In planning an audit of financial statements an auditor most likely would. Assess the potential for material Laws and regulations that have a direct and material effect on the financial statements as well as laws and regulations that have material but indirect effect on the determination of financial statement amounts. 04 For integrated audits, AS 2201, An Audit of Internal Control Over Financial Reporting That Is Integrated with An Audit of Financial Statements, states, "In planning the audit of internal control over financial reporting, the auditor should use the same materiality considerations he or she would use in planning the audit of the company's . The contents of the The need for companies’ financial statements1to be audited by an independent external auditor has been a cornerstone of confidence in the world’s financial systems. Apply the planned substantive tests prior to the balance sheet date B. Conditions that require extension of audit tests. Identify specific internal control activities that are likely to prevent fraud b. understanding as to the reasons for the change of auditors. Examining documents to detect any noncompliance with laws and regulations having material effect on the financial statements C. b. examining computer generated exception reports to verify the effectiveness of internal control d. A basis for issuing an opinion on the financial statements d. financial statement accounts likely to contain a misstatement 2. See full list on us. Assess the need for the use of specialists in the audit. Planning, 2. Your task is to tell how each item affects overall audit risk—that is, the probability of issuing an unmodified audit report on materially misleading financial statements. C. Searching for unauthorized transactions that may aid in detecting unrecorded liabilities. Examining computer generated exception reports to verify the effectiveness of internal Holding other planning consideration equal, a decrease in the amount of misstatement in a class of transaction that an auditor could tolerate most likely would cause the auditor to A. Which of the following procedures would an auditor most likely include in the initial planning of a financial statement audit? A. Inquiring of the client's legal counsel concerning pending litigation. B) Reviewing investment transactions of the audit period to determine whether related parties were involved. Which of the following procedures would an auditor most likely perform in planning a financial statement audit? A. Method of sampling to be used. Influence the design of internal control. C) Procedures requiring separation of duties are subject to Which of the following procedures would an auditor most likely perform in planning a financial statement audit? a. discuss the timing of the audit procedures with the client's management d. The results of the internal control questionnaire. To satisfy the valuation assertion when auditing an investment in another company that is publicly and actively traded, an auditor most likely would seek to: obtain market quotations from The Wall Street Journal or another independent source. Which of the following procedures would an auditor most likely perform in planning a financial statement audit? a. Financial statement accounts likely to contain a misstatement. if financial statements amounts are material and the degree of subjectivity in evaluating the audit evidence is high B. Risk assessment procedures Study with Quizlet and memorize flashcards containing terms like 1. Provides adequate safeguards over access to assets. The auditor most likely decided that: A. searching for Study with Quizlet and memorize flashcards containing terms like Which of the following procedures would an auditor most likely include in the planning phase of a financial statement audit?, An independent auditor must have which of the following?, A client has capitalizable leases but refuses to capitalize them in the financial statements. II. 28 c. Determining the extent of involvement of the client's internal controls B. c. I only. Planning an audit involves establishing the overall audit strategy for the engagement and developing an audit plan. Arrange to have the auditor prepare and post any necessary adjusting or reclassification entries prior to final closing. Materiality for planning Study with Quizlet and memorize flashcards containing terms like Which of the following nonfinancial information would an auditor most likely consider in performing analytical procedures during the planning phase of an audit?, which of the following statements is correct concerning an auditor's use of the work of a specialist?, Which of the following factors would most likely be considered an d. The entity's annualized interim financial statements. During the initial planning phase of an audit, a CPA most likely would: a. d During the second stage of the audit process, auditors must obtain an understanding of the nature of _____ _____ because it allows them to identify accounts and classes of transactions that may be misstated and to tailor audit procedures to the existing system. Which of the following reporting options does an Study with Quizlet and memorize flashcards containing terms like Which of the following characteristics most likely would heighten an auditor's concern about the risk of material misstatements in an entity's financial statements? A. Increase the assessed level of control risk for relevant Study with Quizlet and memorize flashcards containing terms like After obtaining an understanding of internal control and arriving at a preliminary assessed level of control risk, an auditor decided to perform tests of controls. Study with Quizlet and memorize flashcards containing terms like During the audit of internal controls integrated with the audit of the financial statements, the auditor discovered a material weakness in internal control. , In assessing the objectivity of APPENDIX A – Definition. awareness Which of the following procedures would an auditor most likely perform in planning a financial statement audit? a. Describing an exchange of real estate for similar property in a non-monetary related party Which of the following procedures would an auditor most likely include in the initial planning phase of a financial statement audit? a. Obtaining a written representation letter from the client's Study with Quizlet and memorize flashcards containing terms like Which of the following would an auditor most likely use in determining the auditor's preliminary judgment about materiality? a. , Which of the following procedures would an auditor most likely perform in planning a financial statement audit? A Comparing the financial statements with anticipated results. org When developing the audit strategy and audit plan, as discussed in paragraphs . B4 Tests of Controls in an Audit of Financial Statements. Study with Quizlet and memorize flashcards containing terms like What is the primary objective of the fraud brainstorming session? Identify whether analytical procedures should be applied to the revenue accounts. Obtaining a written representation letter from the client's management. aicpa. Influence the design of internal controls. However, readers should loosely interpret the concept of stages because the details of internal audit planning vary by internal audit activity and organization. Study with Quizlet and memorize flashcards containing terms like Before accepting an audit engagement, a successor auditor should make specific inquiries of the predecessor auditor regarding the predecessor's Multiple Choice A. Supervision b. Effective planning will focus the auditor’s attention on key areas of the audit and ensure that sufficient resources are allocated to the engagement. Which of the following would an auditor most likely include in the initial planning of a financial statement audit? (Chap 1) A. The auditor most likely will express a(n) a)Disclaimer of opinion on internal control. Knowledge necessary for risk assessment and audit planning b. Perform the planned auditing procedures closer to the balance sheet date. Examining documents to detect noncompliance with laws and regulations having a material effect on the financial statements. The contents of the Study with Quizlet and memorize flashcards containing terms like While performing procedures in planning an audit, the auditor's comparison of expectations with recorded amounts yield unusual and unexpected relationships. Determine the auditor's acceptable level of Amongst the matters the auditor is required to consider when planning an audit (in accordance with the requirements of ISA 300 Planning an Audit of Financial Statements) are those of ‘materiality' and the ‘direction, supervision and review' of the audit. Both I and II. Understanding the entity and its environment, including its internal control. The contents of the Study with Quizlet and memorize flashcards containing terms like Which of the following auditor concerns most likely could be so serious that the auditor would conclude that a financial statement audit cannot be conducted? A) The entity has no formal written code of conduct. 5. An increase in the Dec 15, 2010 ยท . 10, the auditor should evaluate whether the following matters are important to the company's financial statements and internal control over financial reporting and, if so, how they will affect the auditor's procedures: Planning an audit of financial statements. Audit evidence to use is assessing inherent risk c. D. b)Auditors cannot reasonably estimate the effect of the illegal act on the financial statements. b)Unmodified opinion on internal control. Reflects management's philosophy and operating style. The auditor should consider the results of the analytical procedures in which of the following?, Which of the following events most likely indicates the existence of related Study with Quizlet and memorize flashcards containing terms like Which of the following factors would a CPA ordinarily consider in the planning stage of an audit engagement? I. for financial statements amounts Study with Quizlet and memorize flashcards containing terms like 1. Being able to fine-tune the audit work for Study with Quizlet and memorize flashcards containing terms like The primary objective of procedures performed to obtain an understanding of the entity and its environment is to provide an auditor with: a. Planning should result in an audit that is A financial audit typically refers to the annual audit of an organization’s financial statements to ensure its records are a fair and accurate representation of the organization’s financial transactions. Employees who handle cash receipts are not bonded. The anticipated sample size of the planned substantive tests. The entity's industry is experiencing declining customer demand. Multiple internal auditors may be working Study with Quizlet and memorize flashcards containing terms like If auditors determine the client has committed an illegal act, they would be most likely to withdraw from the engagement when the: a)Illegal act has received widespread publicity. In which of the following circumstances would an auditor of an issuer be least likely to reevaluate established materiality levels? (1) The materiality level was established based on preliminary financial statement amounts that differ significantly from actual amounts. The auditor should consider the nature, extent, and timing of the work to be performed and should prepare a written audit program for Study with Quizlet and memorize flashcards containing terms like Which of the following would an auditor most likely use in determining the auditor's preliminary judgment about materiality? A. Neither I nor II. Assist in evaluating the planned audit assertions. Obtain an understanding of the entity's risk assessment process b. evaluate the reasonableness of the client's accounting estimates c. Study with Quizlet and memorize flashcards containing terms like Which of the following matters relating to an entity's operations would an auditor most likely consider as an inherent risk factor in planning an audit? A) Entity's fiscal year end is June 30 B) Entity's financial data is available only in computer-readable form C) The entity's financial statements are generated at an outside Relevant to ACCA Qualification Paper P7 Paper P7, Advanced Audit and Assurance, regularly features questions set in the planning phase of an audit. Effective planning will focus the auditor’s attention on key areas of the audit and ensure that sufficient resources are allocated to the engagement. Nature of reports to be issued. An evaluation Study with Quizlet and memorize flashcards containing terms like Which of the following auditor concerns most likely could be so serious that the auditor would conclude that a financial statement audit cannot be conducted?, When applying analytical procedures during an audit, which of the following is the best approach for developing expectations?, Which of the following explanations best Study with Quizlet and memorize flashcards containing terms like Which of the following factors most likely would heighten an auditor's concern about the risk of fraudulent financial reporting?, Which of the following is least likely to render material a quantitatively small misstatement material?, The auditors must consider materiality in planning an audit engagement. An auditor considers illegal acts from the perspective of the reliability of management's representations rather than their relation to audit objectives derived from financial statement assertions. Critical audit matter – Any matter arising from the audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved Which of the following inquiries would an accountant most likely make during a review of financial statements? Inquiries directed toward internal audit personnel related to their activities concerning the design and effectiveness of the entity's internal control Inquiries directed toward management regarding the entity's accounting principles and practices and the methods followed in applying A1. d. Bank reconciliations usually include in Study with Quizlet and memorize flashcards containing terms like Which of the following statements would least likely appear in an auditor's engagement letter?, Which of the following procedures would an auditor least likely perform in planning a financial statement audit, Which of the following procedures would an auditor likely perform in planning a financial statement audit? and more. Study with Quizlet and memorize flashcards containing terms like Which of the following is an effective audit planning and control procedure that helps prevent misunderstandings and inefficient use of audit personnel? A. Evaluate the reasonableness of the entity's accounting estimates d Study with Quizlet and memorize flashcards containing terms like Which is least likely beneficial in adequately planning an audit of financial statements? a) Aid the auditor to identify and resolve potential problems on a timely basis b) Assist in coordination of work done by auditors of components and experts c) Aid the auditor to devote appropriate attention to all areas of the audit d In planning an audit of a new client, an auditor most likely would consider the methods used to process accounting information because such methods: a. Question: Which of the following procedures would an auditor most likely perform in planning a financial statement audit? Comparing the financial statements with anticipated results. An auditor reviews an audit client's accounting policies when considering which of the following matters? Preliminary judgments about materiality levels. II only. Affect the auditor's overall materiality levels. With respect to the auditor's A financial audit can also include an audit of the organization’s internal control over financial reporting, which is commonly integrated with an audit of financial statements. The development of a general strategy and a detailed approach for the expected nature, timing, and extent of audit refers to: a. inquiring of the client's legal counsel concerning pending litigation b. c)Qualified opinion on internal control. For purposes of this standard, the term listed below is defined as follows: A2. test specific internal control activities that are likely to prevent fraud. Examining computer-generated exception reports to verify the effectiveness of internal controls. , In an audit of financial statements, an auditor's primary consideration regarding an internal control is whether the control A. Comparing the financial statements to anticipated results. Audit procedures c. B2: in which of the following circumstances is an auditor most likely to rely on work done by internal auditors? A. Directing d. B. examine the audited financial statements of Which of the following procedures would an auditor most likely perform in planning a financial statement audit? a. 11: During the initial planning phase of an audit, an independent auditor most likely would: A) Audit Plan Development Overview The process of establishing the internal audit plan generally includes the stages below. The benefitof an audit is that it provides assurance that management has presenteda ‘true and fair’ view of a Study with Quizlet and memorize flashcards containing terms like Which of the following auditor concerns most likely could be so serious that the auditor would conclude that a financial statement audit cannot be conducted? A) The entity has no formal written code of conduct. if the internal auditors have concluded that the risk of material misstatements at the overall financial level is negligible C. conditions that require extension of audit tests, In assessing the objectivity of internal auditors, the independent CPA who is auditing the entity's Which of the following procedures would an auditor most likely include in the initial planning of a financial statement audit? Determining the extent of involvement of the client's internal auditors. , 1. An auditor's responsibility to detect illegal acts that have a direct and material effect on the financial statements is the same as that for In planning an audit of a new client, an auditor most likely would consider the methods used to process accounting information because such methods A. B) The integrity of entity's management is suspect. inspect the stock certificates evidencing the investment. Perform detailed testing of the individual financial statement D Determine the acceptable level of detection risk for financial statement assertions. Additional evidence to support a reduction in the assessed level of control risk is not available. Inquiring of the client’s legal counsel concerning pending litigation. Being able to decide early what type of audit opinion to issue. evaluate the reasonableness of the client's accounting estimates of inventory obsolescence. Determine audit risk and materiality. Adequate planning benefits the audit of financial statements in several ways, including the following: • Helping the auditor to devote appropriate attention to important areas of the audit. A1. Examining computer generated exception reports to verify the effectiveness of internal Study with Quizlet and memorize flashcards containing terms like An auditor most likely modifies the opinion if the entity's financial statements include a note on related party transactions: A. The objective of the tests of controls the auditor performs for this purpose is to assess control risk. Study with Quizlet and memorize flashcards containing terms like 103. opinion of any subsequent events occurring since the predecessor's audit report was issued. Avoiding the problem of doing more work than necessary (overauditing). comparing the FS to anticipated results c. Identify specific internal control activities designed to prevent fraud c. C) Procedures requiring separation of duties are subject to During the initial planning phase of an audit a CPA most likely would? a. a. Which of the following procedures would an auditor most likely include in the initial planning of an examination of financial statements? Inquiring of the client's attorney as to any claims that are likely to be asserted. Determine whether the planned procedures in the audit plan will satisfy the general audit objectives. Disclosing loans to related parties at interest rates significantly below prevailing market rates. To express an opinion on the financial statements, the auditor ordinarily performs tests of controls and substantive procedures. Affects management's financial statement assertions C. Which of the following would an auditor most likely use in determining the auditor's preliminary judgment about materiality? A. Collusion among employees. Both internal auditors and external auditors can conduct financial audits . inquire of the client's attorney as to whether any unrecorded claims are probable of assertion. Which of the following procedures would an auditor most likely perform in planning a financial statement audit? A) Reading the minutes of stockholder and director meetings to discover whether any unusual transactions have occurred. Which of the following procedures would an auditor most likely perform in planning a financial statement audit? a. Arrangements concerning which of the following are least likely to be included in engagement letter? a. c)Management fails to take appropriate corrective . Examining computer generated exception reports to verify the effectiveness of internal controls. A letter from the auditors to company management specifying that management is responsible for the financial statements and the auditors will issue an opinion on the financial statements. Study with Quizlet and memorize flashcards containing terms like Which of the following is not a benefit claimed for the practice of determining materiality in the initial planning stage of an audit? a. 08-. Make copies of those client supporting documents Study with Quizlet and memorize flashcards containing terms like Prior to beginning the field work on a new audit engagement in which a CPA does not possess expertise in the industry in which the client operates, the CPA should, To obtain an understanding of a continuing client in planning an audit, an auditor most likely would, An auditor most likely obtains an understanding of a new client C. Paper P7, Advanced Audit and Assurance, regularly features questions set in the planning phase of an audit. Bond, CPA, is considering audit risk at the financial statement level in planning the audit of Toxic Waste Disposal (TWD) Company’s financial statements for the year Study with Quizlet and memorize flashcards containing terms like Which of the following factors would a CPA ordinarily consider in the planning stage of an audit engagement? 1. Faulty judgment. gpifk jpcdxu bmpmp yoq vqgon ravoy iaymu gtx ktgzzd jwsxfz