The accounting firm of Smith & Black, CPAs, is negotiating a fee with a new audit client to charge a fee of USD 20,000 if an unmodified opinion will be provided but only USD 5,000 if a modified opinion will be provided. According to the AICPA Code of Professional Conduct, this situation is considered a. a violation of the Independence Rule. O b. a violation of the Commissions and Referral Fees Rule O c. a violation of the Discreditable Acts Rule O d. a violation of the Contingent Fees Rule Tracing one transaction through the internal control system is a. Stupid and ineffective O b. Test of detail of transactions O c. A test of controls O d. A walk through When the auditor identifies that a key control is absent he/she would most probably: a. Conclude that a material weakness or significant deficiency exists. b. Examine 100% of the population C. Consider any existing compensating controls d. Issue a qualified or disclaimer of opinion on internal controls over financial reporting When the auditor identifies that a key control is absent he/she would most probably: a. Conclude that a material weakness or significant deficiency exists. b. Examine 100% of the population C. Consider any existing compensating controls O d. Issue a qualified or disclaimer of opinion on internal controls over financial reporting Tracing one transaction through the internal control system is a. Stupid and ineffective O b. Test of detail of transactions O c. c. A test of controls O d. A walk through An auditor is likely to use procedures to support the operating effectiveness of internal controls. Which of the following would generally not be used? O a. Analytical procedures O b. Re-perform client procedures O c. Make inquiries of appropriate client personnel O d. Examine documents, records, and reports Using a risk register relate to which internal control ? component Information and Communication a O Monitoring bO .Control Environment.co Risk Assessment d O Dividing all items in the Income statement by total ?revenue is Analytic review a Test of detail of transactionsb Test of detail of balancesco Test of control do When the auditor concludes there is a change in an estimate, such as a change in the estimated useful life of an asset for depreciation purposes, affect consistency but not comparability, the auditor should express an opinion that is: O a. Adverse. o b. Unmodified opinion. O c. Qualified. O d. Unmodified opinion with an explanatory paragraph. You are preparing to issue a report on the compilation of financial statements for a nonpublic company. Prior to issuing the report you should a. perform tests of balances on selected accounts to determine if they are free from material misstatements b. read the financial statements to determine if they are free from obvious material errors c. perform limited control tests to determine if there are any material misstatements d. perform analytical procedures to determine if they are free from material misstatements
