ACCT 3222 Final Exam with Questions and 100% Correct Solutions
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Course
ACCT 3222
Institution
ACCT 3222
Assurance Services - Answer Indepent professional services that improve the quality of
information, or its context, for decision makers. Encompasses attest services and financial
statement audits
Attest Services - Answer Services provided by a practitioner engaged to issue a report on
subject m...
ACCT 3222 Final Exam with
Questions and 100% Correct Solutions
Assurance Services - Answer Indepent professional services that improve the quality of
information, or its context, for decision makers. Encompasses attest services and financial
statement audits
Attest Services - Answer Services provided by a practitioner engaged to issue a report on
subject matter, or an assertion about subject matter, that is the responsibility of another
party. Encompasses financial statement audits.
Audit Evidence - Answer All the information used by the auditor in arriving at the conclusion
on which the audit opinion is based. Audit evidence includes the information contained in the
accounting records underlying the financial statements, as well as other information.
Information Asymmetry - Answer The concept that the manager generally has more
information about the true financial position and results of operations of the entity than
the absentee owner does.
Materiality - Answer The maximum amount by which the auditor believes the
financial statements could be misstated and still not affect the decision of users.
Engagement Risk - Answer The overall risk of a (monetary) loss or injury to the auditor's
reputation by association with a client that:
- goes bankrupt
- management lacks integrity
, To minimize engagement risk, audit firms should evaluate - Answer - new clients prior
to appointment (acceptance)
- existing clients prior to being reappointed (continuation)
Family Relationships - Immediate Family - Answer spouse or dependent children
IMPAIRED IF:
- if they hold a "material position" is an audit client
- if the family member is employed in a "key position"
Family Relationships - Close relative - Answer parents, siblings, nondependent children "related
financially"
IMPAIRED IF:
- if they hold a "material position" an audit client and the auditor is aware of it
- if the family member is employed in a key position
Nonattest services - Answer bookkeeping, system implementation, internal audit outsourcing
The SEC rules are predicated on 3 basic principles of auditor objectivity - Answer 1. An
auditor shouldn't audit own work
2. An auditor shouldn't function in the role of management
3. An auditor shouldn't function in the advocacy role for the entity
*generally, a firm cannot provide non-audit services to a publically audited client*
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