If an adequate segregation of duties does not exist, the following could occur: Misappropriation of assets Inaccurate financial documentation i. The person who prepares documentation should not be the same person to authorize and execute the transaction i. Thorough policies and procedures serve as effective training tools for employees.
D This answer is correct because a dependent child is considered to be immediate family of the covered member. Preparation of a fraudulent tax return. Accidentally failing to file a personal tax return. Preparation of fraudulent tax return for a client.
Acting as an executor of an estate that had an immaterial indirect financial interest in the client. Refinancning an automobile loan from a bank client. When nonattest service are provided, the client must: Assume all responsibilities of decision making.
Designate an individual in senior management with requisite skills and knowledge to oversee these services. Must be responsible for establishing internal controls.
All of the above. The client must oversee, evaluate and accept responsibility for results. In addition the client must establish and maintain internal controls.
In performance of any professional service, a member shall A. Maintain objectivity and integrity B.
Avoid conflicts of interest C. Not knowingly misrepresent facts or subordinate judgment D. D Rule Integrity and Objectivity states all three requirements. The audit client believes that this event could have a significant direct effect on the financial statements.
Advise management to disclose the event in notes to the financial statements. Advise management to adjust the financial statements at a point in the future when the extent of the flood and the direct effect on the financial statements is known. Conditions which come into existence after year-end which may have a significant direct effect on the financial statements should be disclosed in the notes to the financial statements.
Which of the following is an example of an advocacy threat to member independence? An engagement team member is litigating a bill for unpaid invoices by the attest client. CPA provides consulting services and charges less than a competitive rate in order to win the business of the client.
C According to Rulein performance of any professional service, a member shall maintain objectivity and integrity, avoid conflicts of interest, and not knowingly misrepresent facts. Answer C is correct because the CPA would be knowingly misrepresenting the facts.
Which of the following acts is generally prohibited by the professional standards? Witholding an audit report because fees charged to client are past due and the client has demanded their return. Witholding an audit report due to outstanding audit issues and the client has demanded their return.
Witholding an incomplete audit report requested by client. Retaining client records after an engagement is terminated prior to completion and the client has demanded their return.Independent Standard-Setting Boards.
Auditing & Assurance. The International Auditing and Assurance Standards Board sets high-quality international standards for auditing, assurance, and quality control that strengthen public confidence in the global profession.
Standards. The PCAOB establishes auditing and related professional practice standards for registered public accounting firms to follow in the preparation and issuance of audit reports. The aim of the risk assessment auditing standards was to improve the quality and effectiveness of audits by substantially changing audit practice.
Statements on Auditing Standards nos. – provide increased rigor to the audit process in a number of key areas including the assessments of.
The International Auditing and Assurance Standards Board is an independent standard-setting body that serves the public interest by setting high-quality international standards for auditing, assurance, and other related areas, and by facilitating their adoption and implementation.
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