C) Modify the opinion if the auditee will not adjust the financial statements. A) The CPAs lack of understanding of the prospective clients internal audit functions audit plan. Evaluate the results of that person's procedures as they relate to the nature, timing, and extent of other planned audit procedures and the effects on the auditor's report. Planning Phase Identify specific internal control activities that are likely to prevent fraud. Non-audit personnelof the accounting firm who have provided services (such as tax preparation) to the client should be identified and consulted to learn more about the client. During the initial planning phase of an audit, a CPA most likely would conduct a preliminary assessment of the client's financial statements and internal controls to determine the scope of the audit and identify any potential risks or areas of concern that may require further examination. Evaluate the reasonableness During the initial planning phase of an audit, a CPA most likely a. Amendments to this standard have been adopted by the PCAOB and approved by the U.S. Securities and Exchange Commission. c. The entity's financial statements of the prior year. window.addEventListener('DOMContentLoaded', function() { Supporting accounting records and files that should be readily available are not produced promptly when requested c. related party transactions take place and are audited by an other CPA firm d. senior mgmnt has excessive interest in upgrading the entity's IT capabilities, b. 5AS 2105,Consideration of Materiality in Planning and Performing an Audit. Test specific internal control activities that are likely to prevent fraud. The nature and amount of assets, liabilities, and transactions executed at the location or business unit, including, e.g., significant transactions that are outside the normal course of businessfor the company or that otherwise appear to be Identify specific internal control activities that are likely to prevent fraud. 21. During the initial planning phase of an audit a cpa - Course Hero The team alsoasks fordraft responses to the recommendations (modified, as appropriate, to reflect discussions). D) The nature of the audit software documentation used by the internal auditors. Note: Many smaller companies have less complex operations. An auditor considers illegal acts from the perspective of the reliability of managements representations rather than their relation to audit objectives derived from financial statement assertions.d. The planned nature, timing, and extent of the risk assessment procedures; The planned nature, timing, and extent of tests of controls and substantive procedures; Other planned audit procedures required to be performed so that the engagement complies withPCAOBstandards. During the initial planning phase of an audit, a CPA, a. b. person to enable the auditor to: .18The auditor should undertake the following activities before starting an initial audit: .19The purpose and objective of planning the audit are the same for an initial audit or a recurring audit engagement. .07The nature and extent of planning activities that are necessary depend on the size and complexity of the company, the auditor's previous experience with the company, and changes in circumstances that occur a. The entitys income before taxes for the period-to-date (e.g., 6 months).c. c.has no impact on employment, product The results of tests of controls.d. The entity is expected to discuss issues with the audit team and indicate any changes that are under way. chapter 3 Flashcards | Chegg.com While validating facts, entity management (including senior entity officials) is expected to examine all statements of fact and provide corrections with appropriate supporting evidence if it identifies. d. Determining the extent of internal auditor involvement. Managements acknowledgement of its responsibilities for maintaining effective internal control, The element of the audit planning process most likely to be agreed upon w/client before implementing audit strategy is determination of, d. timing of inventory observation procedures to be performed. The entity will be asked to confirm its understanding, in writing, within five working days of its receipt of the letter. Effective planning will focus the auditors attention on key areas of the Aizawl Municipal Corporation proposes regulation to prohibit raising of livestock within 100 ft of human residence, Mizoram University ranks 13th on the IIRF University Ranking 2023, Ngopa VC receives award for Best Gram Panchayat at the National Panchayat Awards 2023, ZPM sweeps LMC election ; secures all eleven wards, Mizo Folktales : An Art Exhibition curated by Rinawmi KC, Tuikual South BC bids farewell to the Mizoram Super League, Lunglei's first Municipal Council Elections to be held on March 29, Mizo Sniper Jeje Fanai announces retirement from professional football, Lalnunmawia Diary, a trilogy of first-hand chronicles. Why is this the c c. Conclude whether changes in compliance with prescribed internal controls justify reliance on them.d. 6If no audit committee exists, all references to the audit committee in this standard apply to the entire board of directors of the company. 1. During the initial planning phase of an audit, a CPA most likely Representatives from the entitys management, investors, suppliers, and customers.d. written representations will be obtained from management. Basic to a proper control environment are the quality and integrity of personnel who must perform the prescribed procedures. 11AS 2110,Identifying and Assessing Risks of Material Misstatement. See PCAOB Release No. The first type of illegal acts includes violations of laws and regulations, such as tax laws, that are generally recognized as having a direct and material effect on the determination of financial statement amounts. C) The CPAs inability to determine whether related party transactions were consummated on terms equivalent to arms-length transactions. reporting and, if so, how they will affect the auditor's procedures: The relative complexity of the company's operations. 12AS 2301 andAS 2201,An Audit of Internal Control Over Financial Reporting That Is Integrated with An Audit of Financial Statements. Contracts or other agreement. Financial statement accounts likely to contain a misstatement. Proper project planning is one of the most important steps in ensuring everything is delivered on-time and on-budget. Identify specific internal control activities that are likely to prevent fraud. The auditor during the initial planning phase of an audit. Obtain an understanding of the entity's risk assessment process. D) A procedure that serves as both a substantive test of transactions and a substantive test of balances. who audit the financial statements of one or more of the locations or business units that are included in the consolidated financial statements.18In those situations, Entity officials are expected to review and sign off on documented meeting and interview minutes prepared by the OAG ifthe OAGindicates its intention torely on such records as audit evidence during the audit. S-X, 17CFR210.2-07; and Rule10A-3 under the Securities Exchange Act of 1934, 17CFR240.10A-3.) c. Conclude whether changes in compliance with prescribed internal controls justify relonsider whether the extent of substantive procedures may be reduced based on the results of tests of controls.b. 34-95488. The amendments affect the following provisions: paragraphs .03, .04, .06b, .06A.06I (new), .07, .09.11, .14, .16, .A1, and .A3.A6 (new); the heading and subheading after paragraph .06 (both new); the subheadings after paragraphs .06C, .06F, and .06G (all new); the heading after paragraph .13 (new); and the title of Appendix A. Entity notification. b. Other illegal acts are violations of laws or regulations such as the Securities Acts that may have a material but indirect effect on the financial statements. An auditor's engagement letter should include, a. places), Suppose a stock had an initial price of $37 per share, paid a dividend of $2.91 per share during the year, and had an ending share price of $59. C) The audit committee. Communicate the objectives of that person's work; Determine whether that person's procedures meet the auditor's objectives; and. WebDuring the first phase of an audit, a CPA most likely would Evaluate the integrity of management. C) Is determined, in part, based on how financial statement users may be influenced in making decisions. Evaluate the reasonableness of Which of the following is not one of the auditors. (See, e.g., Rule 2-07 of Regulation At the end of the planning phase, the entity is also required to review the Audit Plan Summary and acknowledge its responsibilities for the subject being audited and the terms of the engagement, including the suitability of the criteria as a basis for assessing whether the audit objective has been met. Web5. Which of these statements concerning illegal acts by clients is correct? The team periodically briefs entity officials and senior management on emerging findings throughout this phase and ensures that it gets the views ofthe deputy head. WebDuring the initial planning phase of an audit, a CPA most likely would a. The team informs the audited entity, in writing, of any significant changes made to the APS and, if needed, issues a revised version to the entity. The level of officials participating in audit meetings and briefing sessions depends on the subject matter discussed and on officials availability. Planning is not a discrete phase of an audit but, rather, a continual and iterative process that might begin shortly after (or in connection with) the completion of the previous audit and continues until the completion The objective of the auditor is to plan the audit so that the audit is conducted effectively. When a performance audit includes many departments and agencies, the OAG. reflects the teams disposition of discussions between the team and the entity since theconclusion of the. A) Failing to write down inventory to market value just before year-end. What type of information should be requested from the predecessor? The entity is close to violating a covenant in a loan agreement; Small amounts may cause the entity to miss forecasted revenues or earnings, or affect the trend in earnings; The entity operates in a volatile business environment, has complex operations (multi-locations), or operates in a highly regulated industry. b. A dual-purpose test is A) A procedure that provides evidence about two different account balances at the same time. The OAG team meets to discuss the audit objective(s), scope and approach, and criteria asstated in the APS. a. The overall audit strategy or the timing of the audit may be discussed, but dont discuss specific audit procedures. and that the audit may not detect all material errors and fraud. material misstatement associated with that location or business unit. No additional comments or sign-off is required, since both English and French drafts undergo additional proofreading and formatting before being tabled in theHouse of Commons. - Evaluate the reasonableness of During the initial planning phase of an audit, a CPA most, Identify specific internal control activities that are, Evaluate reasonableness of the clients accounting, Discuss the timing of the audit procedures with the, Inquire of the clients attorney as to whether any. During the initial planning phase of an audit, a CPA most likely would a. WebThe steps in planning an audit include ( Planning Procedures ): 1. In other words, risk assessment is the doorway Auditor is r. What does the quote Jem, how can you hate Hitler so bad and be so ugly about folks right at home mean? c. Discuss the timing of the audit procedures with the entitys management. .01This standard establishes requirements regarding planning an audit. 2003-2023 Chegg Inc. All rights reserved. B. WebPlanning phase. a. 1Terms defined in Appendix A,Definitions, are set inboldface typethe first time they appear. Evaluation of all matters of continuing accounting significance.c. 8See, e.g., paragraph .06 of AS 1201,Supervision of the Audit Engagement. C) Representatives from management, suppliers, and shareholders. necessary to establish an appropriate audit strategy and audit plan, including determining the audit procedures necessary to obtain sufficient appropriate audit evidence regarding the opening balances.19. OAG grants the entitys OAG liaison and identified recipients electronic access to a controlled version of the APS. Phases of the Audit Process facilitates any field visits to entity or project sites. Inform engagement team members of their responsibilities, including: -the objectives of the procedures that they are to perform; -the nature, timing, and extent of procedures they are to perform; and -matters that could affect the procedures to be performed or the evaluation of the results of those procedures. Direct engagement team members to bring any significant accounting and auditing issues they identify to the attention of the engagement partner. A) Perform detailed testing of the accounts payable account. Audit Chapter 3 Flashcards | Quizlet Which is not a factor in A director of a corporation is best characterized as a(n). Analytical Procedures Training and supervisory skills, During the initial planning phase of an audit, a CPA most likely would, a. 5. Inherent risk is assessed at a sufficiently low level. Audit Plan a. Otherwise, they receive only the portions of the PX draft relevant to their own operations. Which of the following is a definition of control risk? The requirements of this standard do not modify communications required by those other laws or regulations. 15AS 2105.10 describes the consideration of materiality in planning and performing audit procedures at an individual location or business unit. This process helps ensure a thorough and efficient audit. B) Inform engagement team of the nature, timing, and extent of audit procedures. Appropriate senior entity officials are expected to participate in these debriefings. An auditors responsibility to detect illegal acts that have a direct and material effect on the financial statements is the same as that for errors and fraud.b. After careful consideration, the team revises the PX draft if necessary to reflect thediscussions and comments received from, If required, the deputy head or designate is expected to meet with the engagement leader to try to resolve any outstanding issues and reach either an agreement or a clear, shared understanding of points on which they agree to disagree.. Discuss the timing of the audit procedures with the entitys management.d. The entity is expected to identify one of its officials as its OAG liaison for the audit. Which of the following factors would be of least importance to an auditor in determining how much reliance can be placed on the work of internal auditors? 4. Engagement letter. Some sections of the draft are highlighted, marking text to be reproduced or repurposed in the OAGs report communications products. At the end of the planning phase, the OAG provides entities with an AuditPlan Summary (APS), a document that shows. During the initial planning phase of an audit, a CPA most likely would gather information about the client's business and industry, assess risks, and develop an audit After receiving the notification and solicitor-client privilege letter, thedeputy head of the entity is expected to acknowledge in writing that the entity will respect the confidentiality of the OAG-controlled documents to be provided during the course of the audit. The primary objective of procedures performed to obtain an understanding of the entity and its environment, including its internal control, is to provide an auditor with a. knowledge necessary to assess the risk of material misstatement and design further audit procedures b. an evaluation of the consistency of application of management's policies c. a basis for modifying tests of controls d. audit evidence to use in assessing inherent risk, a. knowledge necessary to assess the risk of material misstatement and design further audit procedures, b. Analytical procedures performed during planning often use data aggregated at a high level, The user auditor should apply the same procedures with respect to the services provided by a sub-service organization as a service organization when the user auditor plans to use type 1 or type 2 report that a. was for an engagement for a subservice organization that did not require complementary controls b. was prepared using the carve out method c. contains a system description that is of a date or for a period that precedes the beginning of the audit of the user entity d. was prepared by a service auditor who was not independent of the user entity, b. was prepared using the carve out method, In considering whether to use the service auditor's report, the user auditor should make inquiries concerning the service auditor's professional competence. For best experience use Chrome, Firefox or Safari. AUDIT PLANNING During the initial planning phase of an audit, a CPA most likely would gather information about the client's business and industry, assess risks, and develop an audit strategy tailored to the specific needs and circumstances of the client. B. D) They help to limit auditor liability in the event of misunderstandings. Course Hero is not sponsored or endorsed by any college or university. Which of the following factors most likely would cause a CPA to decide not to accept a new audit engagement? Responsibility of the Engagement Partner for Planning 3. .05Planning the audit includes establishing the overall audit strategy for the engagement and developing an audit plan, which includes, in particular, planned risk assessment procedures and planned responses to b. During the initial planning phase of an audit a cpa - Course Hero Before the meeting, the audit team notifies the audited entity of the main topics to be discussed. confirm that their responses to the recommendations are final. Deputy ministers (DM) transmission draft report, What to ExpectAn Auditees Guide to the Performance Audit Process, sends letters of notification and solicitor-client privilege to all entities included in the audit scope, and, informs each entity of the administrative arrangements to follow when meeting or communicating with the. This site is using cookies under cookie policy . the inquiry of a clients attorney will occur subsequently to initial Quality-writers is a leading custom essay writing company with reliable and experienced writers. Identify specific internal control activities that are likely to prevent fraud. The audit team reviews the audit schedule and key milestones with entity officials to determine whether any changes are needed. All rights reserved. c. Discuss the timing of the audit procedures with the clients management. Answer (d) is incorrect because Multiple Choice The UN model assumes all countries are economic equals. WebAudit? If the population growth rate is very high, the average income per person d I. a. Providing the auditor with access to key persons within the entity who have been authorized to be involved in the audit (limiting) c. design, implementation, and maintenance of internal control relevant to the preperation and fair presentation of the financial statement d. providing the auditor with access to all information that is relevant to the preperation and fair presentation of the financial statement, b. B) Managements disregard of its responsibility to maintain an adequate internal control environment. Internet Explorer does not offer support for this website. The OAG asks each audited entity to formally acknowledge its responsibility for areas included in the audit scope. Outside assistanceneeds should be determined, including the use of aspecialistas required (a tax practitioner or an information technology (IT) professional) and the determination of the extent of involvement of the internal auditors of the client. which of the following statements is true regarding an auditors communications with a predecessor auditor prior to engagement? b. Make preliminary judgments about materiality levels for audit purposes. 9. WebRISK ASSESSMENT IN AUDIT PLANNING Preface This template is the product of a process of exchange of ideas and information among members of the Internal Audit Community of Practice (IA CoP), of the Public Expenditure Management For example, in a not-for-profit entity, total revenues or total expenses might be more appropriate benchmarks, while for asset-based entities (e.g., mutual funds) net assets might be a better benchmark. of audit procedures will occur subsequent to the initial planning 10. For example, internal control testing needs to be performed early in the engagement, inventory counts need to be performed at or near the balance sheet date and the client representation letter cannot be obtained until the end of the audit fieldwork. d. The amendments affect the following provisions: paragraphs .03, .04, .06b, .06A.06I (new), .07, .09.11, .14, .16, .A1, and .A3.A6 (new); the heading and subheading after paragraph .06 (both new); the subheadings after paragraphs .06C, .06F, and .06G (all new); the heading after paragraph .13 (new); and the title of Appendix A. Make constructive suggestions concerning improvements to the clients internal control. For example, client-prepared schedules need to be ready when the auditor is expected to examine them, and the client needs to be informed of dates when they will be prohibited from accessing bank safe deposit boxes to ensure the integrity of counts of securities held at banks. WebPaper P7, Advanced Audit and Assurance, regularly features questions set in the planning phase of an audit. Evaluate the reasonableness of the entitys accounting estimates.c. business processes and financial reporting systems; more centralized accounting functions; extensive involvement by senior management in the day-to-day activities of the business; and fewer levels of management, each with a wide span of control. c. The entity's financial statements of the prior year or annualized interim statemetns, Detection risk differs from both control risk and inherent risk in that detection risk, b. consider necessary to complete the engagement. During the initial planning phase of an audit Please open this site in a different browser. WebDuring the initial planning phase of an audit, an auditor most likely would 1 point Identify specific internal control activities that are likely to prevent fraud. Materiality for the income statement as a whole.d. of these procedures. .03Theengagement partner1is responsible for the engagement and its performance. Multiple Choice The UN mode, a) For the year 2016, P marketing managers project quarterly sales of 100,000 product A and 50,000 p. 2. Review of audit documentationfrom previous audits performed by the accounting firm or a predecessor auditor (if the latter makes these audit documentation available) will assist in developing an outline of the audit program. Consider whether the extent of substantive procedures may be reduced based on the results of tests of controls.b. The performance of suchanalytical proceduresismandatoryin the planning of an audit to identify accounts that may be misstated and that deserve special emphasis in the audit program. Identify specific internal control activities that are likely to prevent fraud. If the entity has requested the DM draft in both official languages and thetranslated version is sent after the original version, the translated version is submitted within the established time frame. Opinion of any subsequent events occurring since the predecessors audit report was issued.d. Mizoram Rural Bank is a regional rural bank jointly owned by the Government of India, State Bank of India and Government of Mizoram.
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