Auditing - CPA Exam || errorless answers 100%.
Auditing Standards Board (ASB) correct answers Technical body within the AICPA that holds
the authority to set the rules for appropriate audits of organizations that do not issue securities to
the public (often referred to as privately held organizations).
Statements on Auditing Standards (SAS) - "Should" correct answers Presumptively Mandatory
Statements on Auditing Standards (SAS) - "Must" correct answers Unconditional requirement
Generally Accepted Accounting Principles (GAAP) correct answers a set of accounting standards
that is used in the preparation of financial statements.
Encompasses the conventions, rules, and procedures necessary to define accepted accounting
practice at a particular time.
Who may be deemed to be "Those Charged with Governance" correct answers Corporate trustee,
board of directors, audit committee, and/or executive management
Auditor's Responsibilities correct answers -Required to assess the risk of fraud
-Comply with relevant ethical requirements
-Plan and perform audit with professional skepticism
-Exercise professional judgment
-Obtain sufficient appropriate audit evidence to reduce audit risk to an acceptably low level
Planning Phase of an Audit correct answers 1. Discuss the timing of the audit procedures with
the client's management
,Percentage of Coverage Rule - Low Risk correct answers 20% of federal funding spent by the
entity
Percentage of Coverage Rule - NOT low risk correct answers 40% and above of federal funding
spent by the entity
Generally Accepted Government Auditing Standards (GAGAS) "Yellow Book" correct answers
Provides framework for auditors of government entities, entities that receive government awards
and other gov orgs.
GAGAS requirements are in ADDITION to the requirement contained in the AICPA standards
requires irregularities or illegal acts to be reported to the counterparty to the contract
Office of Management and Budget (OMB) correct answers Has the primary authority to develop
requirements for performing federal program compliance audits in Accordance with Single Audit
Act
Cognizant Agency correct answers federal agency responsible for reviewing, negotiating, and
approving cost allocation plans, indirect cost rates and more. This is under OMB
most likely assigned to auditee who the fed agency provides the most funding to the auditee
Single Audit - Which Guidelines to Follow? correct answers both GAAS and GAGAS guidelines
are applicable
Single Audit Required When correct answers the entity spends $750,000 or more per fiscal year
in federal awards, grants, or funds
the entity spends funds from one or more than one federal program
, if the entity only expends funds from one program, it "may" be eligible for a program-specific
audit versus a single audit.
Agreed-Upon Procedures correct answers practitioner is engaged to issue a report of findings
based on specific procedures performed on underlying subject matter.
CPA must be Independent!!
practitioner's report should include list of the procedures perform and related findings.
Compilation Engagement correct answers -No Assurance Given
-Does not need to be Independent
-Goal is to assist management in present financial info in the form of FS
-Accountant is required to read the FS & consider if they are good
Compilation Report Requirement correct answers A compilation report is only required
whenever the accountant is engaged to subject the financial statements to compilation
procedures.
Review Engagement correct answers -Limited Assurance
-Must be Independent
-Collect Evidence through observations, inquiry, analytical procedures
-NOT responsible for inquires of outside parties (legal counsel)
-NOT responsible for safeguards or internal controls
Standards Review Report Should Include: correct answers 1. title that includes "independent"
accountant for a review engagement
Auditing Standards Board (ASB) correct answers Technical body within the AICPA that holds
the authority to set the rules for appropriate audits of organizations that do not issue securities to
the public (often referred to as privately held organizations).
Statements on Auditing Standards (SAS) - "Should" correct answers Presumptively Mandatory
Statements on Auditing Standards (SAS) - "Must" correct answers Unconditional requirement
Generally Accepted Accounting Principles (GAAP) correct answers a set of accounting standards
that is used in the preparation of financial statements.
Encompasses the conventions, rules, and procedures necessary to define accepted accounting
practice at a particular time.
Who may be deemed to be "Those Charged with Governance" correct answers Corporate trustee,
board of directors, audit committee, and/or executive management
Auditor's Responsibilities correct answers -Required to assess the risk of fraud
-Comply with relevant ethical requirements
-Plan and perform audit with professional skepticism
-Exercise professional judgment
-Obtain sufficient appropriate audit evidence to reduce audit risk to an acceptably low level
Planning Phase of an Audit correct answers 1. Discuss the timing of the audit procedures with
the client's management
,Percentage of Coverage Rule - Low Risk correct answers 20% of federal funding spent by the
entity
Percentage of Coverage Rule - NOT low risk correct answers 40% and above of federal funding
spent by the entity
Generally Accepted Government Auditing Standards (GAGAS) "Yellow Book" correct answers
Provides framework for auditors of government entities, entities that receive government awards
and other gov orgs.
GAGAS requirements are in ADDITION to the requirement contained in the AICPA standards
requires irregularities or illegal acts to be reported to the counterparty to the contract
Office of Management and Budget (OMB) correct answers Has the primary authority to develop
requirements for performing federal program compliance audits in Accordance with Single Audit
Act
Cognizant Agency correct answers federal agency responsible for reviewing, negotiating, and
approving cost allocation plans, indirect cost rates and more. This is under OMB
most likely assigned to auditee who the fed agency provides the most funding to the auditee
Single Audit - Which Guidelines to Follow? correct answers both GAAS and GAGAS guidelines
are applicable
Single Audit Required When correct answers the entity spends $750,000 or more per fiscal year
in federal awards, grants, or funds
the entity spends funds from one or more than one federal program
, if the entity only expends funds from one program, it "may" be eligible for a program-specific
audit versus a single audit.
Agreed-Upon Procedures correct answers practitioner is engaged to issue a report of findings
based on specific procedures performed on underlying subject matter.
CPA must be Independent!!
practitioner's report should include list of the procedures perform and related findings.
Compilation Engagement correct answers -No Assurance Given
-Does not need to be Independent
-Goal is to assist management in present financial info in the form of FS
-Accountant is required to read the FS & consider if they are good
Compilation Report Requirement correct answers A compilation report is only required
whenever the accountant is engaged to subject the financial statements to compilation
procedures.
Review Engagement correct answers -Limited Assurance
-Must be Independent
-Collect Evidence through observations, inquiry, analytical procedures
-NOT responsible for inquires of outside parties (legal counsel)
-NOT responsible for safeguards or internal controls
Standards Review Report Should Include: correct answers 1. title that includes "independent"
accountant for a review engagement
