Questions to review -

To what does the general standard of GAAS primarily relate?

What are the elements of a successful negligence action against auditors?

A CA may be liable to any purchaser of a security if the CA issued a clean opinion on materially misstated financial statements. When will the CA usually not be liable to the purchaser?

What must the plaintiff prove for an action brought under common law to be successful?

In a common law action, what are the defenses of the accountant?

What are the lessons for accountants that are inherent in the 1136 Tenants' Corporation v. Rothenberg case?

On what assumption is the concept of professional skepticism based?

Identify the two of the three types of audit programs and indicate the purpose of each.

Briefly explain what is meant by the terms nature, timing and extent of audit procedures.

Define independence.

During a review engagement, CA discovers that client supplied information is incomplete. To avoid potential liability due to possibly misstated financial statements, what must the CA do?

What is the purpose of indexing and cross referencing audit working papers

List six types of audit techniques and give a specific procedure for each technique

State the five principal assertions in financial statements and the related audit objective

Describe the compliance assertion [it is not one of the five principal assertions]

Once internal controls are understood, at what point in an audit are they actually tested. Is it the beginning stage of the audit, during the interim audit work or during the year-end audit work?

When should an auditor assess a clients business risks?

What is business risk?

The failure of Enron and WorldCom in the US changed how the accounting profession in the US is regulated with the implementation of Sarbanes-Oxley Act in 2002. Was the regulation of the accounting profession in Canada significantly changed by those failures?

GAAS require that analytical procedures be applied when?

At which point in the review process should analytical review procedures not be used as a substantive test

Be able to list the differences between a report qualified for a scope limitation and a standard unqualified report.

List the differences between a report in which the opinion is disclaimed because of scope limitation and a standard unqualified report.

Distinguish an except for qualified opinion situation from an adverse opinion situation.

How are accountants associated with financial statements?

In one sentence, give a description of the engagement letter

What are the purposes or functions of working papers?

What is a value for money audit?

Are limited liability partnerships permitted in Canada?

What are practice standards?

What are CICA Handbook recommendations?

What are the five analytical procedures?

What are analytical procedures used for in the planning stage of an audit?

What type of information are you likely to find in the minutes of the board of directors?

Does the reporting standard require a comment on the consistency of the accounting principles used in preparing the financial statements?

What evidence should be included in the audit working papers to comply with generally accepted auditing standards?

Define materiality.

Explain absolute size and relative size in making materiality judgments.

How should auditors use the concept of materiality.

State the audit risk model formula and give a brief explanation of its components.

Discuss four ways of managing risk in an organization.

Understand the difference between risk management and risk offset, i.e. quality management by not accepting low quality high risk clients.

What are the levels/types of assurance that an auditor can render.

What is the role of the auditor.

State the main purpose of GAAS Examination Standards.

State the main purpose of GAAS Reporting Standards.

The former General Standard of GAAS in section 5100 of the Handbook has been replaced by what?

What defenses are available to an accountant who is a defendant in a common-law action?

Under the common law, in a law suit concerning auditor liability, who is the primary beneficiary?

Name the important case that limits the auditor's liability to those third parties of which the auditor had knowledge.