CPA AUD Review

What is the opinion with a material related party transaction if it isn't disclosed?

Material related party transaction is a qualified or adverse opinion if it isnt disclosed

If a company omits the statement of cash flows, what will the auditor issue as their opinion

Qualified opinion - because it is just an inadequate disclosure

Where is the auditors responsibility to express an opinion for nonissuer under us auditing standards found. Explicit or implicit

Explicit - in the auditors responsibility paragraph

If the auditor is unable to determine if an estimate is reasonable and it's material what opinion is issued

Scope issue - qualified or disclaimer of opinion

What is included in the opinion paragraph for nonissuer?

Should include 1. Statement of auditors opinion2. Financial reporting framework and origin

What is explicitly included in an audit report for an unmodified opinion (risks)

1. Assess for risk of material misstatement in financial statements2. We performed well enough to respond to these risks

When a change in accounting principle materially affects the financial statements, where is it explained?

Emphasis of matter paragraph only (should describe nature of change and refer to financial statement note and discuss the change in detail)

Does a probable material loss require an emphasis on an unmodified opinion?

It does if it hasn't been disclosed. It doesn't if it has been disclosed

If there is a material weakness in internal controls what does an auditor do

Talk to management, not included in emphasis paragraph

What are the 6 interrelated elements of quality control?

1. Human Resources2. Engagement/client acceptance and continuance3. Leadership responsibilities4. Performance of the engagement5. Monitoring6. Ethical Requirements

What is dual dating?

For subsequent events you can take responsibility of an event that happened after your report was issued but you don't take responsibility in between

Can supplementary information that is required by GAAP be restricted


What would a group auditor most likely do if he decides not to rely on a component auditor. Where is it stated?

He would determine what work he needs to do on the financial statements. Other matters

Can an auditor issue a revised auditors report if a material misstatement was found AND management refuses to change it?

No, the auditor must notify each member of the entity's board of directors

What 5 procedures should be performed for subsequent events?

1. Review of post balance transactions2. Review management representation letter3. Make inquires of unusual adjustments made after year end4. Review minutes of the a stockholders meeting5. Examine the latest interim financial statementsL

What section title is subsequent discovery found on to help not mislead potential investors

AU-C 560.A24

What section title is subsequent discovery that has a material affect and needs to be corrected

AU-C 560.A18

What section title is quality control found in

QC 10.17

What section title - how often should a firm communicate the results of monitoring quality control

QC 10.58

What section title are examples of administrative changes that may be performed on audit documentation after report release date

AU-C 230.A26

What section title is issuer for total hours of other accounting firms found

PCAOB 3101.20

Which paragraphs for nonissuer should refer to GAAP?

Opinion and management's Responsibility

What paragraph is this found in - when a group engagement auditor makes reference to a component auditor

Opinion section

What title - what benchmarks may be appropriate to utilize for materiality

AU-C 320.A6

What title - inquires of the independent auditor made to internal audit personal regarding risks of fraud

AU-C 240.19

What title - current auditor making inquires of predecessor auditor

AU-C 210.11

What title - reference to an auditors specialist in the audit report

AU-C 620.15

What is the formula for Current Ratio. What threshold determines the approach. What is that approach if the threshold is met.

Current Ratio = Current Assets / Current LiabilitiesIf over 1.19 then use income before taxes of 5%

What is found in an audit engagement letter

1. Fees and billing arrangements2. Management will provide written representations3. Responsibilities of Management and applicable reporting framework4. Management will make information available to the auditor in a timely manner5. The responsibilities of management (unrestricted access to relevant persons, and access to all relevant information)6. A written audit report will be issued7. Circumstances may arise that the report may differ from expected form and content

inventory turnover formula