct answers Used to estimate the rate of occurrence of a specific
characteristic.
This sampling method is used in control testing.
Random Number Sampling correct answers Method used to select a sample for evaluation.
May be used with variable sampling OR attribute sampling.
EDP programs correct answers Executive Development Program
Can help determine whether internal controls are operating as designed
Examining the EDP program is a control test
Audit Risk Model correct answers AR = (IR) x (CR) x (DR)
Which type of risk can an auditor control? correct answers Detection Risk
Prescriptive Analytics correct answers prescribe or recommend actions to be taken based on
analytics to reach a desired goal
Examples:
- what-if analysis
- decision support and automation
- machine learning
- natural language processing
Descriptive Analytics correct answers describe what happened within the data
