Audit- Ch1

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40 terms · Questions from book

T/F Independent Audits today place more emphasis on sampling than did the audits of 19th century

True

T/F AICPA issues CPA certificates and Permits CPAs to practice

False- They only prepare and grade. State Board of Accountancy issues CPA permits.

T/F A company is either edited by GAO -or- Internal auditors, but not both.

False

T/F The SEC does not pass on the merits of the securities that are registered with the agency.

True

T/F The AICPA has the primary authority to establish accounting standards

False- FASB

T/F An annual peer review is a requirement of the AICPA

False- req. by states

T/F Many small companies elect to have their financial statements audited by a CPA firm, rather than incur the cost of an audit.

True

T/F Staff assistants in CPA firms generally are responsible for planning and coordinating audit engagements.

False- Senior: Daily, Manager: Supervises overall engagement, Partner: Overall Responsibility

T/F SOX requires that auditors of certain publicly traded companies in the U.S. perform an integrated audit that includes providing assurance on both the financial statements and on compliance with laws and regulations

False- financial statements & internal control

Auditing is frequently only a small part of the practice of local CPA firms.

True

Agreed-upon procedures Report:

Summary of Findings

Examination Report:

Audit, high assurance, low attestation risk, & give opinion

Review Report:

Low Assurance, inquiry & analytical procedure

SAS: Statements on Auditing Standards issued by

ASB: Auditing Standards Board

Risk associated with Survival and Profitability

Business Risk

Risk associated with accuracy/ misstatements

Information Risk

Historicall, AICPA has been most concerned with providing..

Professional Standards for CPA's

What org. protects investors and the public by requiring full disclosure of financial info. by companies offering securities to the public is

SEC

Peer Review Engagement

CPA firm arranges for a critical review of its practices by another CPA firm

Serially numbered pronouncements issued by ASB over a period of years

SASs: Statements on Auditing Standards

Conducts operational audits and reports the results to Congress

GAO: Govt. Accountability Office

Differentiates CPA who audits financial statements from management

Independence

Audits now, compared to those before 1900 are more likely to include

Tests of compliance with laws and regulations

SEC issues

Financial Reporting Releases

Created to toughen penalties for corporate fraud, restricts types of consulting CPA may perform for audit clients, eliminated portions of Self Regulation

SOX

T/F SOX created the PCAOB as a replacement for FASB

False

Boundaries of an ______ audit are often drawn from an org. chart and are not limited to a single accounting period.

Operational

AICPA continuing professional education requirements ..

members, regardless of whether they are in public practice are required to meet these req

FDIC Improvement Act required large financial institutions to have their internal controls over _____ attested.

Financial reporting

SOX established

PCAOB

Primary responsibility for performance of an audit

Partner

____ audit describes the audit of a TP's tax return by an IRS auditor

compliance

Government auditing extends to include ______

compliance

______ auditing is primarily oriented toward future improvements to accomplish the goals of management by providing recommendations.

operational

Integrated Audit Requires Auditors to report on

Financial Statements and Internal Control

Public Companies, Regulated by SEC

PCAOB

Non- Public Companies, Regulated by ASB who provides SASs

AICPA

Develops Standards for public and nonpublic companies

FASB

Develops Acct Standards for the US govt

FASAB

Formed to improve standards of financial accounting for state and local entities

GASB

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