Exam 1: The Demand for Audit, Cpa Profession, Audit Reports and Other Assurance Services

Match each of the definition with the following terms -A law passed in 2002 that provides for additional regulation of public companies and their auditors; and also requires auditors to audit the effectiveness of internal control over financial reporting

Assume you are the partner in charge of the 2012 audit of Bashir Corporation, a private company. The audit report has not yet been prepared. In each independent situation following, indicate the appropriate action to be taken. -Management of Bashir Corporation refuses to allow you to observe, or make, any counts of inventory. The recorded book value of inventory is highly material.

Conditions requiring a departure from an unmodified audit report include all but which of the following?

When an auditor decides that adherence to IFRS would result in misleading financial statements, the auditor has no choice but to issue a qualified audit report.

GAAS, SASs, and ISAs should be looked on by practitioners as _ _________ standards of performance.

Assume you are the partner in charge of the 2012 audit of Bashir Corporation, a private company. The audit report has not yet been prepared. In each independent situation following, indicate the appropriate action to be taken. -You relied upon another auditing firm to perform part of the audit. Although you were the principal auditor, the other firm audited a material portion of the financial statements. You wish to refer to the other firm in your report.

When auditing a public company, the International Standards on Auditing override a country's regulations governing the audit of financial or other information.

PCAOB Auditing Standard 5 requires the audit of internal control over financial reporting to be integrated with:

In the audit of historical financial statements, which of the following accounting bases is the most common?

Companies that file annual statements with a capital market authority are required to have an audit of the effectiveness of their internal controls.

Auditors issue several types of 'special audit reports.' Which of the following circumstances wouldnot require the issuance of a special audit report?

In which situation would the auditor be choosing between a qualified opinion and an adverse opinion?

A review of a company's wage rates for compliance with minimum wage legislation is an operational audit.

Indicate which changes would require an emphasis of a matter paragraph in the audit report.

In the United Arab Emirates, accountants are not allowed to work as auditors unless their names are listed in the register of practicing auditors maintained by the Ministry of Economy and Commerce.

Audit reports issued for financial statements should refer to auditing standards in the auditor's responsibility paragraph.

There are ten generally accepted auditing standards, divided into three categories. List, by category, each of these ten standards.

External users such as stockholders and lenders who rely on those financial statements to make business decisions look to the auditor's report as an indication of the statements' reliability.

Outline the three stage process for deciding the appropriate audit report to issue.

Discuss the reasons why auditors of financial statements must be both competent and independent.