early appointment of the independent auditor will enable

d. the predecessor believes that the client lacks integrity. The new audit clients refusal to allow thiscommunication to occur would impact Rodgers decision concerning: A) the auditor's ability to design audit tests. ], fn* [Title amended, effective for engagements for periods ending on or after June 15, 1998, by Statement on Auditing Standards No. c. statistical risk. Auditing evidence is information collected to review a company's financial transactions, internal control practices, and other items needed for an audit. C) Special care is required in assigning experienced staff. If an auditor is requested to perform nonaudit services for a public company audit client, who is responsible for agreeing to those services with the audit firm? [Paragraph added, effective for engagements for periods ending on or after June 15, 1998, by Statement on Auditing Standards No. (1) Estimate of hours required to complete audit, (2) Dollar estimate of fees to be billed to the client, (1) The financial statements are the responsibility of the companys management, (2) Ratios to be used by the auditor in the planning phase. a. 15) Jennings and Company has repositioned the firm'sbusiness strategy from the basis of competing on costs to competing on productdifferentiation. a. 5) An official record of meetings of the board of directorsand stockholders is included in the corporate: 6) Related party transactions may be indicated when anothercompany: A) Subsidizes certain operating expenses of the company, B) Purchases its securities at their fair value, D) Has had a distributor relationship with the company for10 years. An application for appointment of a personal representative to succeed a personal representative appointed under a different testacy status shall refer to the order in the most recent testacy proceeding, state the name and address of both the person whose appointment is sought and of the person whose appointment will be terminated if the application is granted, and describe the priority of the applicant. b. a proper study and evaluation of internal control to be performed. In such instances, before accepting the engagement, he should ascertain whether circumstances are likely to permit an adequate audit and expression of an unqualified opinion and, if they will not, he should discuss with the client the possible necessity for a qualified opinion or disclaimer of opinion. However, many in the business world are against SOX, seeing it as a politically motivated move leading to a loss of risk-taking and competitiveness. Every application for informal probate of a will or for informal appointment of a personal representative, other than a special or successor representative, shall contain the following: (a) A statement of the interest of the applicant. 14, Evaluating Audit Results, states that a misstatement can result from errors or fraud. Test Prep. Those standards require that the auditor: To the audit committee - all significant deficiencies and material weaknesses identified during the audit. c. The clients chief financial officer. By clicking Accept All Cookies, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts. c. Determine the clients reason for an audit. 9) Which of the following statements is true regardingcommunications between predecessor and successor auditors? The auditor is responsible for conducting the audit in accordance with the standards of the Public Company Accounting Oversight Board. c. Special care is required in assigning experienced staff. Auditors follow the generally accepted auditing standards (GAAS) in such projects. If the decedent was a nonresident, any person who is qualified under paragraphs 1 through 4 of this subsection or a personal representative appointed in the state of domicile or the nominee of such personal representative. 4) The auditor determines that Mathews Company occupies the3rd floor of an office tower for which it pays norent. B) determine the reliance on the company's internal controlsystems for financial reporting. Sometimes the audit limitations present in such circumstances can be remedied. A measure of how willing the auditor is to accept that the financial statements may be materially misstated after the audit is completed and an unqualified opinion has been issued is the: A) inherent risk. A measure of the auditor's assessment of the likelihood that there are material misstatements in an account before considering the effectiveness of the client's internal control is called: Which of the following is not correct regarding the communications between successor and predecessor auditors? B) Audit risk cannot be quantified with certainty. Which is usually included in an engagement letter? Planning Appointment of the Independent Auditor.05 Early appointment of the independent auditor has many advantages to both the auditor and the client. An adult child, a parent, a brother or a sister of the decedent. B) Analytical procedures must be used throughout the audit. A) Analytical procedures may be used in evaluating balancesin the testing phase as long as the auditor also uses them in assessing thegoing concern assumption. Sufficient appropriate audit evidenceto be obtained. b. document the terms of the engagement in writing to minimize misunderstandings. If an auditor is requested to perform nonaudit services for a public company audit client, who is responsible for agreeing to those services with the audit firm? d. reference to managements responsibility for the financial statements. 7) Which one of the following is not an inherent riskfactor in the financial statements? B) Request that bank balances be confirmed. Which of the following would not be found in the corporate charter? d. inherent risk. d. it is required by generally accepted accounting principles. d b. a proper study and evaluation of internal control to be performed. An auditor who accepts an audit engagement and does not possess the industry expertise of the business entity should. 19) Early appointment of the independent auditor willenable: A) a more thorough examination to be performed. A person who is an heir of the decedent. d. There must be communication between the predecessor and successor if the successor is to accept the engagement. 4) Rodgers CPA has requested permission to communicate withpredecessor auditor in order to review certain workpapers for high riskaccounts for a new audit client. Understand the clients business and industry, C. Perform preliminary analytical procedures. fn2 The objectives of certain engagements may differ. d. To help keep audit costs reasonable. b. this may reveal whether transactions would have taken place if the parties had been unrelated. The Securities and Exchange Commission today announced that it adopted final amendments to certain auditor independence requirements in Rule 2-01 of Regulation S-X. A successor auditor may perform which of the following for a new audit client? The audit standards were modified in 2007, reducing costs for many firms by 25% or more annually. B) a proper study and evaluation of internal control to beperformed. 5. Generally, auditors assess inherent risk as moderate for related party transactions because they expect clients to be aware of their scrutiny of such transactions. D) Matthews Company is engaging in fraudulent activities. D) financial risk Click the card to flip B Click the card to flip 1 / 81 Flashcards Learn [Paragraph added, effective for engagements for periods ending on or after June 15, 1998, by Statement on Auditing Standards No. 83. If, in an integrated audit of financial statements and internal control over financial reporting, the auditor concludes that he or she cannot express an opinion on internal control over financial reporting because there has been a limitation on the scope of the audit, he or she should communicate, in writing, to management and the audit committee that the audit of internal control over financial reporting cannot be satisfactorily completed. D) CPA Firm's potential ongoing revenue from the auditclient. The clients chief executive officer. B) help the successor auditor to evaluate whether to acceptthe engagement. To evaluate a specialists work the auditor must himself/herself be considered a specialist. Copyright 2003-2023 Public Company Accounting Oversight Board. Early appointment of the independent auditor will enable A. a. D) performance of substantial parts of the examination isnecessary at interim dates. c. Chairman of the board of directors. When are auditors likely to encounter judgment problems in the use of analytical procedures? Discuss the factors an auditor should consider before accepting a company as an audit client. Copyright © 2006- , All Rights Reserved. b. Auditing standards emphasize the need for auditors to develop and use expectations. A person who is an heir of the decedent. 3) Which of the following statements is not correct withrespect to analytical procedures? 22) Which is usually included in an engagement letter? 2. The duties and powers of the corporate officers. Board of directors representative. The corporate charter is granted by the federal government and is required to recognize the corporation as a separate entity. d. ensure the predecessor collects all unpaid fees prior to a change in auditor. D) understand the client's business and industry and toindicate possible misstatements. 4) When performing planning analytical procedures . An auditor should examine minutes of the board of directors' meetings. C) The predecessor should communicate with the successoronly if the client is public. C) Whenever the auditor fails to consider the patternreflected by several unusual fluctuations when trying to explain what causedthem. Acceptable audit risk is a measure of the auditors willingness to accept that the financial statements do not contain material misstatements after the audit is completed and a qualified audit report has been issued. b. of the lack of independence between the parties. Informal probate or informal appointment may be made only by application of one of the following: 1. M a n i l a AUDITING THEORY AUDIT PLANNING Related PSAs: PSA 300, 310, 320, 520 and 570 Appointment of the Independent Auditor. Which of the following is correct with respect to the use of analytical procedures? An understanding of a clients business and industry and knowledge about operations are essential for performing an adequate audit. An adult child, a parent, a brother or a sister of the decedent. D) Reconciling fixed asset dispositions with the fixedasset ledger . Which of the following is not typically included in initial audit planning? c. transactions may have been consummated on terms equivalent to arms-length transactions. Early appointment of the independent auditor will enable: challenging a. a more thorough examination to be performed. Huge accounting firms, seeking to become one-stop shopping centers for clients, wish to add legal services to the audit, tax, information consulting, financial planning, litigation support, and . B) The auditor musthave adequate technical training and proficiency to perform the audit. 30, AU Section 711 - Filings Under Federal Securities Statutes, AU Section 9711 - Filings Under Federal Securities Statutes: Auditing Interpretations of Section 711, AU Section 722 - Interim Financial Information, AU Section 801 - Compliance Auditing Considerations in Audits of Governmental Entities and Recipients of Governmental Financial Assistance, AU Section 901 - Public Warehouses-Controls and Auditing Procedures for Goods Held. 10) Which of the following best describes the coporateminutes of an entity? 1) During audit planning, the auditor uses analyticalprocedures primarily to: A) identify weaknesses in internal control. c. The types of business activity that the corporation is allowed to conduct. d. acceptable audit risk does not impact on the amount of evidence which must be accumulated. Forty-five days after the death of the decedent, any creditor. Ordinarily, the auditor should review and abstract copies of contracts during the later stages of an audit. 10, Supervision of the Audit Engagement. Early appointment of the independent auditor has many advantages to both the auditor and his client. c. sufficient competent evidential matter to be obtained. D) a more efficient examination to be planned. Whenever the auditor allows unaudited balances to unduly influence his/her expectations of current balances. D is corrent because the early appointment of the independent auditor enables the auditor to plan his/her work so that it may be done expeditiously and to determine the extent to which it can be done before the balance sheet date. 16-246 (C); 16-542 (A). A person who is an heir of the decedent. D) first inform management that an unqualified opinioncannot be issued. Which of the following normally signs the engagement letter for an audit of a private company? D) it is required by generally accepted accountingprinciples. (e) A statement indicating whether the applicant has received a demand for notice, or is aware of any demand for notice, of any probate or appointment proceeding concerning the decedent that may have been filed in this state or elsewhere.

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