Note 7 - cpa prep PDF

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% of coverage method for major programs - - Low risk: 20% of total - High risk: 40% of total

2 CFR 200 - Single audit act

Accountant associated with unaudited FS - Disclaim an opinion

Accounting Department: Cash receipts - - Enters receipts into AR control account - Matches documents: Check listing, Cash receipts summary, deposit summary, Post G/L

Accounts Receivable Confirmations - Existence, Rights and obligations

Acct Balances - Relevant assertions - Completeness, allocation and valuation, rights and obligations, existence

Accts payable turnover - Purchases / Av AP

Activity ratios - Measure of how effectively an enterprise is using its assets

Acts discreditable rule - - Failure to return client records - Discrimination/harassment - Negligence - Disclosure/solicitation of exam q&a - Failure to timely file tax, remit returns to others - Disclosure of confidential info - Misleading ads

Adverse interest threat - Objectivity

Adverse/Disclaimer on FS: Can only only express unmodified on single element when: - Opinion on the specific element is published separately - Specific element doesn't constitute a major portion of the FS, not based on SE/NI

Advocacy threat - Independence compromised, promote client's interest

AICPA Code separated by - - Members in public practice - Members in business - Other members

AICPA Conceptual framework - When the AICPA code of professional conduct doesn't directly address an issue

AICPA Peer review - Every 3 years

AICPA Principles - - Integrity - Responsibilities - Public interest - Objectivity and Independence - Due care - Scope and nature of services

Analytical procedures during final review - By manager or partner

Analytical procedures: investment cycle - Reasonableness of g,l and investment income

Application controls - Processing of individual transactions

AR Department: Cash receipts - Receipts into AR subsidiary records

AR Turnover - Net sales / Average receivables

AR Turnover in days - 365 / AR Turnover

Assessing fraud risk- levels - 1. Overall fraud risk 2. Specific fraud risk by altering NET of procedures 3. Risk related to management override of controls

Attest - Report

Attest engagements - - Examination - Review - Agreed upon procedures

Attestation stds vs GAAS - - No reference to FS - No reference to GAAP

Attribute sampling - To test internal controls

Audit committee preapproval - Not required: (need to bring attention before completed) - Non audit services that < 5% of total revenue

Audit document retention - - Nonissuers: 5 years from report release date - Issuers: 7 years

Audit plan - - Based on audit strategy - NET of procedures to be performed during the audit - Written plan is required

Audit process - Engagement Acceptance --> Assess Risk and Plan Response --> Perform procedures and obtain evidence --> Form conclusions --> Reporting

Audit report: Issuer - Title Addressee Intro: RR SCOPE: AA PP MM EE AA MM Opinion

Audit report: Nonissuer - Title Addressee Intro Management's responsibility: MR DIM Auditor's responsibility: REPPORTS CRAME Auditor's opinion Other reporting responsibilities

Audit risk - - Risk that FS are misstated: RMM - Risk that auditor will not detect such misstatements: DR RMM * DR

Audit strategy - Outlines scope, reporting objectives, timing, required communications and factors that determine focus of audit

Auditing around the computer - Emphasis on input and output of transaction processing

Auditor responsibilities - - Expressing an opinion - Professional skepticism

- Complying with ethical requirements - Professional judgement - Obtaining sufficient, appropriate evidence - Complying with GAAS

Auditor's responsibility- subsequent events - P ost balance sheet transactions R ep letter I nquiry M inutes E xamine latest available interim statements

AUP - - No assurance

AUP - Conditions - I ndependence A greement by both on procedures, materiality M easurability, consistency of data S ufficiency of procedures: party takes responsibility U use is restricted R esponsibity for subject matter (client) E ngagement to perform AUP on prospective: MUST include summary of significant assumptions

Authorization of sale/purchase of investments - BOD

Bank confirmation - Info on: - Loans - Contingent liabilities - Discounted notes - Pledged collateral

- Guarantee, security agreements Completeness, existence, valuation, allocation

Bank reconciliation - - Cash: completeness, existence, valuation, allocation

CAAT - Emphasis on input and processing stages of transaction processing Types - Transaction tagging - Embedded audit modules - Test data - Integrated test facility - Parallel simulation

Cash disbursement - Approving payment and signing check should be segregated

Cash fraud risk - - Lapping - Kiting

Cash ratio - (Cash equivalents + Mkt securities) / CL

Cashier - Receives cash receipts, prepares bank deposit

Change in estimate inseparable from principle - Emphasis of matter/explanatory paragraph

Classical variable sampling - - Measures sampling risk by using the variation of the underlying characteristic of interest Types: - Mean per unit estimation - Ratio estimation

- Difference estimation

Cognizant agency - - Lead agency that provides the most funding to the recipient - Receives and distributes the single audit report

Comfort letter - From CPA to underwriter before registration of client's securities

Comfort letter: Negative assurance about - - Unaudited FS if reviewed

Comfort letter: Positive assurance about - - CPA's independence - Compliance of the form of the FS to the SEC Act if FS are audited...