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