Audit - easy questions

What are the 3 forms of attestation?

examination, Review and Agreed upon procedures

What are the 4 types of audits?

Operational, compliance, integrated, financial

List the 4 major organizations that govern the accounting industry.

SEC, AICPA, PCAOB, State board

What are the normal requirements to be a CPA?

pass the 4 sections of the exam, certain amount of experience,
ethiical, certain level of education

List 4 other Professional services done by accounting firms.

Tax, Consulting, Fraud investigation, personal financial planning,
litigation support, Accounting and review

What are the Financial statement assertions?

completeness, cutoff, valuation allocation and accuracy, existence
or occurrence, rights and obligation, presentation and disclosure

Assertions: Existence or Occurence

Assets, liabilities, and equity interests exist and recorded
transactions have occurred

Assertions: Rights and obligations:

-The company holds rights to the assets, and liability are the
obligations of the company
Assertions- Completeness
All assets, liabilities, equity interests, and transactions that should
have been recorded have been recorded

Assertions:Cutoff
Transactions and events have been recorded in the correct
accounting period

Assertions- Valuation, Allocation and Accuracy

All transactions, assets, liabilities and equity interests are included
in the financial statements at proper amounts

Assertions- Presentation and disclosure

Accounts are described and classified in accordance with generally
accepted accounting principles, and financial statement disclosures
are complete, appropriate, and clearly expressed

List the 6 steps of the audit process

*Plan the audit.
*Obtain an understanding of the client and its environment including
internal control.
*Assess the risk of misstatement and design further audit
procedures.
*Perform further audit procedures.
* Complete the audit.
* Form an opinion and issue the audit

Rule of thumb for materiality?

5-10% of NIBT
.5-1% of total assets
.5-1%of total revenue
1% of total equity
What are tracing and vouching?
Vouching- Ledger to source
Tracing- Source to ledger

What are the 4 main types of control activities?

1.Business performance review
2. Info processing controls
3. Physical control
4. Separation of duties

List the various types of controls

Preventive, Detective, Corrective, Complimentary, Redundant,
Compensating

What are the complements of Internal control?

C- Control activites
R- risk assessment process
I- information systems
M- monitoring of controls
E- Control environments

How does a control failure affect your audit plan?

increases the substantive testing

Who assist companies in monitoring their own controls?

internal audit department

What is an analytical procedure?

An evaluation of financial info to see relationships between financial
and nonfinancial data
List out 5 business process or transactional cycles.
Revenue, procurement, inventory, fixed assets, period end
reporting, payroll

What are the 3 types of control weakness?

less than significant Deficiency, Significant deficiency, material
weakness

At what level is risk evaluated at?

Financial statement and assertion levels

What are the differences between unconditional responsibility and

presumptively mandatory responsibility?
for unconditional res. auditors must fulfill responsibilities in all cases
where such requirements are relevant. Words such as must and
shall indicate responsibility. under pms. should comply with
requirements unless its otherwise justified

What are the 2 types of peer review?

System review, Engagement review

List the 5 elements needed in a work paper

Header, preparer's initials and date, index, tick mark, conclusion,
cross-reference, reviewers initials date and initials, evaluation of
audit worked performed

What are the 4 types of audit tests

inquiry, inspection, observation, re performance

What are the 4 types of audit opinions?

unqualified-type that client wants.
qualified- you issue on financial statements when there is some
limitation on the scope of their audit, or when an item in the financial
statements is not presented in accordance with applicable acc
procedures.
adverse- states that the financial statements are not fairly
presented. disclaimer of opinion- auditors issue if they are unable to
determine the overall fairness of the financial statements

Describe the ranges of reliability of audit evidence with examples

Very reliable- External, from independent sources outside the client
company. When its generated internally through a system of
effective controls, when it is obtained directly from the auditor.
less reliable- when auditor makes inquiries of client personnel and
inspect documentation of the operation

What are the components of audit risk?

Inherent, controls, detection, risk

How do you gain and understand internal controls?

Questionnaire, flow charts, observations, interviews

To rely on the work of others, internal audit must be what?

Competent and objective