AUD Exam: Comprehensive Review of Auditing Principles and Practices

AUD Exam: Comprehensive Review of
Auditing Principles and Practices
SAS, PCAOB AS, GAGAS, SSAE, SSARS - correct answer ✔✔Professional Standards



SAS and PCAOB AS, Interpretive Publications, Other Publications - correct answer ✔✔The GAAS
Hierarchy



Engagement Acceptance, Risk Assessment, Perform Procedures, Form Conclusions, Reporting - correct
answer ✔✔Audit Process Overview



Financial Statements, Internal Controls, Access to Information - correct answer ✔✔Management
Responsibilities



Professional Skepticism, Ethical Requirements, Professional Judgment, Sufficient and Appropriate
Evidence, Complying with GAAS - correct answer ✔✔Auditor Responsibilities



Objectives of Financial Statement Audit - correct answer ✔✔· Obtain reasonable assurance about
whether the financial statements are free from material misstatement

· Report on the financial statements and issue an opinion



Objectives of Audit of Internal Control - correct answer ✔✔· Express an opinion on the effectiveness of
the company's internal control over financial reporting

· Plan and perform the audit to obtain appropriate evidence that is sufficient to obtain reasonable
assurance about whether material weaknesses exist as of the date of management's assessment



Unqualified, Qualified, Disclaimer, Adverse - correct answer ✔✔Types of Audit Opinions



Unqualified Opinion - correct answer ✔✔· Auditor concludes that the financial statements are presented
fairly in all material respects in accordance with the financial reporting framework

,· Auditor gathered sufficient appropriate evidence to determine the financial statements are fairly stated
in all material respects



Qualified Opinion - correct answer ✔✔· Except for the effects of the matters of the qualification, the
financial statements present fairly in all material respects

· Conclude that misstatements are material but not pervasive



Disclaimer of Opinion - correct answer ✔✔· Auditor does not express an opinion on the financial
statements

· Auditor denies rendering an opinion, because they are unable to gather sufficient appropriate audit
evidence to do so

· Conclude that the possible effect is material and pervasive



Adverse Opinion - correct answer ✔✔· Financial statements are not fairly presented in accordance with
GAAP

· Conclude that misstatements are material and pervasive



Key Audit Matters - correct answer ✔✔· Matters communicated with those charged with governance
during the course of an audit of a nonissuer

· Require significant professional judgment and were of the most significant in the audit of the financial
statements

· Auditor does not provide a separate opinion on these matters



Critical Audit Matters - correct answer ✔✔Matters that were communicated to the audit committee,
relate to material financial statement accounts or disclosures, and involve challenging, subjective, or
complex auditor judgment during the course of an audit of a issuer



Emphasis-of-Matter Paragraph - correct answer ✔✔· Included in the auditor's report when required by
GAAS or at the auditor's discretion

· Used when referring to a matter that is appropriately presented or disclosed and is of such importance
that it is fundamental to the users' understanding of the financial statements

· Does not affect the auditor's opinion

, Other-Matter Paragraph - correct answer ✔✔· Included in the auditor's report when required by GAAS
or at the auditor's discretion

· Refer to matters other than those presented or disclosed in the financial statements that are relevant to
the users' understanding of the audit or the auditor's report

· Should not be used to describe key audit matters



Explanatory Paragraph - correct answer ✔✔· Included in the auditor's report when required by the
PCAOB or at the auditor's discretion

· Describe important matters that are relevant to the users' understanding of the audit or the auditor's
report

· Does not affect the auditor's opinion



Emphasis-of-Matter, Explanatory - correct answer ✔✔When changing a prior year opinion, the auditor
should update their opinion and add an _____ or _____ paragraph



Other-Matter, Explanatory - correct answer ✔✔When reporting with precedent auditors, the prior year
auditor's report may be reissued or the prior year report may be summarized in an _____ or _____
paragraph by the successor auditor



Not Reference, Reference - correct answer ✔✔When the group engagement team relies on the work of
the component auditor, the group engagement team may either choose to _____ the component
auditor and must review the work of the component auditor, or divide responsibility with and give _____
to the work of the component auditor



Recognized - correct answer ✔✔For _____ subsequent events, the underlying event occurred before the
balance sheet date, which requires recognition in the financial statements through adjustment or
disclosure



Nonrecognized - correct answer ✔✔For _____ subsequent events, the underlying event occurred after
the balance sheet date, which only require disclosure



Management Representation Letter, Inquire of Legal Counsel, Review Board Minutes, Examine Interim
Financial Statements - correct answer ✔✔The auditor is expected to perform the following procedures
for post balance sheet transactions