Auditing Principles & Procedures Flashcards
7 cards from real CA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Auditing Principles & Procedures flashcards as text
An auditor is required to withdraw from an engagement when:
Answer: Management imposes a scope limitation so severe that a disclaimer is insufficient
When management imposes a scope limitation so pervasive that even a disclaimer cannot adequately communicate the restriction, withdrawal is necessary.
Which procedure would an auditor most likely perform to test the completeness assertion for accounts payable?
Answer: Searching for unrecorded liabilities by examining subsequent cash disbursements
Examining cash payments made after year-end helps identify liabilities that existed at year-end but were not recorded — directly testing completeness.
The PCAOB standards apply to audits of:
Answer: Issuers whose securities are registered with the SEC
PCAOB standards apply to audits of public companies (issuers) that register their securities with the SEC, as established by the Sarbanes-Oxley Act.
When an auditor uses the work of a specialist, the auditor must:
Answer: Evaluate the specialist's competence, objectivity, and reasonableness of findings
The auditor must assess the specialist's professional competence, independence from the client, and whether the findings are reasonable and consistent with other evidence.
In a review engagement, the accountant performs:
Answer: Primarily inquiry and analytical procedures
A review provides limited assurance through inquiry of management and analytical procedures, without the extensive testing performed in an audit.
Which of the following is an example of a preventive control?
Answer: Segregation of duties between authorization and recording
Segregation of duties prevents errors and fraud from occurring by ensuring no single person controls all aspects of a transaction — a classic preventive control.
The auditor's report for a nonpublic entity under SSARS must include a statement that:
Answer: A review is substantially less in scope than an audit
The review report must explicitly state that a review is substantially less in scope than an audit, so users understand the limited nature of the assurance provided.