[jeff]

Welcome to the Q2 2015 CPA Exam Study Group for AUD.

World Premier: “Unmodified” (Audit Reports Rap Video) 🙂

Posted by Another71 on Thursday, November 13, 2014

Free NINJA: https://www.another71.com/cpa-exam-study-plan/

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[ladybossxo]

It is not C and D because tests of details of transactions would not typically be used to monitor the design and use of entity documents and would not typically be used to determine whether internal controls have been implemented.

CPA Exams Done.

[ladybossxo]

I think it makes this question tricky is because we think the question is asking of the objective of tests of details. But the question is asking if they're performed as tests of controls.

CPA Exams Done.

[ladybossxo]

If an auditor's risk assessment is based on the effective operation of controls, the auditor will likely:

a. Perform tests of details of transactions and account balances to identify potential errors and fraud.

b. Identify specific internal controls that are likely to detect or prevent material misstatements.

c. Apply analytical procedures to both financial data and nonfinancial information to detect conditions that may indicate weak controls.

d. Document that the additional audit effort to perform tests of controls exceeds the potential reduction in substantive testing.

CPA Exams Done.

[Anonymous]

@ladybossxo… B

[oceansister]

c?

[oceansister]

oh, I meant b 🙂

[ladybossxo]

@Boricua and Ocean: B is correct!

Here's the explanation:

Assessing risk based on the effective operation of controls involves (1) identifying specific internal controls relevant to

specific assertions that are likely to prevent or detect material misstatements in those assertions, and (2) performing tests of such controls to evaluate their effectiveness.

CPA Exams Done.

[ladybossxo]

An auditor who discovers that a client's employees paid small bribes to municipal officials most likely would withdraw from the engagement if:

a. Management fails to take the appropriate remedial action.

b. The client receives financial assistance from a federal government agency.

c. Documentation that is necessary to prove that the bribes were paid does not exist.

d. The payments violated the client's policies regarding the adherence to applicable laws and regulations.

CPA Exams Done.

[WANNABE_CPA]

A?

FAR : 68, 74, 83 Thank you God 🙂
BEC : 78 (8/27) 🙂
REG : 72 ,80 (2/25) 🙂
AUD : 69,67, 07/23

[ladybossxo]

@Wannabe: A is correct!

Here's the explanation:

An auditor should consider withdrawing from an engagement when the client does not take appropriate remedial action, even if the act of noncompliance is immaterial. This would occur because the implications of management's failure to act appropriately may affect the auditor's ability to rely on management's representations.

CPA Exams Done.

[ladybossxo]

Which of the following statements is correct concerning an auditor's responsibility to report fraud?

a. Fraudulent activities involving senior management of which the auditor becomes aware should be reported directly to the SEC.

b. The auditor is required to communicate to those charged with governance all minor fraudulent acts perpetrated by low-level employees, even if the amounts involved are inconsequential.

c. The disclosure of material management fraud to principal stockholders is required when both senior management and the board of directors fail to acknowledge the fraudulent activities.

d. The disclosure of fraudulent activities to parties other than the client's senior management and those charged with governance is not ordinarily part of the auditor's responsibility.

CPA Exams Done.

[oceansister]

d ? good morning 🙂

[ladybossxo]

Good morning @oceansister! Answer D is correct.

Explanation:

The disclosure of fraudulent activities to parties other than the client's senior management and those charged with governance is not ordinarily part of the auditor's responsibility. However, in certain circumstances, a duty to disclose outside the entity may exist:

1) to comply with certain legal and regulatory requirements

2) to a successor auditor

3) in response to a subpoena

4) to a funding agency

5) to authorities

For those of you using Becker, it is on page A3-36 (middle of the page)

CPA Exams Done.

[ladybossxo]

Which of the following statements concerning analytical procedures is correct?

A.

Analytical procedures may be omitted entirely for some financial statement audits.

B.

Analytical procedures used in planning the audit should not use nonfinancial information.

C.

Analytical procedures usually are effective and efficient for tests of controls.

D.

Analytical procedures alone may provide the appropriate level of assurance for some assertions.

CPA Exams Done.

[trish_1234]

D

AUD 69, 92 7/15 Gleim and Ninja test bank
FAR sometime in 10/15 Gleim
BEC not taken
REG not taken

[Author]

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