Auditing Standards Quiz

A formal statement, usually at the end of an audit report, expressing the auditor's opinion on whether the financial statements are presented fairly, in accordance with the applicable accounting framework.

The auditor's explanation of how they arrived at their opinion on the financial statements. It outlines the scope and methodology of the audit.

Matters that were particularly challenging or complex during the audit, and that could have a material effect on the financial statements.

The responsibility of the company's management to prepare and present the financial statements.

The auditor's responsibility to conduct an audit in accordance with professional standards, to obtain reasonable assurance about the fairness of the financial statements.

The foundation of accounting standards in the United States, which guide the preparation and presentation of financial statements.

A specific type of audit opinion that indicates the financial statements are presented fairly and in accordance with the applicable accounting framework.

A specific type of audit opinion that indicates the financial statements are not presented fairly, in accordance with the applicable accounting framework, due to a specific identified issue.

When an auditor changes their opinion on a previous year's financial statements, they need to clearly disclose the change in their audit report.

The auditor's report must include the date of the previous report they are changing.

When the auditor changes their mind, the report should explain the original opinion issued.

The auditor must justify their change in opinion by explaining the reason for the original finding.

The auditor must clearly detail the specific modifications or information that led to the change in opinion.

The auditor must explicitly state that their opinion is different from the previous one, indicating the nature of the alteration.

When a previous auditor's report is included in the current audit, the current auditor needs to review the prior year's statements again.

When a previous auditor's report is not included, the current auditor only expresses an opinion on the current year and acknowledges the previous auditor in a separate section.

A type of audit opinion where the auditor can't form a conclusion due to a lack of sufficient and appropriate evidence.

This paragraph explains why the auditor was unable to obtain enough evidence for an opinion. It provides an explanation of the scope limitations that prevented the auditor from forming a valid opinion.

A statement included in the audit report stating that the auditor performed the audit in accordance with generally accepted auditing standards (GAAS), implying adherence to professional standards and quality control.

An explanatory paragraph added to an audit report that provides additional information about a specific matter without changing the auditor's opinion. This is used for nonissuer companies.

This type of paragraph is used for events or matters that are not specifically addressed in the financial statements. This is used for nonissuer companies.

A paragraph included in the audit report that provides an explanation for a specific topic or issue. This is used for nonissuer companies.

A change in the audit opinion due to newly discovered information after the initial audit report has been issued.

A subsequent event is an event or transaction that occurs after the balance sheet date but before the financial statements are issued or available to be issued.

An event that occurred on or before the balance sheet date. It provides additional information about existing conditions at the balance sheet date.

An event that occurred after the balance sheet date and does not relate to conditions that existed on the balance sheet date. It provides information about conditions after the balance sheet date.

Adjusting the financial statements to reflect the true amount of the event and disclosing the event in the financial statements.

Events that require adjustments and disclosures in the financial statements. They often relate to estimated accounts.

Events that are not adjusted or disclosed in the financial statements. They are usually disclosed in the notes to the financial statements.

The date on which the company's financial position is measured.

The date on which the financial statements are made available to users.

Information presented outside of the basic financial statements, often in a document containing the audited financial statements or separately.

The auditor's evaluation of the presentation of supplementary information and its fairness in relation to the financial statements.

The auditor must evaluate the presentation of supplementary information as a whole and assess whether it is fairly stated in relation to the financial statements.

The auditor should inquire about the purpose and preparation of the information, understand the methods used, and compare it to the audited financial statements and underlying records.

The auditor's opinion on supplementary information can be presented in a separate section of the auditor's report or in a separate report.

The auditor must identify the supplementary information, describe the procedures performed, and provide their opinion on its fairness.

If material misstatements are found in the supplementary information and management refuses to correct them, the auditor must issue a qualified or adverse opinion.

The auditor may withhold their report if a material misstatement is present and management refuses to revise the supplementary information.

The documentation auditors create as a record of their work during an audit. It includes details about procedures, obtained evidence, and conclusions. This documentation is crucial for supporting the auditor's opinion on the financial statements.

Audit documentation should be comprehensive enough for another experienced auditor, who wasn't involved in the original audit, to understand the audit process. This includes the work done, the evidence obtained, the issues identified, and the resulting conclusions.

Audit documentation is prepared to support the auditor's opinion about the financial statements, not the client's financial statements. The auditor is responsible for expressing an independent viewpoint on the accuracy and completeness of the accounts based on their audit work.

Before a firm can issue an audit report, a reviewer within the firm must give their concurring approval. This review confirms the audit aligns with standards and there are no major audit deficiencies.

The engagement team's conclusions, communication, and documentation of critical matters need to be reviewed to ensure the audit findings align with professional standards.

The audit engagement documentation should demonstrate how the audit team responded to identified risks. This means they should explain the steps taken to mitigate the risks and their impact on the audit.

Auditors regularly evaluate communications with management, the audit committee, and regulatory bodies, checking if the information shared is appropriate, complete, and timely.

A common understanding between the auditor and the client, in terms of the audit, is crucial to ensure the audit process runs smoothly. This includes the auditor's responsibilities.