Audit - CPA Review A1 || with certified answers.
Responsibilities of an auditor include: correct answers - Complying w/ relevant ethical
requirements
- Maintaining professional skepticism & exercising professional judgement throughout the
planning & performance of the audit
- Appropriate competence & capabilities to perform the audit
To obtain reasonable assurance, an auditor should: correct answers Plan the work & properly
supervise any assistants
In certain audit engagements, the auditor may be required to comply w/ auditing requirements in
addition to GAAS. The auditor may conduct the audit in accordance w/ correct answers Both
GAAS & GAGAS
An Auditors responsibility regarding financial statements correct answers Their responsibilities
are confined to the expression of the auditors opinion
Examples of the application of professional skepticism correct answers -Obtainign corroboration
of managements explanations through consultation w/ specialist
- using third-party confirmations to provide support for managements representations
- Designing additional auditing procedures to obtain more reliable evidence in support of
particular FS assertions
Term that identified a requirement for audit evidence correct answers appropriate
Reasonable Assurance correct answers A high, but NOT absolute, level of assurance to allow an
auditor to detect a material misstatement
,Because of the risk of material misstatement, an audit of financial statements in accordance with
generally accepted auditing standards should be planned and performed with an attitude of
correct answers Professional Skepticism
An auditor of a nonissuer exercising professional skepticism with respect to the risks of material
misstatement due to fraud will most appropriately correct answers Consider the reliability of
information to be used as audit evidence
The financial statements of henley co. contain a material departure from GAAP. Henley
effectively argues that due to unusual circumstances, the financial statements would have been
misleading if they were prepared in conformity w/ GAAP. Based solely on this information, the
auditor should: correct answers Render an unmodified opinion w/ a separate paragraph
explaining the unusual situation
In order to form an opinion of the financial statements the auditor should consider whether
correct answers the FS are prepared in all material respect in accordance with the requirements
of the applicable financial reporting framework
An Auditor of a nonissuer concludes that a client's illeal act, which has a material effect on the
financial statements, has not been properly accounted for or disclosed. Depending on the
pervasiveness of the effect on the financial statements, the auditor should express either correct
answers A Qualified or an adverse opinion
When would an auditor most likely modify the audit opinion? correct answers the auditor
concludes that the FS as a whole are material misstated
An auditor's responsibility to express an opinion on the financial statements of a nonissuer under
US auditing standards is: correct answers explicitly represented in the auditors responsibility
paragraph
How are management's responsibility and the auditor's responsibility represented in the auditor's
report of a nonissuer correct answers Explicitly
, March, CPA, is engaged by Monday Corp., a client, to audit the financial statements of Wall
Corp., a company that is not March's client. Monday expects to present Wall's audited financial
statements with March's auditor's report to 1st Federal Bank to obtain financing in Monday's
attempt to purchase Wall. In these circumstances, March's auditor's report would usually be
addressed to correct answers Monday corp, the client that engaged march
which paragraphs of a nonissuer auditor's report on financial statements under US auditing
standards should refer to GAAS and GAAP correct answers GAAS - Auditor's Responsibility
GAAP - opinion
A CPA's report on audited FS under US auditing standards would be inappropriate if it referred
to: correct answers the CPA's assessment of sampling risk factors
in which paragraph of an auditors report for a nonissuer does an auditor communicate the nature
of the engagement and the specific financial statements covered by the audit correct answers
intro paragraph
The earliest date for an auditors report correct answers the date the auditor has obtained
sufficient appropriate evidence to support the opinion
The auditors report should include reference to the US as the country of origin of: correct
answers the accounting principles used to prepare the FS & the auditing standards the auditor
followed in performing the audit
A basic element of the auditors report under US auditing standards correct answers an audit
includes evaluating significant estimates made by management
When single-year financial statements are presented, an auditor ordinarily expresses an
unmodified opinion w/ no emphasis of matter or other matter paragragh if the correct answers
prior year financial statements were audited by another CPA whose report, which expressed an
unmodified opinion is not presented
Responsibilities of an auditor include: correct answers - Complying w/ relevant ethical
requirements
- Maintaining professional skepticism & exercising professional judgement throughout the
planning & performance of the audit
- Appropriate competence & capabilities to perform the audit
To obtain reasonable assurance, an auditor should: correct answers Plan the work & properly
supervise any assistants
In certain audit engagements, the auditor may be required to comply w/ auditing requirements in
addition to GAAS. The auditor may conduct the audit in accordance w/ correct answers Both
GAAS & GAGAS
An Auditors responsibility regarding financial statements correct answers Their responsibilities
are confined to the expression of the auditors opinion
Examples of the application of professional skepticism correct answers -Obtainign corroboration
of managements explanations through consultation w/ specialist
- using third-party confirmations to provide support for managements representations
- Designing additional auditing procedures to obtain more reliable evidence in support of
particular FS assertions
Term that identified a requirement for audit evidence correct answers appropriate
Reasonable Assurance correct answers A high, but NOT absolute, level of assurance to allow an
auditor to detect a material misstatement
,Because of the risk of material misstatement, an audit of financial statements in accordance with
generally accepted auditing standards should be planned and performed with an attitude of
correct answers Professional Skepticism
An auditor of a nonissuer exercising professional skepticism with respect to the risks of material
misstatement due to fraud will most appropriately correct answers Consider the reliability of
information to be used as audit evidence
The financial statements of henley co. contain a material departure from GAAP. Henley
effectively argues that due to unusual circumstances, the financial statements would have been
misleading if they were prepared in conformity w/ GAAP. Based solely on this information, the
auditor should: correct answers Render an unmodified opinion w/ a separate paragraph
explaining the unusual situation
In order to form an opinion of the financial statements the auditor should consider whether
correct answers the FS are prepared in all material respect in accordance with the requirements
of the applicable financial reporting framework
An Auditor of a nonissuer concludes that a client's illeal act, which has a material effect on the
financial statements, has not been properly accounted for or disclosed. Depending on the
pervasiveness of the effect on the financial statements, the auditor should express either correct
answers A Qualified or an adverse opinion
When would an auditor most likely modify the audit opinion? correct answers the auditor
concludes that the FS as a whole are material misstated
An auditor's responsibility to express an opinion on the financial statements of a nonissuer under
US auditing standards is: correct answers explicitly represented in the auditors responsibility
paragraph
How are management's responsibility and the auditor's responsibility represented in the auditor's
report of a nonissuer correct answers Explicitly
, March, CPA, is engaged by Monday Corp., a client, to audit the financial statements of Wall
Corp., a company that is not March's client. Monday expects to present Wall's audited financial
statements with March's auditor's report to 1st Federal Bank to obtain financing in Monday's
attempt to purchase Wall. In these circumstances, March's auditor's report would usually be
addressed to correct answers Monday corp, the client that engaged march
which paragraphs of a nonissuer auditor's report on financial statements under US auditing
standards should refer to GAAS and GAAP correct answers GAAS - Auditor's Responsibility
GAAP - opinion
A CPA's report on audited FS under US auditing standards would be inappropriate if it referred
to: correct answers the CPA's assessment of sampling risk factors
in which paragraph of an auditors report for a nonissuer does an auditor communicate the nature
of the engagement and the specific financial statements covered by the audit correct answers
intro paragraph
The earliest date for an auditors report correct answers the date the auditor has obtained
sufficient appropriate evidence to support the opinion
The auditors report should include reference to the US as the country of origin of: correct
answers the accounting principles used to prepare the FS & the auditing standards the auditor
followed in performing the audit
A basic element of the auditors report under US auditing standards correct answers an audit
includes evaluating significant estimates made by management
When single-year financial statements are presented, an auditor ordinarily expresses an
unmodified opinion w/ no emphasis of matter or other matter paragragh if the correct answers
prior year financial statements were audited by another CPA whose report, which expressed an
unmodified opinion is not presented
