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CPA -AUD 2 EXAM WITH 100% CORRECT ANSWERS LATEST UPDATE
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CPA -AUD 2 EXAM WITH 100% CORRECT ANSWERSLATEST UPDATE
Purpose of assessing control risk
The ultimate purpose of assessing control risk is to contribute to the auditor's evaluation
of the risk of material misstatements exists in the F/S
Objectives of a firm's quality control policies and procedures
The objectives of the quality control policies and procedures that are relevant to an
auditor's consideration of audit quality for a firm that performs audits of financial
statements are to provide reasonable assurance that the firm is in compliance with
applicable professional standards, and that it issues reports that are appropriate under
the circumstances. Both of those are affected by the policies and procedures relating to
engagement performance.
Section 206 of Sarbanes-Oxley
Section 206 of Sarbanes-Oxley states that a firm may not perform auditing services for
an issuer if the CEO, controller, CFO, CAO or person acting in equivalent capacity for
the issuer was employed by that same firm during the one-year period preceding the
audit.
CEO and CFO of a public company must specifically certify in each annual or quarterly
report that
Under Title III of the Sarbanes-Oxley Act of 2002, the chief executive officer and chief
financial officer of a public company shall certify in each annual or quarterly report that
they have reviewed the report; that the report does not contain any untrue statement of
material fact or omission of material fact; that financial position and results of
operations are fairly presented; and that the signing officers are responsible for
establishing and maintaining effective internal control, have evaluated the effectiveness
of internal control within 90 days prior to the report, and have presented their
conclusions as to the effectiveness of internal control.
, This service would not serve to impair the auditor's independence.
Under Sarbanes-Oxley, an auditor of an issuer will not be considered independent as a
result of performing bookkeeping services; management functions or human resources;
or internal audit outsourcing services. Other services are also prohibited, although the
auditor may perform tax services provided that they are preapproved by the client's
audit committee, having satisfied itself that the performance of the service will not
impair the auditor's independence.
Section 404(b) of the Sarbanes-Oxley Act of 2002
Section 404(b) of the Sarbanes-Oxley Act of 2002 explains that the registered public
accounting firm that prepares the audit report for an issuer shall attest to and report on
the internal control assessment made by management of the issuer.
A contingent fee may be received by a CPA for any engagements involving the
representation of a client during an examination of an income tax return or the filing of
an amended income tax return claiming a refund. No other service may be provided by
the CPA for a contingent fee.
Sarbanes-Oxley Act of 2002
The Sarbanes-Oxley Act of 2002 created the PCAOB, revised standards on auditor
independence, and required integrated audits of a company's financial statements and
management's assertion concerning internal controls. Revisions to the independence
standards led to less flexible policies with significant prohibitions against most
nonattest services.
Public Company Accounting Oversight Board
Sarbanes-Oxley created the Public Company Accounting Oversight Board and charged
it with the task of establishing auditing standards for auditors of public companies, the
entities that report to the SEC, and policing the CPA firms registered with the PCAOB
that audit public companies. The PCAOB does not have the authority to prosecute
suspected criminal activities by the registered firms.
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