Financial Auditing and Assurance Services

<p>An understanding in an engagement letter (A)</p> Signup and view all the answers

<p>Yes, if the CPA can supervise and evaluate the specialist’s work (B)</p> Signup and view all the answers

<p>Review of the client's proposed business plan (B), Analysis of the client’s accounting system (D)</p> Signup and view all the answers

<p>A basis for expressing limited assurance (C)</p> Signup and view all the answers

<p>It conveys limited assurance on assertions made by management. (B)</p> Signup and view all the answers

<p>To aid in a faster resolution of legal proceedings (A)</p> Signup and view all the answers

<p>It ensures public confidence in the quality of service (D)</p> Signup and view all the answers

<p>Recklessly using unverifiable information (C)</p> Signup and view all the answers

<p>Objectivity (A)</p> Signup and view all the answers

<p>Objectivity (C)</p> Signup and view all the answers

<p>Issuing a qualified opinion due to limitations in auditing scope (B)</p> Signup and view all the answers

<p>It provides the basis for credible conclusions (C)</p> Signup and view all the answers

<p>Providing services without proper licensing (B)</p> Signup and view all the answers

<p>To conclude that there are no material misstatements. (D)</p> Signup and view all the answers

<p>All material items detected during the audit. (B)</p> Signup and view all the answers

<p>Engage specialists familiar with the industry. (A)</p> Signup and view all the answers

<p>In areas where the greatest risk of material errors exists. (C)</p> Signup and view all the answers

<p>It requires professional judgment. (B)</p> Signup and view all the answers

<p>To set definitive auditing procedures for various situations. (B)</p> Signup and view all the answers

<p>Inform the Audit Committee of the findings. (B)</p> Signup and view all the answers

<p>Determining the amount of audit evidence to gather. (D)</p> Signup and view all the answers

<p>In response to a specific inquiry from a major stockholder. (A)</p> Signup and view all the answers

<p>To disclose a tax fraud committed by the client. (C)</p> Signup and view all the answers

<p>Self-interest review threat (A)</p> Signup and view all the answers

<p>As part of a peer review process. (A)</p> Signup and view all the answers

<p>When a court of law subpoenas them. (B)</p> Signup and view all the answers

<p>To fulfill a client's tax liability. (C)</p> Signup and view all the answers

<p>Sharing information with an accountant from another firm. (A)</p> Signup and view all the answers

<p>Disclosing client information to the IRS without consent. (D)</p> Signup and view all the answers

<p>Warranting the infallibility of the work performed. (C)</p> Signup and view all the answers

<p>Any of the given choices. (B)</p> Signup and view all the answers

<p>Auditor (D)</p> Signup and view all the answers

<p>They must be impartial when dealing with the client. (D)</p> Signup and view all the answers

<p>The auditor must be without bias with respect to the client entity. (B)</p> Signup and view all the answers

<p>To maintain public confidence in the profession. (A)</p> Signup and view all the answers

<p>To emphasize the auditor's independence from the management. (B)</p> Signup and view all the answers

<p>They must ensure their services do not conflict with their independence. (D)</p> Signup and view all the answers

<p>All of the given choices are correct. (A)</p> Signup and view all the answers

<p>General guidelines to assist auditors. (B)</p> Signup and view all the answers

<p>By using adequate professional judgment when applying the standards. (B)</p> Signup and view all the answers

<p>Auditing standards are applied uniformly, but procedures may vary. (B)</p> Signup and view all the answers

<p>PFRS outlines the principles for presentation of financial statements, while GAAS specifies auditor standards. (C)</p> Signup and view all the answers

<p>Laws equivalent to regulatory frameworks for auditors. (A)</p> Signup and view all the answers

<p>To evaluate which standards are applicable to the engagement. (C)</p> Signup and view all the answers

<p>Auditors must adjust procedures based on each client’s unique conditions. (B)</p> Signup and view all the answers

Users of financial statements desire an independent assessment to ensure accuracy and reliability, as complex transactions, lack of clear criteria, and remoteness from the organization can undermine confidence.

Professional services provided on financial or other information to improve the quality of decision-making. These services strengthen confidence in the information by providing objective and independent evaluation.

An audit that checks if an organization follows its own policies and external regulations. It's about confirming adherence to rules and standards.

A level of assurance service on financial statements. It doesn't provide an opinion on the fairness of presentation, but assesses the financial statements for potential material misstatements.

A CPA firm can employ a non-CPA specialist in areas like computer systems, provided the CPA firm can oversee the specialist's work and validate the results.

CPAs can offer various consulting services to clients, including analyzing accounting systems, reviewing business plans, and preparing financing-related information.

The auditor aims to gather enough evidence to conclude that the financial statements are free from any material misstatements, taken as a whole.

Auditors must inform the audit committee about any noncompliance with laws and regulations detected, even if management has addressed it.

When an auditor lacks industry expertise for the client's business, they should gain the necessary knowledge or engage experts.

Auditors concentrate on areas where the risk of material errors or irregularities is highest.

Determining the amount of evidence to collect requires professional judgment, not just following set rules or statistical analysis.

PSA's are authoritative guidelines that provide procedures applicable in various auditing situations, aiming to reduce inconsistency and divergence in auditor opinions.

PSA's are authoritative statements, enforced through the Code of Professional Conduct.

PSA's help clarify and interpret the meaning of generally accepted auditing standards.

An auditor can deviate from a Philippine Standard on Auditing (PSA) if they believe the requirement is impractical or impossible to perform due to the insignificance of the amount involved.

Auditing Standards are general guidelines that help auditors conduct their work effectively. They are not laws but are crucial for ensuring consistency and quality in audits.

PSAs provide subjective guidance to allow auditors to use professional judgment and tailor their audit procedures to the specific circumstances of each engagement.

While Auditing Standards remain consistent across audits, Auditing Procedures can vary depending on the specific circumstances of each engagement.

PFRS focuses on the presentation of financial statements and underlying transactions, while GAAS establishes the standards for conducting audits.

Philippine Standards on Auditing (PSAs) are a set of auditing standards issued by the Auditing and Assurance Standards Council (AASC). They are not laws, but serve as guidelines for auditors.

While GAAS are not a substitute for PFRS, they provide guidance for auditors to identify and address PFRS violations during audits.

A professional accountant has a duty to protect client confidentiality, but there are exceptions where disclosure is allowed.

A professional accountant may disclose confidential information to comply with professional standards, ethics requirements, investigations by regulatory bodies, or to quality reviews by professional bodies.

A subpoena or summons from a court of law can override client confidentiality, allowing a CPA to disclose information.

A peer review process, part of quality assurance, allows disclosure of confidential information between CPA firms.

A CPA must obtain specific consent from the client before disclosing confidential information to any other party.

Unpaid fees from an audit client can create a self-interest threat, potentially compromising independence and objectivity.

When a CPA's financial interests could influence their professional judgment, it creates a self-interest threat.

Longstanding relationships with clients can create a familiarity threat, potentially leading to reduced objectivity.

The auditor must be free from any bias or influence that could affect their judgment or objectivity in conducting the audit.

The auditor must have the necessary skills, knowledge, training, and experience to perform the audit effectively.

If an auditor is not qualified to perform an audit, they are obligated to either acquire the necessary skills or decline the engagement.

The decision about an auditor's independence ultimately rests with the audit committee.

An independent auditor is responsible for providing an impartial opinion on the fairness of the financial statements and is not solely responsible to third-party users.

The auditor should avoid any activities that could create the impression of bias or lack of objectivity, even if they are not actually biased.

Publicly traded companies appoint the outside auditor through their board of directors or stockholder vote to emphasize independence from management.

A set of ethical guidelines that professionals must follow to ensure trust and quality of service.

This principle requires accountants to keep client information private, protecting sensitive data and maintaining trust.

This principle demands that accountants remain unbiased and impartial, avoiding personal gain and conflicts of interest.

This principle mandates honesty and truthfulness in reporting and dealing with stakeholders. It prohibits fraud and misleading information.

This principle emphasizes the requirement for accountants to continuously update their skills and knowledge to provide high-quality services.

These are the internal documents created by an accountant during an audit or engagement. They include notes, calculations, and evidence gathered during the work.

Accountants may be required to release client information legally, such as in lawsuits or investigations. This is a sensitive area where ethical balance is key.

When an accounting practice is sold, the working papers related to clients may be transferred to the new owner, but with restrictions to protect confidentiality.