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Audit one Terms in this set (43)Which of the following would be considered an assurance engagement ? E) all of the above It is always a good idea for auditors to begin an audit with the professional skepticism characterized by the assumption that B) A potential Conflict of interest always exists between the auditor and the management of the enterprise under audit. In an attestation engagement, a CPA practitioner is engaged to A) Prepare a written report containing a conclusion about the reliability of a management assertion. According to the AICPA, the purpose of an audit of financial statements is to B) Enhance the degree of confidence that intended users can place in the financial statements. Bankers who are processing loan applications from companies seeking large loans will probably ask for financial statements audited by an independent CPA because... D) They generally see a potential conflict of interest between company managers who want to get loans and the banks needs for reliable financial statements. The Sarbanes-Oxley Act of 2002
prohibits public accounting firms from providing which of the following services to an audit client? C) All of the above Independent auditors of financial statements perform audits that reduce A) information risk The organization primarily responsible for ensuring that public officials are using public funds efficiently, economically, and effectively is the B) Government Accountability Office (GAO) Jones, CPA, is planning the audit of Rhonda's Company. Rhonda verbally asserts to Jones that all expenses for the year have been recorded in the accounts. Rhonda's representation in this regard D) Is not considered a sufficient basis for Jones to conclude that all expenses have been recorded. A risk to investors that a company's financial statements may be materially misleading is called A) information risk The Sarbanes-Oxley Act of 2002 generally prohibits public accounting firms from d)All of the above. Which of the following best describes the relationship between auditing and attestation engagements? a) Auditing is a subset of attestation engagement that focuses on the certification of financial statements. Which of the following best describes the focus of the following engagements? Auditing Engagement d) The audit objective that all transactions and accounts that should be presented in the financial statements are in fact included is related to which of the PCAOB assertions? C) Completeness Which of the following management assertions is an auditor most likely testing if the audit objective states that all inventory on hand is reflected in the ending inventory balance? D) inventory is complete In auditing the long-term debt account, an auditor's procedures most likely would focus primarily on management's assertion of A) existence. Completeness When testing the completeness assertion for a liability account, an auditor ordinarily
works from the B)Potentially unrecorded items to the financial statements. The audit objective that all transactions are recorded in the proper period is related most closely to which of
the Audit Standards Board (ASB) transaction assertions? C) cutoff The audit objective that all transactions are recorded in the proper account is related most closely to which one of the ASB transaction assertions? D) Classification The audit objective that all balances include items owned by the client is related most closely to which one of the ASB balance assertions? B) Rights and obligations The audit objective that all balances include all items that should be recorded in that account is
related most closely to which one of the ASB balance assertions? C)Completeness Inquiries of warehouse personnel concerning possible obsolete or slow moving inventory items provide assurance about the ASB balance assertion of D) valuation What is the term used to identify the risk that the client's financial statements may be materially false and misleading? B)Information risk What type of evidence would provide the highest level of assurance in an
attestation engagement? B) evidence obtained from independent sources. An auditor selected items from the client's detailed inventory listing (that agreed to the financial statements). During the physical inventory
observation, the auditor then found each item selected and counted the number of units on hand. D)existence Which
of the following questions would be inappropriate for an auditor to ask a client when exhibiting an appropriate level of professional skepticism while completing an audit procedure related to the internal control system? B)Which of your employees is a fraudster? To be proficient as an auditor, a person must first be able to accomplish which of these tasks in a decision-making process? C) Recognize the financial assertions made in management's financial statements and footnotes. Which of the following is an underlying
condition that in part creates the demand by users for reliable information? E)All of these What is the term used to identify the risk that the client's financial
statements may be materially false and misleading? B) Information risk Because of the risk of material misstatement, an audit of financial statements in accordance with generally accepted auditing standards should be planned and performed with an attitude of C) professional skepticism. Accuracy Assertion is that full amounts of all transactions were recorded without error. Completeness The assertion is that all business events to which the company was subjected were recorded. cutoff The assertion is that all transaction were recorded within the correct reporting period. occurrence the assertion is that recorded business transactions actually took place. The assertion is that all reported asset, liability, and equity balances have been fully reported. Completeness assertion The assertion is that all account balances exist for asset, liability, and equity. Existence assertion The assertion is that the entity has the rights to the assets it owns and is obligated under its reported liabilities. Rights and obligations assertion The assertion is that all asset, liability, and equity balances have been recorded at the proper valuations. valuation assertion Presentations and disclosure assertions Accuracy, completeness, occurrence, rights and obligations, understandably Accurancy assertion that all information diclosed is the correct amounts and which reflect their proper values. Completeness The assertion is that all transactions that should be disclosed have been disclosed. Occurrence The assertion is that disclosed transactions have indeed occured. understandability The assertion is that the information included in the financial statement has been appropriately presented and is clearly understandable. Students also viewedChapter 1 and 220 terms chapter 2 multiple choice67 terms Audit exam 184 terms Audit Review65 terms Sets found in the same folderAuditing and Assurance Ch 117 terms Auditing Chapter 137 terms Audit Chapter 938 terms Ch2325 terms Other sets by this creatorCopyright Exams55 terms Copyright - Exam 211 terms Copyright - Exam 311 terms Copyright Terms54 terms Recommended textbook solutions Operations Management: Sustainability and Supply Chain Management12th EditionBarry Render, Chuck Munson, Jay Heizer 1,698 solutions
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What is risk assessment at financial statement level?The Company's Risk Assessment Process
Identifying risks relevant to financial reporting objectives, including risks of material misstatement due to fraud ("fraud risks"); Assessing the likelihood and significance of misstatements resulting from those risks; and. Deciding about actions to address those risks.
What are the 3 types of risk in audit?There are three main types of audit risk: Inherent risk, detection risk, and control risk.
What is detection risk in accounting?In an audit of financial statements, detection risk is the risk that the procedures performed by the auditor will not detect a misstatement that exists and that could be material, individually or in combination with other misstatements.
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