Audit Ch 16

Pataasin ang iyong marka sa homework at exams ngayon gamit ang Quizwiz!

if the client has sold or assigned any receivables, the auditor must ______

confirm by direct communication with the purchaser or assignee

_________ extends the auditor's responsibility for disclosure through the later date only with respect to the specified item

dual-dating

the starting point for investigating significant variations in expenses generally is _______ of management

inquiry

a subsequent event that involves conditions coming into existence after the BS date requires ______

disclosure in the financial statements

the date the auditors grant the client permission to use the audit report

report release date

certain organizations are mandated by designated accounting standard setter to present _____ ______ info as unaudited schedules accompanying the fs

required supplementary

an event occurring after the date of the BS but prior to the date of the auditor's report

subsequent event

reasonableness standard:

the intentional misstatement of immaterial amounts may be deemed unreasonable

a guarantee of collectibility is given when A/R are sold ____ ____

with recourse

considers misstatements from past years and this year

iron curtain approach

an example of a subsequent event requiring pro forma financial statements is ____ _____

a business combination

an auditor determines that proceeds from the sale of scrap were recorded to hte miscellaneous revenue account. The auditor should propse an adjusting journal entry to classify the amount as ______

a reduction to COGS

the product warranty account is often verified in conjunction with the audit of ____

accrued liabilities

the relationship between the ______ (known and likely) misstatements and materiality is often documented in a working paper

aggregated

a subsequent event that provides additional evidence as to conditions that existed at the bs date and affects the estimates inherent in the process of preparing financial statements requires ______

an adjustment to the financial statement amounts

AICPA AU 265 requires that auditors communicate to the ____ _______ any significant deficiencies in internal control

audit committee

must communicate any significant deficiencies in IC and CAM to ______

audit committee

auditors should review the minutes of meetings, including meetings held through the date of the _____

audit report

under no circumstance should a name b added to the payroll without having received the formal ________ notice from the HR department

authorization

most important of all controls over payroll is the division of payroll work among several ______ of the company

departments

the most important audit objective when auditing the statement of cash flows is ______

determine the presentation and disclosure are appropriate

the most important control over payroll is the ________

division of payroll work among several departments

auditor's liability in connection with the registration of new securities with the SEC is extended to the ______ _______ of the registration statement (called an S1 review)

effective date

throughout the course of the audit, the auditors accumulate and communicate to management all _____ _____, other than those the auditors believe to be trivial

identified misstatements

info presented outside the basic fs, excluding required supplementary info, that is not considered necessary for the fs, to be fairly presented in accordance with the applicable financial reporting framework is called ____ info

supplementary

immaterial misstatement that are discovered by the auditors and not corrected by the client are accumulated in the audit ______ _____

working papers

throughout the course of the audit, the auditors accumulate and communicate to management all ______ misstatements other than those that are trivial

identified

what is required for a matter to be considered an unasserted claim ___ and _____

1. legal counsel has devoted substantial attention to it 2. it is probable that a claim will be asserted

provides additional evidence as to conditions that existed at the date of the financial statements (fs amounts should be adjusted)

Type 1 subsequent events

the existence of a good _____ program helps the auditors in their audit of expense accounts

budgeting

are misstatements for which there is no doubt

factual misstatements

most common loss contingency

litigation

the auditors' report should not be dated prior to the date they have gathered sufficient, appropriate evidence (this date is often the last day of fieldwork)

FACT

the professional standards require that the audit committee be informed bout fraudulent or illegal acts that the auditors become aware of

FACT

which of the following statements regarding required supplementary information (RSI) are correct?

1. auditors are required to obtain written representations from management regarding this information 2. auditors are required to compare RSI for consistency to the basic fs and other knowledge obtained during the audit

if, after issuing the audit report, the auditors determine they omitted significant audit procedures, the auditors should _______ ____ ____

1. consider consulting legal counsel 2. assess the importance of omitted procedures 3. attempt to perform the omitted procedures as needed

a client is aware of an unasserted claim that was not disclosed to the auditors. The auditors have sent a letter of inquiry to the client's attorney. The attorney _____ and ____

1. is not required to describe the claim in the reply to the auditors 2. should consider resignation if the client refuses to discuss the matter with the auditors

the output of the payroll department includes: x3

1. payroll journal 2. individual employee statements of earnings 3. payroll distribution schedule (not signed payroll checks)

If a CPA firm discovers a material misstatement in audited financial statements after the auditors report has been issued, and the client will NOT notify affected parties, the auditor should notify _____ ___ ____

1. the client's board of directors 2. each person known to be relying on the audited financial statements 3. regulatory agencies having jurisdiction over the client

procedures carried out by auditors at the client company's facilities on ora s close a practicable to the effective date of a registration statement filed under the Securities Act of 1933 is called a ___-

S-1 Review

arise from differences between the judgments of management and the auditors concerning accounting estimates, or the selection or application of accounting policies that the auditors consider inappropriate

judgmental misstatements

if legal matters are identified, auditors should directly communicated with the client's external legal counsel through a ___ ___ ______ prepared by management and sent by the auditors

letter of inquiry

auditors usually perform _____ substantive procedures on the statement of cash flows

limited

final responsibility for adjustments due to identified misstatements rests with _____

management

if auditors choose to refer to other information in the auditor's report, they may include an ____ _______ paragraph disclaiming an opinion on the other information

other-matter

occasionally, subsequent events may be so material that supplementary ___ _____ financial statements should be prepared giving effect to the events as if they had occurred as of the balance sheet date (use columnar format and usually only BS)

pro forma

the auditors' estimate of misstatements arising from situations in which they used audit sampling to draw conclusions concerning the populations (subtract out factual identified amounts)

projected misstatements

the securities act of 1933 extends the auditor's liability in connection with the registration of new securities with the SEC to the effective date of the _____ ______

registration statement

the date auditors grant the client permission to use the audit report is called the ____ _____ date

report release

However, even after completing normal audit procedures, the auditors are responsible for evaluating subsequent events that come to their attention prior to the ____ ____ date

report release

shortly after year-end, a client's major customer declared bankruptcy. As a result, a large A/R outstanding at year-end is not uncollectible. This subsequent event should

result in an adjustment to the fs if caused by a condition outstanding at year end

AICPA Statement of Position 94-6 requires that company's disclose certain significant _____ and ______

risks and uncertainties

considers only misstatement in current year

roll over approach

auditor's estimate of total misstatement has to be _______ less than a material amount for the auditors to issue an unmodified opinion

significantly

the most important expense accounts: 5

1. advertising 2. r&d 3. legal expense and professional fees 4. maintenance and repairs 5. rents and royalties

AICPA AU 725 provied guidance on supplementary info regarding

1. comparing info with accounting records 2. obtaining written representations from management 3. inquiry of management


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