Reference no: EM13841625

1.R&R is a public corporation that, as of December 31, 2009, is subject to a year-end integrated audit by its independent auditing ?rm, Young & Young. An excerpt of Young & Young's audit opinion state:

In our opinion, the consolidated ?nancial statements present fairly, in all material respects, the ?nancial position of R&R and its subsidiaries as of December 31, 2009, and the results of their operations and their cash ?ows for the ?scal year ended December 31, 2009 in conformity with U.S. GAAP. Also in our opinion, R&R maintained, in all material respects, effective internal control over ?nancial reporting as of December 31, 2009, based on criteria established in Internal control-Integrated Framework issued by the

Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Required:

 (a) What kind of opinion did Young & Young give R&R for its 2009 year-end ?nancial statements?

(b) Under which set of ?nancial reporting standards does R&R report? Which set of auditing standards does Young & Young use in its audit of R&R?

(c) Under which ?nancial reporting standards might R&R report if it were a corporation based in Germany?

2.Your professor has asked you to complete a research paper concerning the link between the auditing profession and financial reporting standard setters and regulators.

Required:

For each independent situation, determine which regulating or standard-setting body you should research:

(a) The entity that sets accounting standards for the government sector.

(b) The entity that decides what is required to become a licensed CPA and conduct work as a CPA.

(c) The entity that sets standards for audits of publicly traded companies.

(d) The entity that sets ?nancial reporting standards in the U.S.

(e) The entity that prepares and administers the Uniform CPA Exam.

(f) The entity that has ultimate authority over public company reports as well as accounting and reporting standards.

3.You are a newly hired associate auditor for Praxo& Hanks, CPAs, a professional services ?rm that provides ?nancial audits, integrated audits, and tax work for a variety of private and public company clients in the mid-Atlantic region of the U.S.

Your ?rst week with the ?rm was spent in a training program for audit staff, which was led by two of the ?rm's audit managers. The ?rst day of the training program focused on understanding the responsibilities of auditors and the nature and objectives of the services provided to audit clients. Answer the following based on what you should have learned in the ?rst day of training.

Required:

(a) Distinguish between the assertions made by management in presenting ?nancial statements and reporting on ICFR, and the statements made within an auditor's report.

(b) How do management's assertions relate to audit evidence?

4.Identify each of the following items as being associated with

(a) an AICPA ?nancial statement audit.

(b) a PCAOB integrated audit.

(c) both sets of audit standards.

_____ AS 5

 

_____ "must" means a mandatory responsibility

 

_____ operating effectiveness of ICFR must be tested

 

_____ signi?cant risks must be identi?ed even if ICFR is not tested

 

_____ 10 generally accepted auditing standards

 

_____ competent evidence

 

_____ appropriate evidence

 

_____ suf?cient evidence

5.Match the following terms and descriptions.

(a) Making a judgment error does not necessarily indicate this as long as the auditor uses due professional care

(b) Presentation and disclosure

(c) Having an objective viewpoint and a questioning mind

(d) Would make a difference in the judgment of a decision maker

(e) ICFR effectiveness

(f) Competent

(g) ICFR across the entire organization

_____ management assertion

____ appropriate

____ design and operating

_____ negligence

_____ material

_____ entity level

_____ professional skepticism

 

6.Given the following stages of an audit, identify in which stage the following audit activities occur.Audit Stages

(1) Preliminary engagement activities

(2) Planning and risk assessment

(3) ICFR controls testing

(4) Substantive procedures

(5) Completion, wrap-up, and reporting

Audit Activities

(a) Vouching whether the amount at which a transaction is recorded agrees to the underlying document

(b) Identifying who should work on the audit engagement

(c) Determining whether the audit ?rm is independent of an audit client

(d) Communicating with the client's outside attorney

(e) Checking to see whether the cashier's of?ce reconciles the bank account properly once a month

(f) Coming to a ?nal decision on whether the ICFR is effective

(g) Determining the complexity of the different kinds of transactions that are handled at each of a company's places of doing businesses