Exam (elaborations)
CPA Becker A3 Detailed Questions And Expert Answers
- Course
- CPA
- Institution
- Boston University
CPA Becker A3 Detailed Questions And Expert Answers
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CPA Becker A3 Detailed Questions And ExpertAnswers
Control risk is assessed as high when: - ANS no effective controls relative to
assertion or
implemented controls are not operating effectively
Audit risk - ANS RMM X DR; risk that auditor fails to modify an opinion on FS that
are materially misstated
Detection risk - ANS the only risk that the auditor controls by altering NET (the
others can only have its assessment changed); risk that auditor will not detect a
MM that exists
Risk See-Saw - ANS detection risk has an inverse relation to RMM
significant risk - ANS A risk of material misstatement that requires special audit
consideration. Fraud risk is always considered significant risk; should ignore the
effects of controls related aka based entirely on inherent risk
tests of controls may be required when: - ANS -entity conducts business using IT
and has no documentation of transactions outside of it
-highly automated processing
-audit evidence is obtained electronically
, reliability of audit evidence - ANS AEIOU
A - auditors personal knowledge
E - external evidence
I - importance of effective controls
O - oral evidence (documents are more reliable)
U - u know this
C the FIVE CARROT WARS - ANS confirmation
footing, cross-footing, and recalculation.
inquiry.
vouching.
examination/inspection.
cutoff review.
analytical procedures.
reperformance
reconciliation
observation
tracing
walk-through
auditing related accounts simultaneously
representation letter
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