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Flashcards in Audit Deck 7 Deck (18)
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When writing the report on an entity's compliance with laws and regulations what statement should you include in your report

Include a statement that laws and regulations are the responsibility of management.


What do you do if you are doing the financial report for a count and get a transmittal report that is not consistent with your F/S, but you think your financial statements are correct - the transmittal info is wrong

When you come across inconsistent information first determine if it is indicative of a instatement in the F/S - if the F/S are correct - then request the the other information be corrected


A report on selected data from a set of audited financials is NOT a separate engagement from an audit. Instead it is a result made possible by the audit therefore it would be

- Not required to be restricted
- presumed to be on the same basis of accounting as is applied in the F/S
- Is limited to dat derived from the entities financial statements


A comfort letter is given to underwriters to provide reasonable grounds to believe there are no material misstatements in F/S related to securities offerings. What do they provide

Comfort letter provide negative assurance regarding selected capsule financial information.
- This is done if the auditor has performed a review of the interim financial information


When can a government internal auditor be considered free from organizational independence for reporting internally

They can when they are removed from political pressures to conduct audits objectively without fear of political reprisal


What is a sub recipient?

It is a nonfederal entity that expends federal awards received from another entity to carry out a federal program


The report resulting from an engagement to apply agreed upon procedures related to f/s will include:

- The accountants finding
-a disclaimer that the procedures applied may not be sufficient fr the purpose intended
- A statment restricting the distribution of the report only to parties knowledgeable about the agreed upon procedures
- No assurance is provided


A client decided not to make an auditor's proposed adjustments that are collectively not material and want the auditor to issue the report based on the unadjusted numbers. What is the correct F/S presentation

The financial statements are free from material misstatement and NO disclosure is required in the notes to the financial statements


How can warranty reserve accounts be manipulated to understate income during a good sales year?

It you overestimate reserves - it will understate income in a good sales year. If you understate reserve it will boost your sales in a poor sales year


In comfort letter the CPA may provide limited negative assurance relative to the information being in conformity with GAAP

They provide limited negative assurance concerning the conformity of the entity's unaudited condensed interim financial information with generally accepted accounting principles


What are the Objectives of Internal Control (3)

- Reporting Objectives
- Operations Objectives
-Compliance Objectives


In an agreed-upon procedure what 2 things will the report contain

The procedures performed that were agreed upon and the findings


A review of financial information other than the financial statements is an attestation engagement since it involves providing assurance but is not an audit - what is an example of this

a review of MD&A


No matter how statements are generated - a report on financial statements would be subject to GAAS if the statement is an audit or SSARA if it is compilation or Review

F/S prepared for use in anoretic country is subject to GAAS


Program financial statements are based historical financial information
- they are intended to show how results of operations and financial position would differ for an event that actually hadn't occurred

Compilations, Reviews, Examinations and Agreed upon procedure engagement may be performed with respect to pro forma financial information


An auditor may accept an engagement to express an opinion on financial statements prepared in conformity with a comprehensive basis of accounting other than gAAP -(Special Purpose Frameworks)

If there is no scope limitation the auditor will express an opinion.
The opinion will state whether the f/s are presented fairly in conformity with the OCBOA

- the entity (not the auditor) will provide an explanation how the OCBOA differs from GAAP - generally they will refer to this footnote in an emphasis of matter paragraph

- Auditor will state that the basis accounting is described in a footnote to the financial statements


What assertion is tested:
An invoice is prepared for each shipping document

completeness - the auditor determine that all good shipped were invoiced


What assertion is tested:
Each credit memo is properly approved