ACC 450 Chapter 2

Which of the following are PCAOB Attestation General Standards?

- Due professional care shall be exercised in the planning and performance of the engagement. - The engagement shall be performed by a practitioner having adequate knowledge of the subject matter.

Categories of PCAOB Attestation Standards are ______.

- Standards of Fieldwork - Standards of Reporting - General Standards

Which of the following items are the same for public and nonpublic company standard audit reports?

- The name used to sign the report. - The rules for proper dating of the report. - The word "Independent" is included in the title.

Professional skepticism includes ______.

- being alert to conditions that may indicate possible misstatement due to error - critical assessment of audit evidence - a questioning mind

International audit reports ______.

- include a more detailed description of auditor responsibilities - include necessary terminology changes regarding ethical standards

The PCAOB ______.

- performs inspections of audit practices of registered public accounting firms - may make referrals to the Justice Department to consider criminal cases - requires all firms that audit SEC registrants to register with them

The PCAOB audit "Basis for Opinion" paragraph describes or alludes to ______.

- registration requirements - the nature of a PCAOB audit - independence requirements

Obtaining absolute assurance is not possible due to ______.

- time and cost constraints - the nature of audit procedures - the nature of financial reporting

Place GAAS authoritative guidance in order from highest level of authority to lowest.

1. Standards 2. Interpretive Publications 3. Other Audit Publications

Generally accepted auditing standards are established by the ______.

AICPA

Standards for Nonpublic companies in the United States

AICPA

Which of the following is NOT included in the current PCAOB framework?

AICPA Auditing Standards

AICPA Generally Accepted Auditing Standards recently adopted a numbering system that organizes standards by topic. This system is known as the ______ number.

AU-C

Acceptance of Client Relationships

Choice, The firm will undertake engagements only where the firm is competent to perform the engagement. The firm will undertake engagements only where the firm is competent to perform the engagement.

True or false: An auditor is allowed to own an immaterial number of shares of stock in a company that she audits without affecting independence principles.

False

In the United States the financial reporting framework most commonly used is ______.

GAAP

The AICPA establishes what standards?

GAAS standards only

Standards for International companies

IAASB Standards

IFRS are developed by the ______.

IASB

An auditor can find guidance in SASs sections ______.

Objectives, Definitions of important terms, Introduction, including scope

Standards for a Public Company in the United States

PCAOB

Leadership responsibilities for quality

Promotes an internal culture based on the recognition that quality is essential in performing engagements.

AICPA's Auditing Standards are identified under ______.

SAS number (dates) and AU-C number (topic)

Which of the following sections are not included in the AICPA Statements on Auditing Standards?

Summary of GAAP

Monitoring

The policies and procedures related to quality control are relevant, adequate, and operating efficiently.

A set of criteria used to prepare the financial statements is known as ______.

a financial reporting framework

When financial statements are not fairly presented, the auditor will issue a(n)

adverse

The standards of the Financial Accounting Standards Boards may be referred to in the audit of ______.

all nongovernmental companies

Reasonable assurance is achieved when ______ risk is at an acceptably low level.

audit

If the auditors are unable to determine the overall fairness of the financial statements, they will issue a(n) ______ opinion.

disclaimer of

First Company relies on one customer for the majority of its revenues each year. First Company's financial statements must acknowledge this relationship to financial statement users under the concept of adequate ___

disclosure

A peer review in which the evaluator selects a sample of the CPA firm's actual accounting work to evaluate whether the reports are procedures are appropriate is called a(n) ______ review.

engagement

The three levels of service covered by the AICPA are _______, ________, and agreed-upon procedures

examinations, reviews

A set of criteria used to prepare financial statements is a financial reporting ____

framework

Grace Chin serves on the board of directors of Bliss Company. The standard that prohibits Grace from also auditing the financial statements of Bliss is known as ______.

independence

A review of a public accounting firm by the PCAOB to ensure compliance with the Sarbanes-Oxley Act of 2002 is called a(n) ______.

inspection

Auditors of large publicly traded companies perform a(n) ____ audit, which includes providing assurance on both the financial statements and the effectiveness of ______ _______ over financial reporting

integrated, internal control

Auditors are responsible to obtain reasonable assurance that clients are in compliance with ______.

only laws having a direct effect on financial statements

An auditor's personal responsibility to maintain a questioning mind, be alert to conditions that may indicate possible misstatement due to fraud or error, and a critical assessment of audit evidence is called ______.

professional skepticism

The auditors state that there is a limitation on the scope of the audit, but not so far as to overshadow an overall opinion when issuing a(n) ______ opinion.

qualified

An underlying principle of AICPA Generally Accepted Auditing Standards includes that an auditor must obtain ______ assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error.

reasonable

It is implied that there is a low level of risk remaining that auditors express an opinion that the financial statements are properly stated when they are not by the concept of

reasonable assurance

The international audit report is ______ the ASB nonpublic company audit report.

similar to

A peer review in which the evaluator considers the CPA firm's system of quality control to perform accounting and auditing work is called a(n) ____ review

system

During an audit, Jose becomes aware that the client has violated an environmental law by disposing of waste inappropriately. Jose feels that the violation is intentional and material and therefore has an obligation to communicate the matter to ______.

those charged with governance

True or false: The date on the audit report should be no earlier than the date that the auditors have obtained sufficient appropriate evidence to support their opinion.

true

t/f: IFRS generally requires more judgment application than GAAP.

true

t/f: Many professional believe audits of IFRS financial statements are more challenging than GAAP statements.

true

Under PCAOB standards, when auditors are taking no exceptions and inserting no modifications in the report, a(n) ______ opinion is issued.

unqualified