Audit CPA Exam Questions and answers, 100% Accurate. Graded A+
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Course
CPA
Institution
CPA
Audit CPA Exam Questions and answers, 100% Accurate. Graded A+
Management is responsible for - -Financial statements - the preparation and fair presentation
Internal controls - design, implementation and maintenance relevant to the FS
Providing auditor with access to info and persons nee...
Audit CPA Exam Questions and
answers, 100% Accurate. Graded A+
Management is responsible for - ✔✔-Financial statements - the preparation and fair presentation
Internal controls - design, implementation and maintenance relevant to the FS
Providing auditor with access to info and persons needed to complete the audit
The preparation and fair presentation of the FS requires - ✔✔-identification of the applicable financial
reporting framework
preparation and fair presentation in accordance with framework
inclusion of adequate description of the framework
to obtain reasonable assurance - ✔✔-plan the work and properly supervise the assistants
determine and apply appropriate materiality levels
identify and assess risks of material misstatement, whether due to error or fraud
and obtain sufficient appropriate audit evidence
The applicable financial reporting framework - ✔✔-The financial reporting framework that is acceptable
in view of the nature of the entity and the objective of the financial statements
Includes general purpose: designed to meet needs of a wide range of users (GAAP & IFRS)
,and special purpose frameworks
Fair presentation frameworks - ✔✔-All financial reporting frameworks in the US are fair presentation
frameworks
Acknowledges explicity or implicitly that to achieve fair presentation of the FS, it may be necessary for
management to provide disclosures beyond those specifically required
Acknowledges explicitly that it may be necessary for mgmt (RARE) to depart from a requirement to
achieve fair presentation
Auditing standards - ✔✔-(GAAS) Generally accepted auditing standards - mandatory on all audit
engagements
(GAGAS) Generally accepted government auditing standards - audits of government organizations,
programs or activities that receive government funds
(PCAOB) - established pursuant to SOX - establish auditing standards for issuers
(ISA) International standards of auditing
The term "must" or "is required" - ✔✔-indicates an unconditional requirement
must be followed in all cases
The term "should" - ✔✔-presumptively mandatory requirement
must be followed in all cases where the requirement is relevant but allows for departures in rare
circumstances if there is appropriate justification
Conditions that indicate possible fraud - ✔✔-Pressure
,Opportunity
Rationalization
If there is substantial doubt about going concern, the auditor should: - ✔✔-consider the adequacy of the
disclosure about the entity's possible inability to continue as a going concern
include an emphasis of matter paragraph in the auditors report to reflect this conclusion
Going concern documentation - ✔✔-Conditions or events that gave rise to the concern
Any mitigating factors the auditor finds significant
Audit work performed to evaluate mgmt plans
Conclusion about whether it remains or is alleviated
The effect on the financial statements and disclosures
Mitigating factors - ✔✔-when an auditors believe there is substantial doubt about going concern, the
auditor is required to consider MANAGEMENTS PLAN FOR DEALING WITH the conditions or events that
led to the auditors belief
-Plan to borrow money or restructure debt
-Plan to sell assets
-Plan to delay or reduce expenditures
-Plan to increase ownership equity
Must have BOTH intent and ability
No audit work can be done - ✔✔-NO AUDIT OPINION
, not even a bad opinion
Subsequent discovery of facts after report release date: If client refuses to follow procedures
"DAR" them to fix it - ✔✔-Disassociate
Alert regulatory agencies
Relying parties
If there is a material inconsistency in documents containing audited financial statements - ✔✔-The
auditor should determine whether the audited financial statements or the other info needs to be
revised
If the FS requires revision and management refuses then they should modify the opinion
If the other info requires revision then they should communicate this to those charged with governance
and include this in the auditors report in an other-matter paragraph or withhold use of the report or
withdraw from engagement
Supplementary info report for nonissuers AND the opinion if one - ✔✔-Could be an other-matter
paragraph in audit report OR
separate report - should reference the auditors report and opinion on the FS
Can have unmodified FS and qualified or adverse on supplementary if misstatements
If qualified opinion on FS then qualified for supplementary should
If adverse or disclaimer on FS, then no opinion should be expressed on supplementary
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