During an audit class, a student suggests that it might be more cost effective if auditors always set Control Risk at Maximum and then perform the planned substantive tests to collect audit evidence. In which of the following clients audits would the student's suggestion be incorrect (must choose one of the three possible choices), if the audit is performed according to the AICPA auditing standards? A) a not for profit charity organization B) a wall street company C) a membership-only company

During an audit class, a student suggests that it might be more cost effective if auditors always set Control Risk at Maximum and then perform the planned substantive tests to collect audit evidence. In which of the following clients audits would the student's suggestion be incorrect (must choose one of the three possible choices), if the audit is performed according to the AICPA auditing standards? A) a not for profit charity organization B) a wall street company C) a membership-only company

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter2: The Auditor’s Responsibilities Regarding Fraud And Mechanisms To Address Fraud: Regulation And Corporate Governance

Section: Chapter Questions

Problem 12RQSC

See similar textbooks

Similar questions

During an audit class, a student suggests that it might be more cost effective if auditors always set Control Risk at Maximum and then perform the planned substantive tests to collect audit evidence. In which of the following clients audits would the student's suggestion be incorrect if the audit is performed according to the AICPA auditing standards? A) A not for profit charity organization B) A Wall Street Company C) A membership-only company
Which of the following is true?a. Members of an audit engagement team cannot speak with audit client officers about matters outside the scope of the audit while the audit engagement is in progress.b. Audit team members who leave the public accounting firm for employment with auditclients can provide audit efficiencies (next year) because they are very familiar with thefirm’s audit plans.c. Audit team partners who leave the public accounting firm for employment with auditclients can retain variable annuity retirement accounts established in the person’s formerfirm retirement plan.d. The public accounting firm must discuss with the audit client’s board or its audit committee the independence implications of the client’s having hired the audit engagement teammanager as its financial vice president.
The following independent situations raise questions about an auditor’s ethical conduct: An auditor accepts an engagement knowing that she does not have the specialist knowledge required. An auditor discloses confidential information about a client to a successor auditor. A public accountant agrees to be the committee chairperson for a local fundraising activity. 4. An auditor accepts a commission from an insurance company for recommending it to one of its audit clients Indicate in each of the above situation whether the effect on professional ethics is (i) a violation or (ii) not a violation, and explain the reason
What is your definition of risk? What could go wrong in an audit that auditors must consider? What are some of the risks of an audit student in an university regarding education?
Lawsuits against CPA firms are most likely to allege that the auditors were negligent in not detecting which of the following? (a) overstatement of liabilities and earnings, (b) understatement of assets and earnings, or overstatement of owners' equity. Explain the reasoning underlying your choice. Please also respond to one of your peers. Discussion Board Requirements: Discussion boards for the relevant auditing topics covered will be created online on Blackboard. (the undi ing inquoc: furthermore each student must respond to the professional analyses of at
Juan Dela Cruz has been asked to accept an engagement to audit a small financial institution. Juan Dela Cruz has not been previously audited a financial institution. Required: Describe the types of knowledge about the prospective client and its industry that Juan Dela Cruz must obtain to plan the engagement Explain how Juan Dela Cruz may obtain this knowledge Discuss how this knowledge of the client’s business and industry will help Juan Dela Cruz in planning and performing an audit in accordance with auditing standards.
Audits may be characterized as (a) financial statement audits, (b) compliance audits, (c) economy and efficiency audits, and (d) program audits. The work can be done by independent (external) auditors, internal auditors, or governmental auditors (including IRS auditors and federal bank examiners). Following is a list of the purpose or products of various audit engagements. a. Analyze proprietary schools' spending to train students for oversupplied occupations. b. Determine the fair presentation in conformity with GAAP of an advertising agency's financial statements. c. Study the Department of Defense's expendable launch vehicle program. d. Determine costs of municipal garbage pickup services compared to comparable service subcontracted to a private business. e. Audit tax shelter partnership financing terms. 1. Study a private aircraft manufacturer's test pilot performance in reporting on the results of test flights. g. Periodically have U.S. comptroller of currency examine a national…
Which of the following actions would be considered as self-interest threats? Select which two options are correct. Select one or more: A. A member of the assurance team is a director of the client. B. An auditor acts as an advocate on behalf of an assurance client. C. An auditor has potential employment with an assurance client. D. One client provides a high percentage of total audit fees.
You were recently hired by the CPA firm Honson & Hansen. Before you start working, the firm requires that you participate in the first-year staff training course. The instructor asks you to prepare answers for the following questions: a. How is audit evidence defined? b. How is the collection of audit evidence related to management assertions? c. What are the two key characteristics of audit evidence that an auditor must consider when evaluating the quality of the evidence? Describe the meaning of each of these characteristics in the context of auditing.
Create a hypothetical ethics case then describe the guidance that applies to the issue. The simplest was to complete this assignment is to use any ethical dilemma that you may have encountered in professional practice or review the AICPA Code of Conduct or the IRS Circular 230 then inventing an ethical situation based on one of these sources. Also, you can use news stories, any disciplinary actions on state CPA websites. After you describe the situation in a case format, then search and locate the ethics guidance that addresses the issue. Use this format: 1. What inspired this case idea? 2. Describe the situation in case format 3. Outline the applicable guidance and how it should be applied to this issue
According to the ethical standards of the profession, which of the following acts by a CPA is generally prohibited? A. Purchasing a product from a third party and reselling it to a client. B. Writing a financial management newsletter promoted and sold by a publishing company. C. Accepting a commission for recommending a product to an audit client D. Accepting engagements obtained through the efforts of third parties.
Sarah O’Hann enjoyed taking her first auditing course as part of her undergraduate accounting program. While at home during her semester break, she and her father discussed the class, and it was clear that he didn’t really understand the nature of the audit process as he asked the following questions. What is the main objective of the audit of an entity’s financial statements? Given the CPA firm is auditing financial statements, why would they need to understand anything about the client’s business? What does the auditor do in an audit other than verify the mathematical accuracy of the numbers in the financial statements? The audit represents the CPA firm’s guarantee about the accuracy of the financial statements, right? Isn’t the auditor’s primary responsibility to detect all kinds of fraud at the client?