Reference no: EM13859663

1. What is the relationship between U. S. AND International Auditing Standards?

2. Alan, a CPA is participating in an audit engagement of ABC Company. He has performed the audit and has determined that an unqualified opinion is to be issued but he would like to expand on the rationale for the unqualified opinion. Please describe the five situations in which an explanatory paragraph would be necessary in an unqualified opinion

3.  - Based upon the below 4 situations - explain your position of "why" or "why not" the following circumstances would have violated the professions ethical standards when you are a practicing CPA?

- 1. Expressed an unmodified opinion on the current year's financial statements when fees for the prior year's audit were unpaid.

- 2. Recommended a controller's position description with candidate specifications to an audit client.

- 3. Purchased a CPA firm's practice of monthly write-ups for a percentage of fees to be received over a 3 year period.

- 4. Made arrangements with a financial institution to collect notes issued by a client in payment of fees due for the current year's audit.

4. There are four major sources of legal liability for a CPA. In addition there are defenses to such liability. List the sources of legal liability and provide at least one defense to each liability you state.

5. Describe the six related audit transaction objects and indicate whether they pertain solely to Sarbanes Oxley or non-publicly traded companies.

1. What is the difference between a significant deficiency and a material weakness as it relates to internal Control? How does the presence of one material deficiency affect the auditor's report on internal controls under the PCAOB standards? Likewise how does a material weakness impact the auditor's report on internal controls under the PCAOB standards?

2. Business risk must be assessed in performing an audit.

(a) Define business risk in association with an audit and describe several sources of such risk.

(b) How does business risk relate to the performance of preliminary analytical procedures in an audit?

(c) There are four major areas in planning an audit engagement and there are subparts to each of the four major areas. Please identify the four major areas and the subparts that are associated with the major areas.

3.  Audit Risk consists of inherent risk, control risk, and detection risk.

(a) Please completely define each of the above.

(b) Indicate whether each of the statements below is true or false and explain your position:

(1) The risk that material misstatement will not be prevented or detected on a timely basis by internal controls can be reduced to zero by having effective controls in place.

(2) Detection Risk is a function of the efficiency of an auditing procedure.

(3) Cash is more susceptible to theft than an inventory of coal because it has greater inherent risk?

(4) The Inherent risk of the theft of an inventory of cellphones at a mall store is greater than the misappropriation of cash at a COSTCO Store?

4.  Auditing standards define a confirmation as the "process of obtaining and evaluating a direct communication from a third party in response to a request for information about a particular item affecting financial statement assertions." What are the two assertions for which confirmation of accounts receivable balances provides primary evidence. Select one of the below options and EXPLAIN your reasons why you selected that option.

(a) Completeness and Valuation

(b) Valuation and Rights and Obligations.

(c) Rights and obligations and existence.

(d) Existence and Completeness

5.  Utilizing the "Auditing Through the Computer Approach" explain what types of procedures you would perform as an auditor in evaluating an online order processing system. Name a control that could compensate for inadequate segregation of duties in a computer system.

6.  When considering the use of Management's written representations as audit evidence about the completeness of an assertion, an auditor should understand that such representations - select one of the answers that best completes this sentence and explain your response:

(a) Constitute sufficient evidence to support the assertion when considered in combination with a sufficiently low assessed level of control risk.

(b) Complement, but do not replace, substantive tests designed to support the assertion.

(c) Are not part of the evidence considered to support the assertion.

(d) Replace a low assessed level of control risk as evidence to support the assertion.