# A5

An auditor has been hired to report on a nonissuer's IC over financial reporting. Which of the following best describes a reporting option in this scenario?
A. if management fails to provide a written representation letter acknowledging its responsibility for the effectiveness of IC, the auditor will generally issue an unmodified opinion with additional explanatory language
B. when a material weakness exists, the auditor should issue an adverse opinion
C. when a significant deficiency exists, the auditor may issue either a qualified or adverse opinion
D. if management fails to provide a written representation letter acknowledging its responsibility for the effectiveness of IC, the auditor will generally issue either a qualified or adverse opinion
Click the card to flip 👆
1 / 52
Terms in this set (52)
An auditor has been hired to report on a nonissuer's IC over financial reporting. Which of the following best describes a reporting option in this scenario?
A. if management fails to provide a written representation letter acknowledging its responsibility for the effectiveness of IC, the auditor will generally issue an unmodified opinion with additional explanatory language
B. when a material weakness exists, the auditor should issue an adverse opinion
C. when a significant deficiency exists, the auditor may issue either a qualified or adverse opinion
D. if management fails to provide a written representation letter acknowledging its responsibility for the effectiveness of IC, the auditor will generally issue either a qualified or adverse opinion
Compliance audit work papers will include all of the following documentation except:
A. risk assessment procedures performed including those related to gaining an understanding of the IC over compliance
B. responses to the assessed risk of noncompliance including tests of compliance and TOC
C. materiality levels
D. final basis for the opinion on the effectiveness of IC over compliance
An accountant may accept an engagement to apply agreed-upon-procedures to prospective F/S provided that:
A the accountant is independent from the responsible party
B. the prospective F/S are also examined
C. responsibility for the adequacy of the procedures performed is taken by the accountant
D. negative assurance is expressed on the prospective F/S taken as a whole
An auditor conducting a compliance audit will design and perform additional audit procedures in response to the assessed risk of material noncompliance. These procedures will include TOC if:
A. the auditor has determined a deficiency in the design of IC over compliance
B. the auditor's expectation of the operating effectiveness of controls over compliance is otherwise unknown
C. TOC are required by the governmental audit requirement
D. the auditor has been engaged to perform an organization-wide audit
C.
tests of operating effectiveness of controls may be required if
- the risk assessment includes an explanation of operating effectiveness of controls over compliance
- substantive procedures do not provide enough evidence to support a conclusion
- TOC are required by the applicable governmental audit requirements
If an auditor performing an integrated audit identifies one or more material weaknesses in a nonissuer's internal control, the auditor should:
A. expand the audit of IC to identify deficiencies less severe than material weaknesses
B. conclude that the F/S are materially misstated because of the material weakness in IC
C. disclaim an opinion on IC
D. express an adverse opinion on the entity's IC
Which of the following is a documentation requirement that an auditor should follow when auditing in accordance with government auditing standards?
A. audit documentation contain sufficient info so supplementary oral explanations are not required
B. the auditor should obtain written representations from management acknowledging responsibility for correcting instances of fraud, abuse and waste
C. the auditor should document the procedures that assure discovery of all illegal acts and contingent liabilities resulting from noncompliance
D. audit documentation should contain a caveat that all instances of material errors and fraud may not be identified
After performing a compliance audit of an entity that received federal funds, what conclusion would the auditor draw if the entity does not have adequate documentation to support $5 million in operating expenses paid from federal funds? A. the entity spent$5 million in operating expenses that were not approved
B. questioned costs of $5 million for operating expenses have been identified C. the entity spent$5 million of government funds for services that were not required
D. the entity submitted unauthorized invoices for expenses
The auditors' purpose in establishing materiality levels in a compliance audit include all of the following, except;
A. determining the nature and extent of risk assessment procedures
B. determining the NET of additional audit procedures
C. evaluate whether the entity has compiled with applicable requirements
D. establish the basis for the opinion on effectiveness of IC over compliance
An auditor who identifies a potential fraud that is significant within the context of the audit under generally accepted government auditing standards would most appropriately respond first in which of the following manners?
A. recommending a separate engagement to determine whether fraud has occurred
B. extend audit procedures as necessary to determine whether fraud has occurred
C. refer investigation of the potential fraud to the party with oversight responsibility
D. communicate the potential fraud with management