Quality Control, Engagement Acceptance, Planning, & Internal Control - CPA Auditing and Attestation (AUD)
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Risk is communicated in the audit report as:
Risk is communicated in the audit report as:
The concept of reasonable assurance is used to guide the auditor when assigning and assessing risk in the audit process.
The concept of reasonable assurance is used to guide the auditor when assigning and assessing risk in the audit process.
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Risk of material misstatement exists at:
Risk of material misstatement exists at:
The risk of misstatement appears at the transactional level as well as the financial statement level. The statements can be materially misstated in the aggregate based on a series of misstated transactions or on the whole.
The risk of misstatement appears at the transactional level as well as the financial statement level. The statements can be materially misstated in the aggregate based on a series of misstated transactions or on the whole.
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Inherent risk is defined as:
Inherent risk is defined as:
Inherent risk is defined as risk that exists outside the audit process. It is sometimes termed industry risk.
Inherent risk is defined as risk that exists outside the audit process. It is sometimes termed industry risk.
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The objective of performing analytical procedures in planning an audit is to identify the existence of:
The objective of performing analytical procedures in planning an audit is to identify the existence of:
The objective of performing analytical procedures during planning is to discover unusual transactions or events that may have an impact on the planning of the financial statement audit.
The objective of performing analytical procedures during planning is to discover unusual transactions or events that may have an impact on the planning of the financial statement audit.
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An auditor compared the current year gross margin with the prior year gross margin to determine if the cost of sales is reasonable. What type of audit procedure was performed?
An auditor compared the current year gross margin with the prior year gross margin to determine if the cost of sales is reasonable. What type of audit procedure was performed?
Analytical procedures are evaluations of financial information made by a study of plausible relationships among data and they include comparisons between the current year and prior year's financial information.
Analytical procedures are evaluations of financial information made by a study of plausible relationships among data and they include comparisons between the current year and prior year's financial information.
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If the management of a company with recently audited financial statements refuses to make a revision to the statements as a result of a material inconsistency, the auditor should .
If the management of a company with recently audited financial statements refuses to make a revision to the statements as a result of a material inconsistency, the auditor should .
An auditor may modify the opinion of his or her audit if management refuses to correct a material issue, or withdraw from the engagement altogether.
An auditor may modify the opinion of his or her audit if management refuses to correct a material issue, or withdraw from the engagement altogether.
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Sufficient evidence refers to:
Sufficient evidence refers to:
Sufficient evidence refers to the amount of evidence. It is sufficient in quantity to enable the auditor to express a reasonable judgment.
Sufficient evidence refers to the amount of evidence. It is sufficient in quantity to enable the auditor to express a reasonable judgment.
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John Anderson CPA is in the process of auditing a client. In terms of “reliability of evidence”, evidence pertaining to cash records should be obtained through:
John Anderson CPA is in the process of auditing a client. In terms of “reliability of evidence”, evidence pertaining to cash records should be obtained through:
In the hierarch of evidence, evidence from independent sources is deemed most appropriate. In this scenario, the independent source of evidence is the bank statements as this document comes from an outside source (the bank).
In the hierarch of evidence, evidence from independent sources is deemed most appropriate. In this scenario, the independent source of evidence is the bank statements as this document comes from an outside source (the bank).
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An “assertion” in terms of the financial statement includes:
An “assertion” in terms of the financial statement includes:
An “assertion” in terms of the financial statement includes the completeness, existence, valuation, rights and obligations, and presentation and disclosure.
An “assertion” in terms of the financial statement includes the completeness, existence, valuation, rights and obligations, and presentation and disclosure.
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After fieldwork audit procedures are completed, a partner of the CPA firm who has not been involved in the audit performs a second or wrap up review of the audit documentation. This second review usually focuses on:
After fieldwork audit procedures are completed, a partner of the CPA firm who has not been involved in the audit performs a second or wrap up review of the audit documentation. This second review usually focuses on:
The primary purpose of a second partner review is to evaluate the significant judgments made by the engagement team and the related conclusions reached in forming the overall conclusion.
The primary purpose of a second partner review is to evaluate the significant judgments made by the engagement team and the related conclusions reached in forming the overall conclusion.
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The purpose of establishing quality control policies and procedures for deciding whether to accept or continue a client relationship is to:
The purpose of establishing quality control policies and procedures for deciding whether to accept or continue a client relationship is to:
The purpose of establishing quality control policies and procedures for deciding whether to accept or continue a client relationship is to minimize the likelihood of associating with clients whose management lacks integrity.
The purpose of establishing quality control policies and procedures for deciding whether to accept or continue a client relationship is to minimize the likelihood of associating with clients whose management lacks integrity.
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Materiality levels are set by:
Materiality levels are set by:
Materiality levels are set by the judgment of the auditor. The auditor may use industry standards to help in determining the materiality level, however, experience and judgment are the final determinants.
Materiality levels are set by the judgment of the auditor. The auditor may use industry standards to help in determining the materiality level, however, experience and judgment are the final determinants.
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In addressing materiality, the auditor should:
In addressing materiality, the auditor should:
In addressing materiality, the auditor should decide whether the omission or misstatement would change the judgment of the reader.
In addressing materiality, the auditor should decide whether the omission or misstatement would change the judgment of the reader.
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“Performance Materiality” is defined as
“Performance Materiality” is defined as
Performance Materiality is defined as the amount that is less than the overall materiality level. Performance materiality is set to respond to smaller misstatements or omissions that in aggregate may affect the materiality level.
Performance Materiality is defined as the amount that is less than the overall materiality level. Performance materiality is set to respond to smaller misstatements or omissions that in aggregate may affect the materiality level.
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In developing an overall audit strategy, the auditor should consider:
In developing an overall audit strategy, the auditor should consider:
In developing an overall audit strategy, an auditor should consider preliminary evaluations of materiality, audit risk, and internal control.
In developing an overall audit strategy, an auditor should consider preliminary evaluations of materiality, audit risk, and internal control.
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During the initial planning phase of an audit, the auditor would most likely:
During the initial planning phase of an audit, the auditor would most likely:
Procedures that an auditor may consider in planning the audit include discussing the type, scope, and timing of the audit with the client's management.
Procedures that an auditor may consider in planning the audit include discussing the type, scope, and timing of the audit with the client's management.
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The users of a company's set of financial statements would be:
The users of a company's set of financial statements would be:
Both creditors and shareholders would need access to reliable financial statements in order to decide if the company is worth investing in or lending money to.
Both creditors and shareholders would need access to reliable financial statements in order to decide if the company is worth investing in or lending money to.
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Auditors document the terms of engagement in:
Auditors document the terms of engagement in:
An engagement letter outlines the terms of the engagement including management's expected responsibilities and the responsibilities of the auditor.
An engagement letter outlines the terms of the engagement including management's expected responsibilities and the responsibilities of the auditor.
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A properly developed engagement letter should include:
A properly developed engagement letter should include:
A properly constructed engagement letter should discuss the responsibilities of the auditors, management as well as the risks and limitations of the audit engagement.
A properly constructed engagement letter should discuss the responsibilities of the auditors, management as well as the risks and limitations of the audit engagement.
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Preplanning audit documentation includes
Preplanning audit documentation includes
A preplanning audit document will discuss the overall audit strategy. Planning an audit will include an internal control assessment, but not in the preplanning stage. Confirmation letters and substantive testing are part of the audit process.
A preplanning audit document will discuss the overall audit strategy. Planning an audit will include an internal control assessment, but not in the preplanning stage. Confirmation letters and substantive testing are part of the audit process.
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