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LSU Acct 3222 Wiley Test 1 Questions With 100% Correct Answers | Verified | Updated 2024, Exams of Advanced Education

LSU Acct 3222 Wiley Test 1 Questions With 100% Correct Answers | Verified | Updated 2024 unmodified report - Correct Answer-the name of a clean report for private companies unqualified report - Correct Answer-the name of a clean report for public companies clean report - Correct Answer-means that in the auditors' opinion if the company follows GAAP end of field work - Correct Answer-the date at the bottom of the audit report, stating 45 days after year end, when auditors stop gathering evidence, no hard deadline from the government management's responsibilities - Correct Answer--designing, implementing, and maintaining internal controls -creating financial statements -following GAAP -estimates for financial statements stems

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Download LSU Acct 3222 Wiley Test 1 Questions With 100% Correct Answers | Verified | Updated 2024 and more Exams Advanced Education in PDF only on Docsity! LSU Acct 3222 Wiley Test 1 Questions With 100% Correct Answers | Verified | Updated 2024 unmodified report - Correct Answer-the name of a clean report for private companies unqualified report - Correct Answer-the name of a clean report for public companies clean report - Correct Answer-means that in the auditors' opinion if the company follows GAAP end of field work - Correct Answer-the date at the bottom of the audit report, stating 45 days after year end, when auditors stop gathering evidence, no hard deadline from the government management's responsibilities - Correct Answer--designing, implementing, and maintaining internal controls -creating financial statements -following GAAP pg. 1 professoraxe l -estimates for financial statements stems -gives auditors access to records, documentation, and personnel NASBA - Correct Answer--who you apply with to take the CPA exam; only handles the applications to take the CPA exam, not dealt with by each particular state -every state has their own state board; determines the education requirements for the state -licensing is controlled at the state level -make high level decisions, appointed by the governor AICPA - Correct Answer--professional organization, like exclusive club -makes and grades the CPA exam -issues the AU-C (auditing accounting estimates) -created SAS (Statements on Auditing Standards) state - Correct Answer-issues your CPA license ASB - Correct Answer--audit standards for private and non- profit organizations pg. 2 professoraxe l an audit is a type of attestation service; however, an attestation service is NOT an audit - Correct Answer-how is audit related to an attestation service? assurance service - Correct Answer-independent service improving the quality of information of financial and non financial information, includes any service provided by a professional that involves improving the quality of information prepared by someone else, includes the other two categories independent - Correct Answer-service is performed by someone not involved with the creation of the information and is objective in evaluating integrated audit - Correct Answer-when the audit for the financial statements and the internal controls are performed at the same time materiality - Correct Answer-ability of information to influence decisions that users make on the basis of the financial information of a specific reporting entity, if omitting the information would influence others that read this information pg. 5 professoraxe l auditor's responsibilities - Correct Answer--give opinion that financials are presented fairly according to GAAP -NOT responsible for creating financial statements -done with auditing standards providing minimum requirements and guidance for the performance of an audit professional judgment - Correct Answer-relevant, training, knowledge, and experience auditors use to make informed decisions, get this as you build a career professional skepticism - Correct Answer-involves the attitude of the auditor, need to maintain a questioning mind alert to conditions that could involve fraud or misstatements, investigate all information from the client while working independently of the company do not want to be sued - Correct Answer-reasons to use specific wording like "no guarantee" and "reasonable assurance" pg. 6 professoraxe l to note that the entire firm stands behind the audit of the client - Correct Answer-reason for putting the name of the firm at the bottom of the audit report audit standards (AS) - Correct Answer-issued by the PCAOB make sure following GAAP aka following rules no matter what - Correct Answer-purpose of an audit need minimum of 20 per year year, but have a rolling schedule of 80 hours on a two year basis - Correct Answer-CPE requirements appropriate competence - Correct Answer-having proper certification of CPA, education/hours, CPE training, similar foundation, work experience -internal controls audit -financial statement audit - Correct Answer-Sarbanes Oxley Act required these two things of a publicly traded company pg. 7 professoraxe l self review threat - Correct Answer-threat that would require you to review or audit your own work advocacy threat - Correct Answer-promoting a client's interests to compromising integrity and or independence familiarity threat - Correct Answer-long term and close relationships causing a CPA to be too sympathetic or accepting client's work undue influence threat - Correct Answer-CPA has a subordinate judgment, client's expertise is better than the CPA or the client has an aggressive personality self interest threat - Correct Answer-CPA benefits from financial interest/financial relationship with client adverse interest threat - Correct Answer-CPA's interests are opposed to the client's interest, litigation, get new auditors management participation threat - Correct Answer-CPA takes on the role of management, only problem if providing pg. 10 professoraxe l attestation services, independence only, fine if a small firm is outsourcing and needs someone to be CFO when needed -profession/regulation/legislation -client -firm - Correct Answer-three categories of safeguards code of conduct - Correct Answer-the way the "profession" contributes to safeguard of assets SOX - Correct Answer-the way "legislation" contributes to safeguard of assets SEC and PCAOB - Correct Answer-two "regulation" committees/organizations that contributes to safeguard of assets integrity and objectivity - Correct Answer-free of conflicts of interests, not knowingly misrepresent facts or subordinate judgment to others pg. 11 professoraxe l independence - Correct Answer-in the performance of professional services as required by standards, cannot be involved with the company being audited attestation - Correct Answer-the type of engagement that independence pertains to covered members - Correct Answer--members of an audit team -review partner or manager -partners in the same office as as lead partner on the audit -immediate family members of all the people above -close relatives -other accounting firm employees that consult with engagement/audit team immediate family members - Correct Answer--spouse -children -let the firm know to be sure but only would apply if these people are in financial positions pg. 12 professoraxe l -serve in advocacy role for client - Correct Answer-three basic principles for what auditors should not do from PCAOB/SEC -NO consulting allowed -can do tax services - Correct Answer-the rule for PUBLIC client regarding consulting/tax services when doing an audit for that company -according to ASB -may be okay to consult as long as safeguards are implemented - Correct Answer-the rule for PRIVATE client regarding consulting/tax service when doing an audit for that company -SOX issued -lead and review partner must rotate off client after five years -stay off for five years and then rotate back on - Correct Answer-rule for audit partner rotation on an audit covered members - Correct Answer--any person who is in a position to influence an attest engagement -all members of the audit team pg. 15 professoraxe l -review partner or manager -partners in the same office as lead partner on the audit -other accounting firm employees that consult with the engagement/audit team -immediate family members of all those people -close relatives spouse children - Correct Answer-immediate family members of covered members parents siblings - Correct Answer-close relatives of covered members cooling off period - Correct Answer--one year time frame that is mandatory if a former member of the audit team is employed with the client in a financial oversight role -the auditing firm would be unable to audit during this one year period -lack of independence/undue influence threat, but they can be hired in another position for one year and then just go into a higher position pg. 16 professoraxe l -can happen -safeguards need to be in place by the audit firm - Correct Answer-rule for private company client hiring someone from the audit team in a financial oversight role -professional competence -due professional care -planning and supervision -sufficient relevant data - Correct Answer-the four "general standards" that each member needs to comply with professional competence - Correct Answer-do not take a service you are unable to do not able to do all services a CPA can do due professional care - Correct Answer-always a good job, do not be negligent in work planning and supervision - Correct Answer-watching what people below you are doing, making sure you accurately plan what to do before it happens pg. 17 professoraxe l observation and inspection - Correct Answer--tour the facility of the client and see how they operate -learn terminology, client excited too hare with you -ask questions learning what they do -done during planning -looking at documents, loan agreements, lease agreements, board of directors minutes -internal auditors' reports, supposed to be auditing from within board of directors minutes - Correct Answer-talking about high level important issues, need to know what the board is talking about discussion among audit team members - Correct Answer-- brainstorming -application of GAAP, can be different based on specific industry -unique and unusual transactions -good training for new audit staff pg. 20 professoraxe l compliance with laws and regulations, illegal acts - Correct Answer--cooking the books, but if it is outside the realm of the financial statements -management has the first line responsibility for preventing and detecting illegal acts direct and material effect on financial statements - Correct Answer--same responsibility for detecting direct and material illegal acts as for material misstatements -more than likely types of laws that have this effect would be already familiar with these and would have people to talk to about these things that work at the audit firm material and indirect effect on financial statements - Correct Answer--outside the realm of GAAP -no assurance on these illegal acts -if you uncover something in the normal course of the audit, then gather more evidence and report it to management or the board -think about and DOCUMENT that you thought about how it would affect the audit strategy pg. 21 professoraxe l key performance indicators - Correct Answer--how the client measures their performance -clients are all different -different types are profitability, liquidity/cash flow profitability - Correct Answer-EPS, Profit Margin, Gross Profit Margin liquidity - Correct Answer-the ability to pay debts as they come due related party - Correct Answer-subsidiary and parent relationship of the company, equity method investments used for significant influence and the percentage is 20-49%, family members of upper management of two companies, need to scan for special transactions and cutting a special deal and calling it a loan when it isn't a loan -request from management about the related parties (planning) -if client is publicly traded, special form to fill out from the SEC (planning) -inspect board of directors minutes (planning) pg. 22 professoraxe l risk response of substantive procedures - Correct Answer-- obtain evidential matter about specific management assertions related to balances and transactions -evidence is circumstantial and additional evidence is needed risk response of final review - Correct Answer--assist auditor in final review of overall reasonableness -have a full set of financial statements at the end of the audit analytical procedures - Correct Answer-study of plausible relationships among both financial and nonfinancial data -unauthorized access -cyber threats -data breaches -programming errors -outdated software and systems -may be changing to a new system -employees not trained - Correct Answer-risks of IT pg. 25 professoraxe l gain understanding during the risk assessment and then decide whether to test controls - Correct Answer-internal control and IT things to look at trend analysis - Correct Answer-seeing what has happened over the years, compare current year balances to prior year balances, compare budget to actual horizontal analysis - Correct Answer-analysis of financial statements that compares account values reported on these statements over two or more years to identify changes and trends; going across (left to right in the financial statements) vertical analysis - Correct Answer-reporting an amount on a financial statement as a percentage of another item on the same financial statement, calculate each item as a percent of revenue ratio analysis - Correct Answer-the calculation and interpretation of a financial ratio pg. 26 professoraxe l you have to look at the full formula for COGS to know what is moving - Correct Answer-the way that gross profit margin can move opposite of profit margin adjusting and closing entries - Correct Answer-done at year end, oversight is by those charged with governance, performed by higher levels of management, can be an area where fraud is occurring -revenues and expenses can be reported in the wrong period, accidentally or intentionally -accuracy of accruals and deferrals (many are estimates and calculations) and the auditor needs to say this needs to be a conservative estimate - Correct Answer-risks of closing procedures and how fraud can occur through this process operational (performance) audit - Correct Answer-concerned with economy, efficiency, and effectiveness of an organization's activities compliance audit - Correct Answer-assurance service that determines whether the entity has conformed with regulations, rules, and processes pg. 27 professoraxe l 1. planning materiality 2. performance materiality 3. re-evaluation throughout the audit - Correct Answer-three steps regarding materiality 1. brainstorming 2. inquire management 3. document - Correct Answer-three steps to fraud risk assessment reasonable assurance - Correct Answer-the only thing that the auditors can give about the financial statements since nothing is guaranteed fraud - Correct Answer-intentional misstatement or omission error - Correct Answer-unintentional misstatement or omission fraudulent financial reporting - Correct Answer-lying on financial statements, when the company overstates or understates and lies or intentionally omits something, not pg. 30 professoraxe l applying GAAP appropriately and not disclosing everything that is happening misappropriation of assets - Correct Answer-stealing, embezzlement, accounts payable schemes, person causes the company to pay for something it did not receive, expense reimbursement fraud substantive testing - Correct Answer-auditor will obtain minimal evidence of internal controls reliance on controls approach - Correct Answer-conduct extensive internal control testing test control - Correct Answer-during the interim time frame, re-perform a reconciliation process and see if you get the same outcome as the employess year end substantive testing - Correct Answer-busy season, have the full year of financial statements now, dig into the highest risk areas and gather evidence and support, have a deadline pg. 31 professoraxe l timing - Correct Answer-when to do the audit process nature - Correct Answer-types of audit procedures used, some give more reliable evidence than others extent - Correct Answer-the higher risk means more evidence and more work, sampling more things the lower risk means less evidence and less work -nature -extent -timing - Correct Answer-purpose of finding the audit risk and material misstatement risk will send people from affiliated offices overseas if necessary - Correct Answer-reason for identifying geographic location of a client gaining an understanding of the client - Correct Answer- consider the level of demand for goods provided by companies in the industry of the client pg. 32 professoraxe l