Professional Documents
Culture Documents
more as a checklist of where you might focus your study/review. It is possible that exam questions will
be taken from any learning objective listed on this guide, also shown in bold in the PowerPoint slides.
Please take note that just because I have indicated certain objectives to be Important! does not mean
that these are the only objectives you will be tested on.
The content of this document is not meant to be all encompassing but to provide a path towards focal
areas. Meaning, use of this guide alone will not be adequate to ensure your success on this exam.
I provide some additional thoughts based on prior student success. The best scenario is that you will
have done all of the following:
You completed the pre-class readings before class and used the knowledge checks as an indication
of key concepts and topics.
You attended class and reviewed the PowerPoints (NOTE: PLEASE CHECK WEBCOURSES FOR THE
MOST RECENT VERSIONS OF THE PPTs) which indicate important learning objectives from each
chapter and contain further explanation of key concepts and topics to focus on.
You re-read the relevant chapters and/or important learning objectives and focus on related
multiple choice questions at the back of the chapter. Practicing the multiple choice questions at the
back of the chapter helps you to train to answer the type of questions you will see on the exam.
You attend the Module 3 Exam review on April 19th and ask clarification questions.
One of the things that makes this test difficult is the style of exam question. Some of the questions do
ask for best answer which makes them more challenging. Other questions/answers might seem tricky
because one or two words can change the meaning entirely.
GOOD LUCK!
3-2: Specify the conditions required to issue the standard unmodified opinion audit report.
Know the difference between a standard unmodified opinion audit report and other reports
(Figure 3-2)
Know the conditions for issuing an unmodified opinion (also called unqualified, or clean opinion)
3-4: Describe the five circumstances when an emphasis-of-matter explanatory paragraph or non-
standard wording is appropriate.
Know the situations in which an unmodified opinion is issued with an explanatory paragraph or
modified wording
o Lack of consistent application of GAAP
o Substantial doubt about the entity’s ability to continue as a going concern
o Audit agrees with a departure from GAAP
o Emphasis of other matters (material related parties, subsequent events, matters
affecting comparability with prior year, material litigation or regulatory actions, major
catastrophes)
3-5: Identify the types of audit reports that can be issued when an unmodified opinion is not justified. (it
might also help to review 3-7)
Know the difference between qualified opinions (i.e.overall financial statements are fairly
presented but there scope limitations or GAAP departures), adverse opinions (auditors have
determined financial statements are not fairly presented), and disclaimers (i.e. auditor is unable
to determine if financial statements are fairly presented, or lack of independence) and the
reasons why these opinions might result
10-1: Define fraud and distinguish between fraudulent financial reporting and misappropriation of
assets.
10-2: Describe the fraud triangle and identify conditions for fraud.
10-3: Understand the auditor’s responsibility for assessing the risk of fraud and detecting material
misstatement due to fraud.
10-6: Recognize specific fraud risk areas and develop procedures to detect fraud.
10-7: Understand interview techniques and other activities after fraud is suspected.
Understand how frauds are detected and by who (Review Figure 10-8)
Understand how auditors response/what auditors do when frauds are detected
15-2: Distinguish between statistical and nonstatistical sampling and between probabilistic and
nonprobablistic sample selection.
Understand the phases of sampling (plan, select and perform tests, evaluate results)
Distinguish between statistical versus non statistical sampling
15-5: Use nonstatistical sampling in tests of controls and substantive tests of transactions
Understand the following concepts: sampling risk (acceptable risk of overreliance, population
size tolerable exception rate, population exception rate and how they affect sample size
16-1: Describe the methodology for designing tests of details of balances using the audit risk model.
16-2: Design and perform substantive analytical procedures for accounts in the sales and collections
cycle.
16-3: Design and perform tests of details of balances for accounts receivable.
Chapter 23: Substantive Testing – Cash & Cash Equivalents (p737 -752)
23-2: Show the relationship of cash in the bank to the various transaction cycles.
23-3: Design and perform audit tests of the general cash account.
Understand in the audit of cash – the importance of the bank reconciliation, what it is and what
we can uncover by auditing cash and the bank reconciliation
o Receipt of a bank confirmation
o Accessing cut-off bank activity after year-end
o Testing the bank reconciliation
Define subsequent events and distinguish those that have a direct effect on the financial
statements (require adjustment) versus those that do not (but which may require disclosure).
Understand how auditors find subsequent events
24-5: Design and perform the final steps in the evidence-accumulation segment of the audit.
Understand procedures performed to wrap up the audit: final analytical procedures, going
concern evaluation, related party transactions
Understand the role of the management representation letter
24-6: Integrate the audit evidence gathered and evaluate the overall audit results.
Understand how auditors consider whether their evidence supports the audit opinion (is
sufficient and appropriate)
Understand review of audit documentation and engagement quality review.