pcaob inspections are conducted by quizlet

0000017578 00000 n the possible concentration of control activities.C. Compare financial information with nonfinancial operating data. 52) Which of the following best describes the main reason independent auditors report on managements financial statements?A. 0000004771 00000 n guided by standards similar to GAAS.B. Another role is to write those rules. 761 0 obj <> endobj 144) Which of the following is an example of the appropriate implementation of a system of quality control?A. The PCAOB is the body with formal authority for the creation of auditing standards for the audits of public entities.D. PCAOB inspection teams review a sample of audit engagements conducted by the firm as well as the firm's system of quality control. Analytical procedures performed by auditors on the clients trial balanceD. This corresponds with a lower scoping materiality as well. make a complete examination of Camdens records and verify all of Camdens transactions. Request a list of related parties from management.B. PCAOB was formed in direct response to the many accounting scandals from that era that, collectively, shook investor confidence and broke the public's trust in many publicly traded companies. Each year, we publish a summary reportthat provides information on the inspections conducted PDF Guide to PCAOB Inspections - Center for Audit Quality make inquiries of the predecessor auditor after obtaining the consent of the prospective client. Auditors direct personal knowledge, obtained through observation and inspection, is of higher quality than information obtained indirectly from independent outside sources. Independent professional services that report on specific written management assertions, Independent professional services that improve the quality of information for decision makers. The names of the financial statements audited, An indication that all necessary disclosures have been presented, 139) When applying analytical procedures during an audit, which of the following is the best approach for developing expectations?A. 51) Which of the following is not an ASB assertion about inventory related to presentation and disclosure?A. Therefore, while the concurring partner is still meant to bolster the integrity of the process, their review is much lighter and non-evasive. to provide constructive suggestions to the client for improving its internal control.C. evaluate the quality of the internal auditors working paper documentation and their recent audit recommendations. The auditor will typically have a lower materiality threshold due to the public nature of the company and the involved risk. assigning management responsibilities in such a manner that commercial considerations are the firms top priority.B. potentially unrecorded items to the financial statements.C. regulation of firms that audit public entities.C. significant issues influencing the decision to withdraw from the engagement.D. In performing a regular inspection, the staff of the Division of Registration and Inspections and any other person authorized by the Board to participate in the inspection shall take such steps, and perform such procedures, as the Board determines are necessary or appropriate. Consideration of the ability of the entitys internal control to prevent or detect errors, Determination of materiality levels for use during the audit. Auditing Standards Board.B. Independent professional services that improve the operations of the clientD. the prospective clients consent to make inquiries of the predecessor, if any. 0000006410 00000 n By far the older of the two, AICPA was founded in the 1940s to help auditors better perform their tasks, the more modern set of their self-regulatory audit standards taking root in the 1970s. An auditor on the engagement has a distant relative who is employed by a vendor that does a significant amount of business with clients.B. Comparing a list of vendor addresses to employee address filesB. The auditor must obtain sufficient appropriate evidence about whether material misstatements exist.B. design special substantive tests to compensate for the lack of industry expertise. Relevant ethical requirements, 74) Which of the following is not considered a type of audit evidence?A. trial balance to the subsidiary ledger.D. 40) According to PCAOB Auditing Standard No. Reevaluating the clients internal control environmentC. 14) Before accepting an engagement to audit a new client, an auditor is required toA. disclaim liability.B. the basis for any conclusions related to this decision to withdraw from the engagement.C. Standards of the PCAOB: Scope only; GAAP: Opinion onlyB. Make inquiries of the clients lawyer concerning pending litigation.C. Quiz 4, 344 Flashcards | Quizlet review the predecessors audit documentation if the audit is to be in accordance with GAAS. the risk that auditors will not properly control the staff on the audit engagement.B. 5 (AS 5), the auditor should identify significant accounts and disclosures and their relevant assertions. the prospective clients signature to a written engagement letter.D. Decisions that are time-sensitive. independence. Arrangements regarding fees and billingC. Audit Evidence, Yes or no? Audit documentation is the property of the client, and sufficient and appropriate copies should be retained by the auditor for at least five years.B. 29) Which of the following factors most likely would cause an auditor not to accept a new audit engagement?A. software packages are always inexpensive.C. Identifying reasonable explanations for unexpected differences before talking to client managementD. 60) Which of the following audit procedures would an auditor most likely perform to test controls relating to managements valuation assertion for accounts receivable?A. a large number of CAATs packages are currently available. relevance as well as the reliability of information.D. Auditing Standards for the audits of public entities.B. Now well get off of our soapbox and go back to providing you, our financial brethren, guidance and wisdom for your journey down the audit road. ensure a clear contractual understanding of the services to be provided by the CPA.D. Multiple choice question. External-internal. Identification of working capital deficiencies. Select more effective substantive tests.B. 111) A practitioner is engaged to express an opinion on managements assertion that the square footage of a warehouse offered for sale is 150,000 square feet. PDF SPOTLIGHT 136) Which of the following is a correct statement regarding the nature and timing of communications between an accounting firm performing an initial audit of an issuer and the issuers audit committee?A. maintain public confidence in the profession. The Sarbanes-Oxley Act requires the PCAOB to periodically inspect firms that audit public companies for compliance with the securities laws and with the PCAOB's rules and auditing standards. 79) A CPA firm would provide itself reasonable assurance of meeting its responsibility to offer professional services that conform with professional standards byA. seek the SECs permission to accept the engagement if Blakeney is publicly owned.C. prepare spreadsheets.C. The practitioner should refer to which of the following sources for professional guidance?A. Inspection of bank statements obtained directly from the clients financial institutionC. Economic transactions that are numerous and complexC. 0000056579 00000 n Reviewing prior year audit documentation and the permanent file for the client, Reviewing prior year audit documentation and the permanent file for the client. the applicable financial reporting framework (i.e., GAAP in the United States). The ownership of a financial interest in a client by the auditor, The auditors objectivity and ability to act impartially toward the client. peer review of member firms of the Private Companies Practice Section.B. there are time delays in processing transactions in a batch system. managements clear and consistent demonstration of its own commitment to quality control and high-quality work. transactions that affect all accounts in that particular group. They play a critical role in the industry and create balance and trust within our financial systems. What else is important to know about this process?C. Statements on Auditing Standards for the audits of nonpublic entities.D. Identify audit evidence relevant to the verification of assertions management makes in its unaudited financial statements and notes.B. Compliance with company policiesD. observation of inventory accounts.C. Perform cutoff tests of cash receipts and disbursements.D. Inspections do not involve a review of all aspects of a firm's quality control system. verify that the internal auditors assessment of control risk is comparable to the independent auditors assessment.C. professional judgment. Economic and efficient use of resourcesB. Assess the control risk for sales and collections. 0000056618 00000 n 128) The four basic requirements for becoming a CPA in most states areA. each account balance will be tested under either tests of controls or tests of transactions.C. 21) When testing the completeness assertion for a liability account, an auditor ordinarily works from theA. Things that look, sound, or even act the same often have significant differences between the margins. Unmodified opinion or disclaimer of opinionB. consists of representations made by the clients officers, directors, owners, and employees.D. consider the policies that prohibit the internal auditors from auditing areas where they were recently assigned.B. How frequently are these evaluations conducted? An indication that all necessary disclosures have been presentedC. reduce the level of required tests of controls to a relatively small amount.B. specific actions performed by auditors during an examination.B. automatic initiation and execution of transactions.B. access information stored on computer files even with a limited understanding of the clients hardware and software features. The auditor is discovered to own a financial interest in the entity.B. Assessment of inherent risk, no; assessment of control risk, yesD. become independent in fact.B. Standards issued by the Auditing Standards Board after 2003 apply to the audits of both public and private entities. Reliability of audit evidence refers to the amount of corroborative evidence obtained.B. discussions with firm personnel.D. Vouching selected entries in the accounts payable subsidiary ledger to purchase orders and receiving reports, Vouching selected entries in the accounts payable subsidiary ledger to purchase orders and receiving reports. Specific auditing procedures designed to determine the effectiveness of the entitys internal control over financial reportingC. firms only firms and individual CPAs Auditing standards for both public and private entities must be formally approved by the Securities and Exchange Commission.C. Inspect the entitys reports of prenumbered shipping documents that have not been recorded in the sales journal. Receiving confirmation from third parties as to the existence of securities is more reliable than the auditors personal inspection of those securities.C. Obviously, along with inherently higher standards, a PCAOB audit is more stringent, meticulous, and casts a wider net due to the lower materiality, all with an accelerated timeline. financial decisions are important to investors and users.C. Financial Viability of firm, Yes or No? PCAOB provides each firm with issuer audit clients inspected with a report, which summarizes any deficiencies identified through the inspections process. Standards of the PCAOB: Introductory only; GAAP: All paragraphsC. establishing an understanding with each client concerning individual responsibilities in a signed engagement letter.C. transactions that affect all accounts in that particular group.C. Topic 5 - Acct 441 Flashcards | Quizlet In 2018, the Public Company Accounting Oversight Board ("PCAOB" or "the Board") conducted an inspection of the registered public accounting firm Baker Tilly US, LLP ("the Firm") pursuant to the Sarbanes-Oxley Act of 2002 ("the Act"). The entitys trial balanceD. assessing the risk that errors and fraud may cause the financial statements to contain material misstatements. construct parallel simulations to test the clients computing system.D. 0000023704 00000 n A level of performance that would be exercised by reasonable auditors in similar circumstances is referred to as professional skepticism. Obtain an aged trial balance of the accounts receivable. Inspections | PCAOB discuss the management representation letter with the prospective clients audit committee.B. 108) For which of the following judgments may an independent auditor share responsibility with an entitys internal auditor who is assessed to be both competent and objective?A. provide tax advice or prepare a tax return based on financial information the CPA has not audited or reviewed. Evidence drawn from a document prepared by the client is more reliable than evidence drawn from a document prepared by an external party that is forwarded to the auditor by the client.B. The integrity of entitys management is suspect. PDF PCAOB 2020 Inspection Procedures Pursuant to PCAOB Rule 4009, inspection staff must recommend to the Board that it determine that a firm either has or has not satisfactorily addressed any quality control criticisms within the relevant . Chapter 2 Flashcards | Quizlet 165) 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? Assurance of the consistent application of correct accounting proceduresB. Scanning accounts receivable balances for amounts over the credit limit, Comparing a list of vendor addresses to employee address files. assemble prospective financial statements based on the assumptions of the entitys management without expressing any assurance.D. significant effects the decision to withdraw from the engagement could have on the firm. 116) 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?A. an assessment of fraud risk factors likely to cause material misstatements.B. Statements of Auditing Standards issued by the ASB, Yes or No? regulation of firms that audit public entities. issuance of statements by the Financial Accounting Standards Board.D. PDF Report on 2018 Inspection of Baker Tilly US, LLP guidelines for the general conduct of audit engagements. What is the PCAOB? Auditing Standards & Inspection Reports Youd also be correct in surmising that an AICPA audit, given its auditor-friendly roots, has a distinctly less stringent focus. education, the CPA Examination, experience, and a state certificate.C. 4) An auditor would least likely use computer software toA. Firm-wide policies to evaluate the financial and professional relationships of its professionalsB. a decrease of management supervision of operations. The PCAOB inspects registered public accounting firms to assess compliance with the Sarbanes-Oxley Act, the rules of the Board, the rules of the Securities and Exchange Commission, and professional standards, in connection with the firm's performance of audits, issuance of audit reports, and related matters involving U.S. public companies, othe. Detection of fraudC. accounting records to the supporting evidence.B. 77) When assessing internal auditors objectivity, an independent auditor shouldA. Susceptibility of the account balance to misstatement, Yes or No? hbspt.cta._relativeUrls=true;hbspt.cta.load(2102630, '72bcbc91-c14c-41eb-8991-37eef27c9dda', {"useNewLoader":"true","region":"na1"}); Therefore, the focus of a PCAOB audit has a distinct bent towards a companys stakeholders and providing the investing public with clarity, accuracy, and accountability. Under these circumstances, which party should initiate the communications between Hill and Post?A. The nature of many audit procedures is such that they cannot always be relied upon to detect misstatements. Verbal statements made by client personnelB. 104-2018-111A (Includes portions of Part II and Appendix B of the full report that were not included in PCAOB Release No. 142) Which of the following presumptions is correct about the reliability of audit evidence?A. significant consultations related to the decision to withdraw from the engagement.B. 80) The standard auditors report refers to standards of the PCAOB and GAAP in which paragraph?A. The management that prepares the statements may have a poorly designed system of internal control.D. Evidence is considered of higher quality when gathered prior to year-end than following year-end. Governmental Auditing Standards for the audits of governmental entities.C. 0000005873 00000 n Read sales contracts for evidence of customers rights of return or price allowance terms.D. obtaining predecessor audit documentation. the Federal Bureau of Investigation (FBI). consists of documents that are produced, used, and stored within the clients information system. The PCAOB issues auditing standards for the audit of public entities, subject to SEC approval.C. Statements on Standards for Accounting and Review Services, C. Statements on Standards for Attestation Engagements, D. Statements on Standards for Consulting Services, Statements on Standards for Attestation Engagements. Assessment of inherent risk, yes; assessment of control risk, yesB. attempt to communicate with the predecessor auditor before accepting the engagement.D. 167) Which of the following matters does an auditor usually include in the engagement letter?A. In fact, its very name and founding speak volumes -- the Public Company Accounting Oversight Board, founded in 2002 as a part of Sarbanes-Oxley. 160) Which of the following audit procedures would an auditor most likely perform to test controls relating to managements valuation assertion for accounts receivable? The Sarbanes-Oxley Act authorizes the PCAOB to inspect registered firms for the purpose of assessing compliance with certain laws, rules, and professional standards in connection with a firm's audit work for public company and broker-dealer clients. maintaining a comprehensive system of quality control that is suitably designed in relation to its organizational structure.D. financial statements to the potentially unrecorded items.D. Credit salesB. The opinion assesses the financial statements against an applicable financial reporting framework.C. 20) Auditors should design the written audit plan so thatA. spreadsheet analysis.D. access client data files.B. specific assertions under audit.C. <<6AAA20DA525C6C41918AD95C5FFC5644>]/Prev 554991/XRefStm 2034>> To be reliable, audit evidence should be convincing rather than persuasive.C. Inventory is properly stated at its cost on the balance sheet. quality control.C. MonitoringC. Net realizable value of inventoryC. obtaining an engagement letter.D. 0000028475 00000 n 0000005287 00000 n 46) The essential advantages of a computer-assisted audit techniques (CAATs) package would not include the fact thatA. supporting evidence to the accounting records. The auditor must express an opinion in accordance with the auditors findings.C. The report specifically identifies the financial statements and years examined by the auditor. As such, a PCAOB audit will have two opinions, one for financial statements and the other, ICFR, regarding your control environment and effectiveness. financial statement assertion.D. Assessment of inherent riskB. Know what youre up against, the level of scrutiny to expect, and never forget that, like it or not, the audit process is in place for a greater good. Attending on-the-job trainingC. Attesting to the fairness of the financial statements, Attesting to the fairness of the financial statements. managements clear and consistent demonstration of its own commitment to quality control and high-quality work.C. the auditors evaluation of the audited companys internal control. Management fails to modify prescribed controls for changes in conditions. Assessment of inherent risk, no; assessment of control risk, no, Assessment of inherent risk, no; assessment of control risk, no, 109) The Sarbanes-Oxley Act of 2002 requires that the key company officials certify the financial statements. What are the major characteristics of PCAOB inspections? 97) Which of the following is a substantive test that an auditor most likely would perform to verify the existence and valuation of recorded accounts payable?A. 2) Which of the following procedures would a CPA most likely perform in the planning phase of a financial statement audit?A. Both firm A and firm B will be inspected annually. Risk assessment, yes or no? Comparing receivable turnover rates to industry statistics for reasonablenessC. Misstated account balances may be corrected as the result of the independent audit work.C. PCAOB inspection teams review a sample of audit engagements conducted by the firm as well as the firms system of quality control.C. The chair of Mondays board of directors, 73) Which element of a system of quality control strives to provide the firm with reasonable assurance that its policies and procedures are operating effectively?A. Compare financial information with nonfinancial operating data.B. The report provides a detailed listing of major auditing procedures performed during the examination. is obtained directly from third parties independent of the client. 72) C. Hill, CPA, has been retained to audit the financial statements of Monday Co. Mondays predecessor auditor was K. Post, CPA, whom Monday has notified by that its services have been terminated. another public accounting firm selected by the firm being inspected.B. they have read the financial statements.D. Accountants need not look any further than AICPA and PCAOB audits for proof of this time-tested dynamic -- and it pays to understand those important differences. The Basics of Inspections page offers greater detail on our inspections, including answers to common questions such as how audits are selected and what an inspection may entail. 32) The characteristics that distinguish computer processing from manual processing would not includeA. Which of your employees is a fraudster? Continuing professional education to ensure that professionals knowledge keeps pace with changes in the accounting and auditing professionD.

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