Exam 5: Professional Auditing Standards and the Audit Opinion Formulation Process

The purpose of the audit program is to list the audit procedures to be followed in gathering audit evidence and to help those in charge of the audit to monitor the progress and supervise the work.

Substantive analytical procedures are optional for significant tests and disclosures.

Presentation and disclosure assertions imply that all transactions and balances are properly presented, disclosures represent what actually happened, and the footnote disclosures are appropriate and adequate.

The AICPA principles governing an audit explicitly state that an audit has inherent limitations prohibiting an auditor from obtaining reasonable assurance that the statements are free from misstatement.

The auditor is not required to test every control related to relevant assertions in a significant account.

The standards of the PCAOB consist of seven principles.

If the auditor's assessment of the materiality of the account balance is high, what would be the respective effect on the extent of substantive testing and the nature of procedures performed. Extent of Tests Nature of Procedures

An auditor should give equal emphasis to all management assertions when testing accounts.

With a substantive audit strategy, what is an auditor likely to do?

The nature of an audit procedure indicates when the procedure is performed during the audit.

When assessing the effectiveness of controls for relevant assertions the auditor tests only transaction controls.

Which statement is true concerning materiality?

Which document is used by auditors to formally accept a new client?

The reporting standards of the ten generally accepted audit standards of the PCAOB includes consistency, disclosure, and due professional care.

Which of the following is not a typical accounting cycle?

Which of the following is a use of audit documentation?

If the auditor assesses internal controls to be effective, less substantive testing is likely.

The auditing standards issued by the PCAOB are identical to the auditing standards issued by the AICPA.

What does the quality of the evidence an auditor collects depend upon?

Write the three general auditing standards of the PCAOB.