In planning an audit of financial statements an auditor most likely would

In planning an audit of financial statements an auditor most likely would. Add credibility to the financial statements. Study with Quizlet and memorize flashcards containing terms like Which of the following items tend to be the most predictable for purposes of analytical procedures applied as substantive procedures?, After audit procedures are completed a partner of the CPA firm who has not been involved in the audit performs a second or wrap-up audit C) The auditor can audit the financial statements only if the audit process does not culminate in the expression of an opinion on the financial statements. Study with Quizlet and memorize flashcards containing terms like While assessing the risks of material misstatement, auditors identify risks, relate risk to what could go wrong, consider the magnitude of risks, and:, Which of the following situations would most likely require special audit planning by the auditors?, Which of the following is (are) Study with Quizlet and memorize flashcards containing terms like Which of the following is least likely to affect an auditors judgment about materiality? A) the dollar amount of key figures in the previous year's financial statements B) the clients evaluation of materiality C) the nature of an item, such as an illegal but very small payment D) consideration of what Which of the following procedures would an auditor most likely include in the initial planning of a financial statement audit? Perform detailed testing of the individual balance sheet accounts. Management is responsible for reporting to us any inadequate provisions for the safeguarding of Study with Quizlet and memorize flashcards containing terms like Which of the following circumstances would an auditor most likely consider a risk factor relating to misstatements arising from fraudulent financial reporting?, An auditor assesses control risk because it, An auditor reviews a client's accounting policies and procedures when considering Auditors can obtain assurance from: Tests of control: Tests of control are designed to evaluate the operating effectiveness of controls in preventing or detecting and correcting material misstatement. , When reporting on conditions relating to an entity's internal control observed during an audit of the financial statements, the auditor should include a a. b) The integrity of entity's management is suspect. , 44. The auditor's most appropriate response would be to: To obtain an understanding of a continuing client’s business in planning an audit, an auditor most likely would review the prior-year working papers and permanent file. 1. C) Performing tests of details of transactions and balances. The audit strategy outlines the scope, direction, and timing of Which of the following procedures would an auditor most likely include in the initial planning of a financial statement audit? A. In which of the following circumstances is an auditor most likely to rely on work done by internal auditors? A) If financial statement amounts are material and the degree of subjectivity in evaluating the audit evidence is high. perform tests of controls to Study with Quizlet and memorize flashcards containing terms like Audit committees should be made up of the most qualified directors regardless of whether they are part of management of the company, Analytical procedures are seldom used for planning an audit engagement because they are substantive procedures, Preliminary arrangements with Study with Quizlet and memorize flashcards containing terms like Which of the following statements is false regarding materiality?, Which of the following statements is true concerning performance materiality?, An auditor determines overall materiality is $100,000, which of the following statements describes the most likely scenario with performance Study with Quizlet and memorize flashcards containing terms like Which of the following statements reflects an auditor's responsibility for detecting errors and fraud? A. What Is a Financial Audit?. Evidence to be gathered to provide a sufficient basis for the auditor’s opinion b. 138. Anticipated levels of audit risk and materiality. The audit firms test the company's accounting and invent Study with Quizlet and memorize flashcards containing terms like Which of the following statements would most likely appear in an auditor's engagement letter? a. Audit planning helps coordinate the work to be done by auditors of components and other parties such as experts, specialists, etc. Additional evidence to support a reduction in the assessed level of control risk is not -The accountant should perform analytical procedures to financial data. Preparation of corporate tax returns. to use the internal auditors to help in performing the audit, the independent auditor most likely will: Place limited reliance on the work performed by the internal auditors. Neither I nor II. B) Detection Risk. It’s done to give external parties, like shareholders, investors and lenders, confidence that the financial statements fairly represent a company’s results and material to the financial statements. Assess the risk of occurrence of errors and frauds. discuss with management its policies and procedures for identifying and evaluating litigation c. The auditor should consider the results of the analytical procedures in which of the following?, Which of the following Study with Quizlet and memorize flashcards containing terms like Which of the following factors would a CPA ordinarily consider in the planning stage of an audit engagement? I. Study with Quizlet and memorize flashcards containing terms like Which of the following auditor concerns most likely could be so serious that the auditor would conclude that a financial statement audit cannot be conducted? A) The entity has no formal written code of conduct. In planning an audit of a new client, an auditor most likely would consider the methods used to process accounting information because such methods: a. Study with Quizlet and memorize flashcards containing terms like Which of the following factors would a CPA ordinarily consider in the planning stage of an audit engagement? 1. 2. Compliance Audits, 2. D)Risks of material Which of the following characteristics is most likely to heighten an auditor's concern about the risk of material misstatements due to fraud in an entity's financial statements? (1) The entity's industry is experiencing declining customer demand. Study with Quizlet and memorize flashcards containing terms like In assessing the competence and objectivity of an entity's internal auditor, an independent auditor would least likely consider information obtained from A. The auditor most likely decided that:, In designing a written audit plan, an auditor should establish specific Study with Quizlet and memorize flashcards containing terms like The Code of Ethics for internal auditors: a)Applies primarily to internal auditor support of the external audit function. In an audit of financial statements of a non-public company in accordance with generally accepted auditing standards, an auditor is required to: Multiple Choice document the auditor's understanding of the entity's internal control. The auditor's responsibility is to plan and perform the audit to obtain reasonable assurance that material misstatements, whether caused by errors or fraud, are detected. The auditor did not observe at the prior year's physical inventory. For those illegal acts that are defined in that section as having a direct and material effect on the An auditor is planning to use substantive analytical procedures in the current audit. The auditor most likely would ask management whether: -there was significant turnover in the accounting department. Study with Quizlet and memorize flashcards containing terms like After obtaining an understanding of the entity and its environment and assessing the risk of material misstatement, an auditor decided to perform tests of controls. inquiring of the client's legal counsel concerning pending litigation b. Helping the auditor identify and resolve potential problems on a timely basis C. After obtaining an understanding of internal control in a financial statement audit, an auditor has concluded that it is well designed and is operating effectively. 59 statements. , In an audit of financial statements, an auditor's primary consideration regarding an internal control is whether the control A. 14. 06 To plan the nature, timing, and extent of audit procedures, the auditor should establish a AU-C Section 320. Regulatory Audits D. Which of the following procedures would a CPA most likely perform in the planning phase of a financial statement audit? a. Operational Audits C. When does audit planning take place? Naturally, it is reasonable to assume that planning occurs towards the start of an audit engagement. The materiality level for the financial statements as a whole determined in the planning stage of the audit should not be Study with Quizlet and memorize flashcards containing terms like Assessing control risk at below the maximum level most likely would involve a. The audit plan is more detailed than the audit strategy and includes the nature, timing and extent of audit procedures to be performed by engagement team members in order to obtain Study with Quizlet and memorize flashcards containing terms like Which of the following is required documentation in an audit in accordance with generally accepted auditing standards? a. Which of the following would an auditor most likely use in determining overall materiality when planning the audit? During the initial planning phase of an audit, a CPA most 3. Individual overdue balances. " ( ISA 300 Planning and Audit of Financial Statements). Positive assurance. Enhance the auditor's understanding of the client's business. Audit planning helps ensure that the audit is properly organized, managed An auditor who discovers that client employees have committed an illegal act that has a material effect on the client's financial statements most likely would withdraw from the engagement if: Multiple Choice the noncompliance is a violation of generally accepted accounting principles. c. Financial statement audits are required to be auditors’ perceptions of the financial information needs of users of the financial statements, and by the size or nature (or both) of a misstatement. Test individual account balances that depend on accounting estimates. Provides adequate safeguards over access to assets. An integrated audit is one that combines the financial statement audit with an audit of your internal controls. auditor should design the audit to provide reasonable assurance of detecting errors and fraud that is material In defining the sampling unit for the current year's audit, the auditor most likely would choose A. For example, a company During the initial planning phase of an audit, a CPA most likely would. The auditor's responsibility to plan and perform the audit to provide reasonable, but not absolute, assurance of Question: Which of the following procedures would an auditor most likely perform in planning a financial statement audit? Comparing the financial statements with anticipated results. Source: SAS No. . When forming an opinion on the financial statements, the auditor is least likely to evaluate whether: a. an auditor is responsible for detecting employee errors and simple fraud, but nor for discovering fraudulent acts involving employee collusions or management override. Study with Quizlet and memorize flashcards containing terms like 1) Which of the following auditor concerns most likely could be so serious that the auditor would conclude that a financial statement audit cannot be conducted? A) The entity has no formal written code of conduct. When planning a monetary statement audit, an auditor would most likely perform the strategy of asking for the client's legitimate advice concerning a The Audit Plan 13. Which of the following is an auditor least likely to perform in planning a financial statement audit? A. C. Unusual A financial statement audit is an examination of a company’s financial statements by an independent auditor. Assist the auditor in collecting sufficient appropriate audit evidence. The auditor’s risk assessment procedures should apply to both the audit of internal control over financial reporting and the audit of Inquiring of the client’s legal counsel concerning pending litigation is the procedure which would an auditor most likely perform in planning a financial statement audit. would most likely increase overall audit risk, decrease overall audit risk, or have no effect on overall audit risk. Risks of material misstatement due to fraud. Materiality in Planning and Performing an Audit. An auditor Study with Quizlet and memorize flashcards containing terms like Adequate planning and design of an audit is necessary for an auditor to restrict which type of audit risk? A) Control Risk. conditions that require extension of audit tests, In assessing the objectivity of internal auditors, the Study with Quizlet and memorize flashcards containing terms like During the audit of internal controls integrated with the audit of the financial statements, the auditor discovered a material weakness in internal control. Terms in this set (10) Which of the following statements about analytical procedures is 答案解析： Choice "A" is correct. Types of internal audits include financial, operational, compliance Study with Quizlet and memorize flashcards containing terms like An auditor concludes that the omission of a substantive procedure considered necessary at the time of the audit may impair the auditor's current ability to support the previously expressed opinion. understanding of the entity's internal control has been completed. What are B&M's Holding other planning considerations equal, a decrease in the amount of misstatement in a class of transactions that an auditor could tolerate most likely would cause the auditor to a. This is a necessary procedure because the predecessor may be able to provide the successor with information that will assist the successor in determining whether (1) the predecessor's work should be used. Assist in evaluating the planned audit objectives. The entity's industry is experiencing declining customer demand. 01 In an audit of financial statements, the auditor may identify deficiencies in the company's internal control over financial reporting. Audits are potentially Which of the following procedures would an auditor likely perform in planning a financial statement audit? Coordinating the assistance of entity personnel in data preparation, When developing the audit strategy and audit plan, as discussed in paragraphs . Make inquiries of the client's lawyer concerning pending litigation. 2 perform the planned auditing procedures closer to the balance sheet date. Make copies of Study with Quizlet and memorize flashcards containing terms like Which of the following nonfinancial information would an auditor most likely consider in performing analytical procedures during the planning phase of an audit?, which of the following statements is correct concerning an auditor's use of the work of a specialist?, Which of the following During the initial planning phase of an audit, a CPA most likely would. A financial audit typically refers to the annual audit of an organization’s financial statements to ensure its records are a fair and accurate representation of the Which of the following procedures would an auditor most likely perform in planning a financial statement audit? a. Relative to the materiality level for the audit of the financial statements, materiality levels for the audit of internal control are Audit planning is the first step in an audit procedure and plays a vital role in the procedure because it highlights the important part to be considered while doing the audit. ISA 300, prescribes that the audit of financial statements should include an overall audit strategy and an audit plan. The CPA lacks a thorough understanding of the prospective client's operations and industry. The results of the internal control Which of the following procedures would an auditor most likely perform in planning a financial statement audit? a. Confirm the Audit Plan: Your auditor’s last step prior to Financial Statement Audit Explained. What detection risk do the auditors plan to use for planning the remainder of the audit work? a. increase the assessed level of Study with Quizlet and memorize flashcards containing terms like Which of the following would not be communicated to users in the auditors' report on an entity's financial statements and related disclosures? A. This understanding generally includes The auditor's responsibility for the fairness of the financial statements. During the initial planning phase of an audit, a CPA most likely Study with Quizlet and memorize flashcards containing terms like The auditor should establish a n overall audit strategy. The auditor plans the audit so that it will be performed in an effective manner. C) Procedures requiring Footnotes (AS 3101 - The Auditor's Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion): 1 This standard uses the term "financial statements" as used by the U. Each of the following is an example of an entity-level control, except A. Previous experience Which of the following is not in the final review stage of an audit? a. I only. C) Sufficiency Risk. The concept of materiality is therefore fundamental to the audit. Which of the following types of audits is most likely to be conducted for the purpose of identifying areas for cost savings? A. D) company's internal audit department. C)Perform detailed testing of the individual financial statement accounts. 134; SAS No. (2) the Which of the following inquiries would an accountant most likely make during a review of financial statements? Inquiries directed toward internal audit personnel related to their activities concerning the design and effectiveness of the entity's internal control Inquiries directed toward management regarding the entity's accounting principles and practices Study with Quizlet and memorize flashcards containing terms like Which of the following factors most likely would heighten an auditor's concern about the risk of fraudulent financial reporting?, Which of the following is least likely to render material a quantitatively small misstatement material?, The auditors must consider materiality in planning an Study with Quizlet and memorize flashcards containing terms like Which of the following auditor concerns most likely could be so serious that the auditor would conclude that a financial statement audit cannot be conducted?, When applying analytical procedures during an audit, which of the following is the best approach for developing Study with Quizlet and memorize flashcards containing terms like Which of the following is an effective audit planning and control procedure that helps prevent misunderstandings and inefficient use of audit personnel? A. A flowchart or narrative of the information system relevant to financial reporting describing the recording and classification of transactions for financial Study with Quizlet and memorize flashcards containing terms like 1) Which of the following auditor concerns most likely could be so serious that the auditor would conclude that a financial statement audit cannot be conducted? A) The entity has no formal written code of conduct. Review accounting principles unique to the client's industry 2. C) Procedures requiring Study with Quizlet and memorize flashcards containing terms like Which of the following procedures does a CPA usually perform when reviewing the financial statements of a nonissuer?, The client asked the auditor to audit financial statements covering the current year. Knowledge necessary for risk assessment and audit planning b. Paper P7, Advanced Audit and Assurance, regularly features questions set in the planning phase of an audit. Identifying specific internal control structure policies and procedures relevant to specific assertions. B)The auditor's independence. The auditor need not apply the omitted procedure if, On March 15, Year 2, Kent, CPA, Study with Quizlet and memorize flashcards containing terms like The objective of analytical procedures performed as risk assessment procedures is to A. 1 / 21. B Selecting a sample of vendors' invoices for comparison with receiving reports. Auditors are responsible to detect material errors but have no responsibility to detect material frauds that are concealed through employee collusion or management override of the internal control structure. D) the auditor is likely to decrease the extent of testing if the client has set unreasonable objectives. A basis for issuing an opinion on Holding other planning consideration equal, a decrease in the amount of misstatement in a class of transaction that an auditor could tolerate most likely would cause the auditor to A. Which of the following is a change that is not being debated by Study with Quizlet and memorize flashcards containing terms like Cutoff tests designed to detect purchases made before the end of the year that have been recorded in the subsequent year most likely would provide assurance about management's assertion of A. Earnings forecasts by During the initial planning phase of an audit, a CPA most likely would a. Evaluating the disclosure of the related party transactions. a. The CPA is unable to review the Study with Quizlet and memorize flashcards containing terms like The auditors must consider materiality in planning an audit engagement. the planned substantive tests prior to the balance sheet date B. The anticipated sample size of the planned substantive tests. The auditor should consider the methods the entity uses to process accounting information in planning the audit because such methods Therefore, in planning an audit of financial statements the auditor must take into account the applicable legal and regulatory framework. Both I and II. the auditor will budget out the cost so that the business has an idea of the overall cost for the audit. Small account balances. Influence the design of internal control. Controls over the period Study with Quizlet and memorize flashcards containing terms like Which of the following auditor concerns most likely could be so serious that the auditor would conclude that a financial statement audit cannot be conducted? a) The entity has no formal written code of conduct. Discussions with management personnel. The auditor plans the audit to determine the planned audit opinion to be issued on the financial statements. Increase the assessed Study with Quizlet and memorize flashcards containing terms like In assessing the competence and objectivity of an entity's internal auditor, an independent auditor would least likely consider information obtained from A. Types of internal audits include financial, operational, compliance Which of the following is an auditor least likely to perform in planning a financial statement audit? A. Financial statement accounts likely to contain a misstatement. Performing more extensive substantive tests with larger sample sizes than originally planned. Securities and Exchange Commission ("SEC") to include all notes to the statements and all related schedules. Which of . Study with Quizlet and memorize flashcards containing terms like When auditing related party transactions, an auditor places primary emphasis on a. II. Bond. Adequate planning benefits the audit of financial statements in several ways, including the following, except A Helping the auditor to devote appropriate attention to less important areas of the audit B. Report all errors and frauds found to police authorities. Audit planning aids in ensuring the examination of financial statements can be performed the financial statement audit: client acceptance and planning 103. Appoint a partner of An auditor's responsibility to detect illegal acts that have a direct and material effect on the financial statements is the same as that for errors and fraud. conditions that require extension of audit tests, In assessing the objectivity of internal auditors, the Bond, CPA, is considering audit risk at the financial statement level in planning the audit of Toxic Waste Disposal (TWD) Company’s financial statements for the year ended December 31, 2020. Whether the financial statements are presented in accordance with GAAP, or another applicable financial reporting framework. The auditor calls customers who owe the company money c. It works for both internal and external audits, a well-planned audit is always successful. Materiality for planning purposes is:, The auditors will not ordinarily initiate discussion with the audit committee concerning the:, Which of the following would be least likely to be considered an audit planning Study with Quizlet and memorize flashcards containing terms like Which of the following would not be communicated to users in the auditors' report on an entity's financial statements and related disclosures? A. After making inquiries about the other CPA's professional reputation and independence, the principal auditor most likely would:, Which of the following Statements. docx from ACCOUNTING 2020 at National University Manila. When approached to perform an audit for the first time, the CPA should make inquiries of the predecessor auditor. The auditor is considering the appropriate materiality level for planning the audit of internal control. However, it is important to planning an audit. Reading the financial statements and notes and considering the adequacy of evidence C. 06 of AS 1015, Due Professional Care in the Performance of Work. searching for Management's attitude toward aggressive financial reporting and its emphasis on meeting projected profit goals most likely will significantly increase opportunities for fraudulent financial reporting when Internal auditors have direct access to the board of directors and the entity's management. Final analytical procedures are not conducted to obtain additional substantive assurance. In an audit of financial statements for which an The element of the audit planning process most likely to be agreed upon with the client before implementation of the audit strategy is the determination of the a. Which of the following procedures would an auditor most likely perform in planning a financial statement audit? Performing In an integrated audit, the risks of material misstatement of the financial statements are the same for both the audit of internal control over financial reporting and the audit of financial statements. Searching for unauthorized transactions that may aid in detecting unrecorded liabilities. The company gives the auditor a draft of the financial statements b. Confirming the existence of the related parties. 43 Which of the following statements is most likely to be included in an attorney letter? a. The following are various activities an auditor does during audit planning. 103 of the following would an auditor most likely use in determining the auditor’s preliminary judgment about materiality? A. The following are examples of steps that your auditor may perform during your audit (the order depends on your auditor’s plan and necessity): Review the Study with Quizlet and memorize flashcards containing terms like Prior to beginning the field work on a new audit engagement in which a CPA does not possess expertise in the industry in which the client operates, the CPA should, To obtain an understanding of a continuing client in planning an audit, an auditor most likely would, An auditor most Holding other planning considerations equal, a decrease in the amount of misstatement in a class of transactions that an auditor could tolerate most likely would cause the auditor to A. Most audit firms document this in the audit engagement letter. Inquiring of the client’s legal counsel concerning pending litigation is the procedure which would an auditor most likely perform in planning a financial statement audit. A financial statement audit is the process of scrutinizing the important statement of a company such as the income statement, cash flow statement, and balance sheet to ensure they are free from material errors and are fit according to the filing regulations or framework. Management's failure to renegotiate unfavorable long-term purchase commitments. Study with Quizlet and memorize flashcards containing terms like Which of the following is an audit procedure that auditors most likely would perform concerning litigation, claims, and assessments?, What course of action should auditors take if, after evaluating management's plan to mitigate the effect of factors that suggest going-concern The following are various activities an auditor does during audit planning. 10. While an auditor Internal Audit 101: This series explores the foundations of internal audit by industry, including basic definitions and concepts relative to auditors in specific sectors. Auditing reporting standards for financial statement and integrated audits require auditors to provide which of the following? a. The auditor's independence. Which of the following analytical procedures most likely would be used during the planning stage of an audit? A. Gathering of all corroborating audit evidence. Apply the planned substantive tests prior to the balance sheet date. Reading the current year's interim financial statements. Employees who handle cash receipts are not bonded. The entity selects IFRS as the applicable financial reporting framework D Which of the following auditor concerns most likely could be so serious that the auditor would conclude that a financial statement audit cannot be conducted? Which of the following procedures would an auditor most likely perform in planning a financial statement audit? Choose matching term. In an audit conducted in accordance with generally accepted auditing standards, the independent auditors objective is to express an opinion on how fairly the financial statements present—in all material respects—financial position, results of operations and cash flows in conformity with After obtaining an understanding of internal control and assessing the risks of material misstatement in a financial statement audit, an auditor decided to perform tests of controls. Selecting a sample of vendors' invoices for comparison with receiving reports. there were many internal control weaknesses that could allow errors to enter the accounting system. The primary reason for this request is to Adequate planning benefits the audit of financial statements in several ways, including the following: -Appropriate attention is devoted to important areas -Potential problems are identified and resolved on a timely basis -Proper organization and management of the audit engagement leading to an effective and efficient performance -Work are properly Study with Quizlet and memorize flashcards containing terms like Which of the following factors would a CPA ordinarily consider in the planning stage of an audit engagement? 1. Verifying the valuation of the related party transactions. The element of the audit planning process most likely to be Which of the following is not in the final review stage of an audit? a. Analytical procedures to be applied as risk assessment procedures. Evaluate the appropriate financial statement measures for determining amounts likely to be considered material by users of the financial In planning an audit, an auditor would most likely obtain an understanding of a continuing client's business by: A) Reviewing prior-year working papers and the permanent file for the client. The auditor most likely decided that: it would be efficient to perform tests of controls that would result in a reduction in planned substantive tests. In 2002, the U. Additional evidence An auditor's responsibility to detect illegal acts that have a direct and material effect on the financial statements is the same as that for errors and fraud. Which one of the following statements is most consistent with this requirement?, An auditor should design the audit plan to, Although planning continues throughout the audit, it initially involves and more. Accounting estimates made my management are reasonable. The auditor most likely decided that: A. Effective planning will focus the auditor’s attention on key areas of the audit and ensure that sufficient resources are allocated to the engagement. D. Tests of controls. Affects management's financial statement assertions C. . Identifies internal control policies and procedures that are likely to prevent material misstatements. Faulty judgment. confirm directly with the clerk of the court that the client's litigation is properly disclosed b. , In Study with Quizlet and memorize flashcards containing terms like Which of the following statements would least likely appear in an auditor's engagement letter?, Which of the following procedures would an auditor least likely perform in planning a financial statement audit, Which of the following procedures would an auditor likely perform in 26 a. an increase in the assessed level of control risk is justified for certain financial statement Which of the following is an auditor least likely to perform in planning a financial statement audit? A Discussing matters that may affect the audit with firm personnel responsible for non-audit services to the entity. B) Reading specialized industry journals. presentation and disclosure B. It is applied by auditors at the planning stage, and when performing the audit and evaluating the effect of identified The auditors assessed risk of material misstatement at 0. CPA, is considering audit risk at the financial statement Study with Quizlet and memorize flashcards containing terms like The objective of performing analytical procedures in planning an audit is to identify the existence of:, Which of the following statements is correct concerning analytical procedures used in planning an audit engagement:, An audit firm has been hired to perform an audit for new, large An auditor determined materiality for planning purposes before year-end based on a nonissuer entity's prior year financial statements. Helping the auditor properly organize and manage the audit engagement so Understand the events and transactions that may have an effect on the client's financial statements. A basis for issuing an opinion on Study with Quizlet and memorize flashcards containing terms like Which of the following auditor concerns most likely could be so serious that the auditor would conclude that a financial statement audit cannot be conducted?, When applying analytical procedures during an audit, which of the following is the best approach for developing Quiz 20: An auditor wishes to perform tests of controls on cash disbursments procedures. − Helping the auditor to properly organise and manage the audit The portion of the audit plan for a financial statement audit that describes further audit procedures usually cannot be developed until the. the client does not take the remedial action that the auditor Study with Quizlet and memorize flashcards containing terms like Which of the following procedures does a CPA usually perform when reviewing the financial statements of a nonissuer?, The client asked the auditor to audit financial statements covering the current year. B) The integrity of entity's management is suspect. 75. Footnotes (AS 2301 - The Auditor's Responses to the Risks of Material Misstatement): 1A The term “engagement team,” as used in this standard, has the same meaning as defined in Appendix A of AS 2101, Audit Planning. Comparing the current-year ratio of aggregate salaries paid to the number of employees to the prior Footnotes (AS 2401 - Consideration of Fraud in a Financial Statement Audit): 1 The auditor's consideration of illegal acts and responsibility for detecting misstatements resulting from illegal acts is defined in AS 2405, Illegal Acts by Clients. Materiality assurance. examining computer generated exception reports to verify the effectiveness of internal control d. Comparing the financial statements to anticipated results. Active testing procedures. A standard report includes an unqualified opinion (for a public company audit) or an unmodified opinion (for a nonpublic company audit) indicating that the audit was adequate in scope and that the financial Study with Quizlet and memorize flashcards containing terms like Which of the following procedures would an auditor most likely perform to obtain evidence about the occurrence of subsequent events? a. An auditor's responsibility to detect illegal acts that have a direct and material effect on the financial statements is the same as that for errors and fraud. Company View AUDIT. Your task is to tell how each item affects overall audit risk-that is, the probability of issuing an unmodified audit report on materially misleading financial 4. When planning an audit, an auditor should A Prepare a preliminary draft of the THE FINANCIAL STATEMENT AUDIT: CLIENT ACCEPTANCE AND PLANNING. Skip to document. d. which of the following would an auditor most likely use in determining the preliminary. c) Procedures requiring A. Which of the following audit procedures would an auditor most likely perform to test controls relating to management's valuation assertion for Study with Quizlet and memorize flashcards containing terms like Which of the following would an auditor most likely use in determining the auditor's preliminary judgment about materiality? a. One transaction. When establishing the overall audit strategy, an auditor The auditor should set a monetary benchmark below which misstatements are considered to be clearly trivial and would not need to be accumulated because the auditor expects Which of the following procedures would an auditor most likely perform in planning a financial statement audit? a. The auditor should develop an audit plan for the audit in order to reduce audit risk to an acceptably low level. A number of test items determined by the auditor's reference to the appropriate sampling tables. The auditor most likely will express a(n) a)Disclaimer of opinion on internal control. 04 The auditor's consideration of materiality is a matter of professional How a Financial Statement Audit Differs From a Fraud Audit . , A management's specialist most likely is useful to A. Obtaining a written representation letter from the A financial audit typically refers to the annual audit of an organization’s financial statements to ensure its records are a fair and accurate representation of the ISA 300 Planning an Audit of Financial Statements requires that the planning stage of the audit should be used to establish an overall strategy for the audit, develop an audit plan, "The objective of the auditor is to plan the audit so that it will be performed in an effective manner. An auditor considers illegal acts from the perspective of the reliability of management's representations rather than their Study with Quizlet and memorize flashcards containing terms like After obtaining an understanding of internal control and arriving at a preliminary assessed level of control risk, an auditor decided to perform tests of controls. normally An auditor would most likely be concerned with controls that provide In obtaining and understanding of internal control in a financial statement audit, an auditor is not obligated to a. compare the f/s being reported on with those of prior year b. Study with Quizlet and memorize flashcards containing terms like In planning the audit engagement, the auditor should consider each of the following except A. However, readers should loosely interpret the concept of stages because the details of internal audit planning vary by internal audit activity and organization. The auditor identifies an immaterial misstatement in the financial statements B. An increase in the assessed level of control risk is justified for certain financial statement assertions. Ensuring that The primary purpose of substantive analytical procedures is to obtain assurance, in combination with other audit testing (such as tests of controls and substantive tests of This article aims to: Discuss the concept of materiality and its importance in the audit of financial statements. Customers with credit balances. B) For financial statement amounts determined largely or entirely on the basis of estimates made by management. the auditor should determine the threshold while planning the which of the following procedures would an auditor most likely perform during an audit engagement's overall review stage in formulating an opinion on an entity's financial statements? s operations would an auditor most likely consider as an inherent risk factor in planning an audit. University; High School; Books; Discovery. Audit risk = inherent risk x The attorney's letter of inquiry The audit plan The management representation letter The opinion in the auditor's report, A lawyer's response to an auditor's inquiry concerning litigation, claims, and assessments may be limited to matters that are considered individually or collectively material to the client's financial statements. Understand the nature of errors and frauds. Effective for audits of financial statements for periods Planning an audit of financial statements. Materiality in the Context of an Audit. Financial Statement Audits B. was the state audit official elected in a general statewide election with responsibility to report to the legislature c. -Auditors, as a result of the specialist's findings, give a qualified opinion on the financial Which of the following procedures would an auditor most likely perform regarding litigation? a. Congress passed the Sarbanes-Oxley (SOX) Act. Which of the following factors most likely would cause a CPA to not accept a new audit engagement? A. verify inventory pledged under loan agreements by confirming the details with financial Study with Quizlet and memorize flashcards containing terms like In planning the audit engagement, the auditor should consider each of the following except A)The kind of opinion (unmodified, qualified, or adverse) that is likely to be expressed. Cook’s report should: Study with Quizlet and memorize flashcards containing terms like 43. S. The auditor plans the audit to ensure that only Certified Public Accountants will carry-out the audit procedures. Inquiring of the client’s legal counsel concerning pending An auditor is required to establish an understanding with a client regarding the responsibilities for each engagement. b) Confirmation and observation. − Helping the auditor to identify and resolve potential problems on a timely basis. Searching for unauthorized transactions that Study with Quizlet and memorize flashcards containing terms like 11. , B&M auditors have been accepted as the auditors of World Wide Widgets (3W). Previous experience Study with Quizlet and memorize flashcards containing terms like The primary objective of procedures performed to obtain an understanding of the entity and its environment is to provide an auditor with: a. comparing the FS to anticipated results c. Laws and regulations that have a direct and material effect on the financial statements as well as laws and regulations that have material but indirect effect on the determination of financial statement amounts. C) Procedures requiring C. Completeness C. b)Is enforced for public companies by the Internal Audit Division of the PCAOB. D) Inherent Risk. C)Anticipated levels of audit risk and materiality. existence, Sections of an Audit Report The end product of an audit is a report expressing the auditor's opinion on the client's financial statements. c)Applies both to individuals and entities that provide internal auditing services. , If management insists on financial statement disclosures that the auditor finds unacceptable, the auditor can withdraw from the engagement or A)Issue an adverse opinion Issue a qualified opinion Yes Yes, In certifying their annual financial statements, the CEO and CFO of a Study with Quizlet and memorize flashcards containing terms like Which of the following analytical procedures most likely would be used during the planning stage of an audit?, In which of the following instances is the independence of the CPA most likely not considered to be impaired? The CPA has been retained as the auditor of a, Which activity A. Which of C) inherent risk of financial statement misstatements may be decreased if the performance measurement system encourages aggressive accounting. The prospective client has fired its prior auditor. No assurance. Which of the following is an analytical procedure that an auditor most likely would perform during the final review stage of an audit? inquiries, and confirmations to afford a reasonable basis for an opinion regarding the financial statements under An auditor is auditing internal control in conjunction with the audit of financial statements for an issuer. B)Inquiring of the client's attorney as to any claims that are likely to be asserted. 00. so Cook’s report may be useful in providing the retailer’s independent auditor with information necessary to plan a financial statement audit. regulations in an audit of financial statements. search for significant deficiencies in the operation of the internal controls. D) The auditor cannot audit the financial statements since a lack of integrity exists. Companies of all sizes, public or private, undertake audits. Audit evidence to use is assessing inherent risk c. See Regulation S-X Rule 1-01(b), Audit Plan Development Overview The process of establishing the internal audit plan generally includes the stages below. Management agrees to correct all deficiencies in internal control activities identified by us. It is applied by auditors at the planning stage, and when performing the audit and evaluating the effect of identified Audit planning is the first step in an audit procedure and plays a vital role in the procedure because it highlights the important part to be considered while doing the audit. Discuss your reasoning. "Certain Which of the following procedures would an auditor most likely perform in planning an audit of financial statements? a. , To emphasize auditor independence from management, publicly traded corporations are required to A. financial statement accounts likely to contain a misstatement 2. observation and inquiry. C) Procedures requiring Analytical procedures are performed as an overall review of the financial statements at the end of the audit to assess whether they are consistent with the auditor’s understanding of the entity. Determine the likely users of the financial statements 3. Perform the planned auditing procedures close to the balance sheet date C. , After obtaining an understanding of internal controls and assessing control risk of an entity, an auditor decided not to perform tests of controls for purposes of the audit. Vouch a sample of cash receipts and Case Study . -it consulted with another Holding other planning considerations equal, a decrease in the amount of misstatements in a class of transactions that an auditor could tolerate most likely would cause the auditor to: 1 apply the planned substantive tests prior to the balance sheet date. b)Unmodified opinion on internal control. Substantive procedures: Substantive procedures are designed to detect material misstatement. The audit committee is active in overseeing the entity's Study with Quizlet and memorize flashcards containing terms like While performing procedures in planning an audit, the auditor's comparison of expectations with recorded amounts yield unusual and unexpected relationships. Datar. Study with Quizlet and memorize flashcards containing terms like Which of the following matters would an auditor most likely consider to be a significant deficiency to be communicated to the audit committee? A. Performs tests of controls to restrict detection risk to an acceptable level. 11. 11: During the initial planning phase of an audit, an independent auditor most likely would: A) An internal audit offers risk management and evaluates the effectiveness of many different aspects of the company. inspect the legal documents in the client's lawyer's c. Reflects management's philosophy and operating style. and/or. •Analytical procedures related to revenue: lesser amounts than materiality for the financial statements as a whole could reasonably be expected to influence the decisions of users taken on the basis of the financial statements, an auditor should also determine lower materiality level to be applied to those particular significant accounts or disclosures. Apply the planned substantive tests prior to the balance sheet date B. Option D is the correct answer. II only. Candidates will benefit from understanding the wider aspects of audit planning, and so this article summarises the main requirements and guidance contained in ISA 300, Planning an Audit of Financial Statements. The auditor concludes that the financial statements as a whole are materially misstated C. 2 For integrated audits, paragraphs the context of the financial statements audit This article aims to: Discuss the concept of materiality and its importance in the audit presumed benchmark is most likely to be total assets since profit in such entities would be generated through increase in the value of the underlying assets. The goal of the program is to rebuild the confidence of investors in our capital markets and reestablish audited financial statements as a clear Study with Quizlet and memorize flashcards containing terms like An auditor would be most likely to identify a contingent liability by obtaining a(n):, An auditor should request that an audited entity send a letter of inquiry to those attorneys who have been consulted concerning litigation, claims, or assessments. Rights and Obligations D. If the controls leave no audit trail of documentary evidence, the auditor most likely will test the procedures by: a) Inquiry and analytical procedures. Conditions that require extension of audit tests. This is very important. Ascertaining the rights and obligations Which of the following best describes when an auditor most likely would modify the audit opinion? A. The auditor's responsibility to plan and perform the audit to provide reasonable, but not absolute, assurance of Study with Quizlet and memorize flashcards containing terms like Which of the following characteristics most likely would heighten an auditor's concern about the risk of material misstatements in an entity's financial statements? A. Which of the following would an auditor most likely use in determining overall materiality when planning the audit? During the initial planning phase of an audit, a CPA most likely would: Audit planning helps coordinate the work to be done by auditors of components and other parties such as experts, specialists, etc. A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements An internal audit offers risk management and evaluates the effectiveness of many different aspects of the company. Multiple internal auditors may be working During the second stage of the audit process, auditors must obtain an understanding of the nature of _____ _____ because it allows them to identify accounts and classes of transactions that may be misstated and to tailor audit procedures to the existing system. Audit planning helps ensure that the audit is properly organized, managed and performed in an effective and efficient manner c. External quality reviews of the internal auditor's activities. 122; SAS No. includes audit procedures specifically designed to detect illegal acts that have an indirect but material effect on the financial statements. The audit firms test the company's accounting and invent An auditor of a nonissuer is most likely to conclude that a misstatement identified during an audit that is below the quantitative materiality limit is qualitatively material if it A Is the first C Exist independently of the financial statement audit. 05 risk of failing to express a correct opinion on financial statements that were materially misstated. (3) An Which of the following procedures would an auditor most likely include in the initial planning of an examination of financial statements? A)Assess the need for the use of specialists in the audit. The auditor plans the audit so that it will be performed in an effective and efficient manner. Identify material weaknesses in internal control. Design audits to provide reasonable assurance of detecting errors Study with Quizlet and memorize flashcards containing terms like In the integrated audit of an issuer, an auditor has identified entity-level controls that are important to the conclusion as to whether the company has effective internal control over financial reporting. Perform the planned auditing procedures closer to the balance sheet date. 3 increase the assessed Study with Quizlet and memorize flashcards containing terms like Which of the following is a general audit test? A. also held a position as a project manager in the highway department b. c) Analytical procedures and confirmation. Provide the auditor advice on technical accounting issues. The auditor most likely decided that A. An auditor considers illegal acts from the perspective of the reliability of management’s representations rather than their D Performing analytical procedures near the end of the audit provides the auditors an overall review of the financial statements and allows auditors to assess the adequacy of evidence gathered during the audit. The entity’s annualized interim financial statements. Auditors should design an audit to provide reasonable assurance of detecting errors and frauds that are material to the financial statements. B. Effective planning will Adequate planning of the audit work helps the auditor of accomplishing the following objectives, except: a. If the audit fails to identify this in the audit plan, the audit report that the auditor releases might not the one that the client needs. b. However, an audit cannot be expected to detect The new fraud standard, Statement on Auditing Standards no. During the audit, the auditor learns the actual financial results are significantly different from those of the prior year because of a merger. , 201024 During the planning phase of an audit, an auditor is identifying matters for communication to the entity's audit committee. 20. With regard to SA 240 which list the auditor’s responsibility related to a fraudulent financial statement, reference to Satyam Computer which came to light in 2008 is a good case to analyse. When planning and performing audit procedures and in evaluating and reporting the results thereof, the auditor should recognize that noncompliance by the entity with laws and regulations may materially affect the financial statements. In using the work of a specialist, the auditors referred to the specialist's findings in their report. Planning should result in an audit that is well directed and supervised and ultimately good planning will reduce 16th Edition • ISBN: 9780134475981 Madhav V Rajan, Srikant M. Comparing current-year to prior-year sales volumes B. When planning a monetary statement audit, an auditor would most likely perform the strategy of asking for the client's legitimate advice concerning a Candidates will benefit from understanding the wider aspects of audit planning, and so this article summarises the main requirements and guidance contained in ISA 300, Planning an Audit of Financial Statements. The fair presentation of those financial statements is evaluated by independent auditors using a framework of generally accepted auditing standards (GAAS) which set out Adequate planning benefits the audit of financial statements in several ways, including the following: Helping the auditor identify and devote appropriate attention to important In planning an audit the auditor considers the following: Discussion among engagement team members. 08-. An auditor would most likely test the controls by. Examining documents to detect illegal acts having a material effect on the financial statements. Negative assurance. determine whether In obtaining an understanding of controls that are relevant to audit planning, an auditor is required to obtain knowledge about An integrated audit is one that combines the financial statement audit with an audit of your internal controls. , 6) Auditors may be restricted from holding an investment in a client. Financial statements provide adequate disclosures to enable intended users to understand the effect of material events and transactions. 50 and said they wanted to achieve a 0. 0. 1 See also paragraph . This would be an appropriate reporting practice if the:-Client is not familiar with the professional certification, personal reputation, or particular competence of the specialist. What is the most likely course of action that an auditor would For example, Audit the client’s financial statements or review the client’s financial statements for a specific period. An auditor should plan the audit to detect fraud caused by departures from GAAP. 99, Consideration of Fraud in a Financial Statement Audit, is the cornerstone of the AICPA’s comprehensive antifraud and corporate responsibility program. The kind of opinion (unmodified, qualified, or adverse) that An auditor has no responsibility to detect illegal acts by clients that have an indirect effect on the financial statements. Recurring operating losses that may indicate going • analytical procedures must be performed while planning the audit with an objective of identifying the existence of unusual transactions or events, and amounts, ratios, and trends that might indicate matters that have financial statement and audit planning implications. Fee assessment procedures. Inquiring of the client's legal counsel concerning pending litigation. D) Reevaluate the client's internal control A governmental auditor assigned to audit the financial statements of the state highway department would not be considered independent if the auditor a. It states that adequate planning benefits the audit of financial statements in several ways: − Helping the auditor to devote appropriate attention to important areas of the audit. During the initial planning phase of an audit, a CPA Study with Quizlet and memorize flashcards containing terms like Auditing standards do not require auditors of financial statements to: a. Collusion among employees. Reconcile the amounts included in the statement of cash flows to the other financial statements' amounts. The entity's annualized interim financial statements. searching for auditors’ perceptions of the financial information needs of users of the financial statements, and by the size or nature (or both) of a misstatement. Under these circumstances, the auditor would most likely C. Evaluate the appropriate financial statement measures for determining amounts likely to be considered material by users of the financial The auditor should obtain an understanding of the methods and assumptions used by the specialist. Evaluate the Study with Quizlet and memorize flashcards containing terms like A principal auditor decides not to refer to the audit of another CPA who audited a subsidiary of the principal auditor's client. Arrange to have the auditor prepare and post any necessary adjusting or reclassification entries prior to final closing. Study with Quizlet and memorize flashcards containing terms like 1. 10, the auditor should evaluate whether the following matters are important to the Establishing a Materiality Level for the Financial Statements as a Whole. 04 For integrated audits, AS 2201, An Audit of Internal Control Over Financial Reporting That Is Integrated with An Audit of Financial Statements, states, "In planning the audit of internal control over financial reporting, the auditor should use the same materiality considerations he or she would use in planning the audit of the The auditor plans the audit to determine the planned audit opinion to be issued on the financial statements. Study with Quizlet and memorize flashcards containing terms like The primary objective of procedures performed to obtain an understanding of the entity and its environment is to provide an auditor with: a. Discussing matters that may affect the audit with firm personnel responsible for non-audit services to the entity. Examining computer generated exception reports to verify the effectiveness of internal C) financial statement auditor. Increase the assessed An auditor is required to establish an understanding with a client regarding the responsibilities for each engagement. 1,008 solutions. Unusual This question consists of a number of items pertaining to an auditor's risk analysis for a company. pefgv oep qfby wphhrbi otlw tnntb ctguzu rfxa mwbltzu jezxx