Deck 9: Other Assurance Services, Internal and Governmental Financial Auditing and Operations Auditing

Question 1

The two types of services provided in connection with ISRE 2410 and ISRS 4410:

A) examination and review services.
B) compilation and review services.
C) management advisory services and compilations.
D) audit and examination services.

Answer 1

compilation and review services.

Question 2

Practitioners who perform compilation services are referred to in ISRS 4410 as:

A) auditors.
B) bookkeepers.
C) CPAs.
D) accountants.

Answer 2

accountants.

Question 3

Which of these is a compilation report under IFRS 4410?

A) Compilation without independence.
B) Compilation with limited independence.
C) Compilation with a departure from the applicable financial reporting framework.
D) Compilation that omits substantially all disclosures.

Answer 3

Compilation with a departure from the applicable financial reporting framework.

Question 4

An examination results in a _______ conclusion.

A) equivocal
B) negative
C) positive
D) limited assurance

Question 5

An auditing firm can issue a compilation report:

A) only if all the partners and the staff in the office performing the engagement are independent.
B) only if the partners are independent.
C) even if it is not independent.
D) if the partners have no material or direct immaterial interest in client.

Question 6

The distribution of which of the following types of reports is unrestricte?

A) Examinations and agreed- upon procedures.
B) Examinations and reviews.
C) Reviews and agreed- upon procedures.
D) Examinations, reviews, and agreed- upon procedures.

Question 7

For reviews, an accountant does which of the following?

Question 8

In the U.S., the AICPA has developed specific standards for assurance engagements in all but which of the following areas?

A) Prospective financial statements.
B) Compliance with laws and regulations.
C) Pro forma financial information.
D) Standards have been developed for all of the above.

Question 9

Which of the following is not an area of emphasis in a review conducted under ISRE 2410?

A) Make inquiries of management.
B) Obtain knowledge of the client.
C) Obtain knowledge of the accounting principles and practices of the client's industry.
D) Tests of internal controls.

Question 10

Distribution of which of the following types of reports is limited?

A) Audit.
B) Agreed- upon procedures.
C) Examination.
D) Review.

Question 11

Which of the following forms of review are permissible under ISRE 2410

A) Reviews without auditor independence.
B) Review on financial statements that omit substantially all disclosures.
C) Review without limited procedures.
D) Review with limited assurance.

Question 12

Evidence for a review engagement consists primarily of:

Question 13

Which of the following services is performed under AICPA attestation standards?

Question 14

Reports on debt compliance and similar engagements may be issued as a separate report or as part of a report that expresses the auditor's opinion on the financial statements. When they are issued as a part of the report on the financial statements, it is done by:

A) adding a middle paragraph before the opinion paragraph.
B) adding a paragraph between the introductory and scope paragraphs.
C) adding a paragraph after the opinion paragraph.
D) adding an additional phrase or sentence within the opinion paragraph.

Question 15

Which of the following is not required under ISAE 3000 for an assurance engagemet?

A) The engagement must serve as the basis for a positive conclusion.
B) The practitioner must have adequate knowledge of the subject matter sufficient understanding of the client's internal control.
C) The subject matter must be evaluated against suitable criteria.
D) An attitude of professional skepticism must be maintained.

Question 16

A report on an examination is _________ as to the distribution by the client after it is issued.

A) restricted
B) unrestricted
C) directed
D) limited

Question 17

Which are prospective financial statements that present an entity's expected financial position, results of operations, and cash flows, to the best of the responsible party's knowledge and belief

Question 18

Which are prospective financial statements that present an entity's financial position, results of operations, and cash flows, to the best of the responsible party's knowledge and belief, given one or more hypothetical assumptions?

Question 19

General use statements are prepared for use by:

A) known contractual parties.
B) regulators.
C) any third party.
D) internal auditor.

Question 20

Which of the following procedures is not included in a review service engagement?

A) Procedures designed to identify relationships among data that appear to be unusual.
B) A study and evaluation of internal control.
C) Inquiries of management.
D) Looking at the results of any internal audit and any subsequent actions taken by management.

Question 21

Why do standards prohibit accepting an engagement on a projection for general use?

A) The auditor is not qualified to report on the use of accounting standards in the projected financial statement.
B) Underlying hypothetical assumptions are difficult to interpret without obtaining additional information.
C) Reports on projections are not well understood by the general public.
D) The auditor's procedures would violate auditing standards.

Question 22

SysTrust engagements should be performed following guidance provided by the:

A) AICPA attestation standards.
B) AICPA accounting standards.
C) AICPA auditing standards.
D) AICPA review standards.

Question 23

An auditor's standard report on the examination of a forecast should not include a:

A) statement that the prospective results may not be achieved.
B) an opinion on the reasonableness of management's assumptions.
C) statement that the auditor expresses only limited assurance that the results may be achieved.
D) disclaimer of responsibility to update the report for events occurring after the report's date.

Question 24

ISRE 2410 recommends five main activities are performed during a financial statement review engagement, one of which is to 'perform analytical procedures.' State the other four.

Question 25

Auditors frequently audit statements prepared on bases other than IFRS. Discuss four commonly used bases other than IFRS.

Question 26

Draft a report that would be appropriate when an auditor has performed a compilation of financial statements in accordance with IFRS.

Question 27

Draft a report that would be appropriate when an auditor has made a proper review of the financial statements of a nonpublic entity and has concluded they appear reasonable.

Question 28

Discuss the main difference between an audit of specified elements, accounts, or items to a standard audit of financial statements in accordance with IFRS.

Question 29

Match each the source of authoritative support for that engagement with the type of engagement

-Compilation of financial statements prepared in accordance with IFRS for a nonpublic company.

A) International Standards on Auditing
B) International Standard on Related Services (ISRS) 4410
C) International Standard on Assurance Engagements (ISAE) 3000
D) International Standard on Assurance Engagements (ISAE) 3400
E) International Standard on Review Engagements (ISRE) 2410
F) No standards have been set for these engagements

Question 30

Match each the source of authoritative support for that engagement with the type of engagement

-Examination of forecasted financial statements.

A) International Standards on Auditing
B) International Standard on Related Services (ISRS) 4411
C) International Standard on Assurance Engagements (ISAE) 3001
D) International Standard on Assurance Engagements (ISAE) 3401
E) International Standard on Review Engagements (ISRE) 2410
F) No standards have been set for these engagements

Question 31

Match each the source of authoritative support for that engagement with the type of engagement

-Operational auditing.

A) International Standards on Auditing
B) International Standard on Related Services (ISRS) 4412
C) International Standard on Assurance Engagements (ISAE) 3002
D) International Standard on Assurance Engagements (ISAE) 3402
E) International Standard on Review Engagements (ISRE) 2410
F) No standards have been set for these engagements

Question 32

Match each the source of authoritative support for that engagement with the type of engagement

-Audits of financial statements for a nonpublic entity prepared in accordance with IFRS.

A) International Standards on Auditing
B) International Standard on Related Services (ISRS) 4413
C) International Standard on Assurance Engagements (ISAE) 3003
D) International Standard on Assurance Engagements (ISAE) 3403
E) International Standard on Review Engagements (ISRE) 2410
F) No standards have been set for these engagements

Question 33

Match each the source of authoritative support for that engagement with the type of engagement

-Limited assurance engagements other than audits, reviews, or compilations of historical financial statements prepared in accordance with IFRS.

A) International Standards on Auditing
B) International Standard on Related Services (ISRS) 4414
C) International Standard on Assurance Engagements (ISAE) 3004
D) International Standard on Assurance Engagements (ISAE) 3404
E) International Standard on Review Engagements (ISRE) 2410
F) No standards have been set for these engagements

Question 34

Match each the source of authoritative support for that engagement with the type of engagement

-A review of unaudited financial statements designed to provide limited assurance that no material modifications need be made to the statements in order for them to be in conformity with IFRS.

A) International Standards on Auditing
B) International Standard on Related Services (ISRS) 4415
C) International Standard on Assurance Engagements (ISAE) 3005
D) International Standard on Assurance Engagements (ISAE) 3405
E) International Standard on Review Engagements (ISRE) 2410
F) No standards have been set for these engagements

Question 35

An accountant must be independent to issue a compilation report.

Question 36

An auditor must be independent to undertake a review service engagement.

Question 37

WebTrust services are performed under the direction of the IAASB.

Question 38

When performing a review of financial statements, an auditor is required to obtain a letter of representation from management.

Question 39

An auditing firm can issue a compilation report even if it is not independent with respect to the client.

Question 40

The IIA Code of Ethics is based on all but which of the following ethical principles?

A) Competency.
B) Confidentiality.
C) Independence.
D) Integrity.

Question 41

Statements on Internal Auditing Standards are issued by the:

A) FASB.
B) IAASB
C) AICPA.
D) IIA.

Question 42

Auditing standards ________ external auditors to use the internal auditors for direct assistance on the audit.

A) permit
B) prohibit
C) discourage
D) encourage

Question 43

Which of the following is not one of the broad categories of operational audits?

A) Special assignment audits.
B) Internal audits.
C) Organizational audits.
D) Functional audits.

Question 44

The IIA's professional practice framework (including its code of ethics and International Standards for the Professional Practice of Internal Auditing) is commonly referred to as the:

A) Red Book.
B) Green Book.
C) Blue Book.
D) Yellow Book.

Question 45

Which of the following can affect the independence of operational auditors?
$\begin{array}{llllll} \text { Responsibilities} & \text { Reporting Structure}\end{array}$

A) $\begin{array}{llllll}&& \text { No } &&&&&& \text { Yes } \end{array}$
B) $\begin{array}{llllll}&& \text { Yes } &&&&&& \text { No } \end{array}$
C) $\begin{array}{llllll} &&\text { No } & &&&&&\text { No } \end{array}$
D) $\begin{array}{llllll}&&\text { Yes } &&&&& \text { Yes }\end{array}$

Question 46

A(n)) ________audit emphasizes how efficiently and effectively functions interact.

A) financial
B) operational
C) organizational
D) compliance

Question 47

To be effective, an internal audit department must report to:

Question 48

External financial statement auditors must obtain evidence regarding what attributes of an internal audit department if the external auditors intend to rely on the internal auditor's work?

$\begin{array}{llllll} \text { Independence from}\\\text { the Audit Committee} & \text { Competence}\end{array}$

A) $\begin{array}{llllll}&& \text { No } &&&&&& \text { No } \end{array}$
B) $\begin{array}{llllll}&& \text { Yes } &&&&&& \text { No } \end{array}$
C) $\begin{array}{llllll} &&\text { Yes } & &&&&&\text { Yes } \end{array}$
D) $\begin{array}{llllll}&&\text { No } &&&&&& \text { Yes }\end{array}$

Question 49

What organization establishes auditing standards for internal auditors and what are those standards commonly called?

Question 50

Define internal auditing.

Question 51

Discuss the main sources of criteria that an operational auditor can use to evaluate efficiency and effectiveness.

Question 52

Operational audits are primarily geared toward compliance.

Question 53

Reports of internal audits are standardized just as those for external audits.