Treasure Hunt Terms
Residual interest in an enterprise
Equity
__________exist when one party has the ability to exercise, directly or indirectly, control, joint control or significant influence over the other. Two or more parties are _________ when they are subject to common control, joint control or common significant influence.
Related parties
related
For any assurance engagement when should subsequent events been performed up to?
Date of the assurance report
True/False: Under ASPE an entity with subsidiaries must prepare consolidated financial statements.
False.
S1591.24 states:
An enterprise shall make an accounting policy choice to either:
(a) consolidate its subsidiaries (see CONSOLIDATED FINANCIAL STATEMENTS, Section 1601); or
(b) account for subsidiaries that it controls through:
(i) voting interests, potential voting interests, or a combination thereof, using the cost method (see paragraphs 1591.26A-.26B) or the equity method (see paragraph 1591.27);
How often are you required to prepare and receive a signed engagement letter?
BDO Technical Manual Chapter 4 states:
Once agreed with the client, an engagement letter remains effective until it is replaced. However, its contents are to be reconsidered at least annually to ensure that it continues to reflect the client's circumstances. If any change takes place that materially affects the scope or understanding of the engagement, the engagement team send a revised engagement letter (as required by paragraph 4.18). Ordinarily an engagement letter would be reissued at least every three years.
Share that lets the issuer buy back the share at a specific price.
Redeemable
____________is the amount of consideration paid or received as established and agreed to by related parties.
Exchange amount
True/False: You must document your threshold for variance analysis in review engagements.
False - your 'threshold' for variance analysis in a review engagement should be based on professional judgement
When must a contingent loss be disclosed under ASPE in the financial statements?
S3290.18 states:
The existence of a contingent loss at the date of the financial statements shall be disclosed in notes to the financial statements when:
(a) the occurrence of the confirming future event is likely but the amount of the loss cannot be reasonably estimated;
(b) the occurrence of the confirming future event is likely and an accrual has been made but there exists an exposure to loss in excess of the amount accrued; or
(c) the occurrence of the confirming future event is not determinable.
When may a review engagement report be dated?
CSRE 2400.103 states:
103. The practitioner shall date the report no earlier than the date on which the practitioner has obtained sufficient appropriate evidence as the basis for the practitioner's conclusion on the financial statements, including being satisfied that: (Ref: Para. A167-A170)
(a) All the statements that comprise the financial statements under the applicable financial reporting framework, including the related notes where applicable, have been prepared; and
(b) Those with the recognized authority have asserted that they have taken responsibility for those financial statements.
Share that lets the holder sell the share back to the issuer at a set price.
Retractable
__________is a lease that, from the point of view of the lessee, transfers substantially all the benefits and risks incident to ownership of property to the lessee.
capital lease
You discover a material error in the current year during this year's assurance engagement. You discuss this with the client who decides to correct the comparative figures in the current year. What must you do?
AND NO THE ANSWER IS NOT ASK LAINA
Consult through the online consultation portal.
BONUS: Where do you find the online consultation portal?
Jointly controlled assets:
How are jointly controlled assets recognized on the financial statements?
S3056.18 states:
An investor in jointly controlled assets in which the investor has joint control shall recognize:
(a) in its balance sheet, its share of the jointly controlled assets and its share of any liabilities incurred jointly with the other investors in relation to the joint arrangement; and
(b) in its income statement, any revenue from the sale or use of its share of the output of the joint arrangement, and its share of any expenses incurred by the joint arrangement.
How do you determine the sample size when testing completeness?
When sampling for completeness, it is not possible to pick a representative sample, because by definition that true population is unknown (we are looking for items that are missing). In this case, we may select a sample from the reciprocal population. Since the true size of the population is unknown, any formulas that assist in the determination of an appropriate sample size are meaningless; thus the extent of the sample size is up to professional judgement.
_____________gains shall not be accrued in financial statements
Contingent
S3290.17 states "contingent gains shall not be accrued in financial statements"
A type of derivative in which two counterparties exchange cashflows of one party's financial instrument for those of the other party's financial instrument.
Swap
You have a brand new audit engagement with a private school and need to design a test for testing tuition revenue. Since you are worried about completeness you decide the best approach would be to calculate a sample based on the tuition balance, pick some samples from the ledger and agree them to the receipts and invoices.
Are you testing completeness in the described procedure above?
No! The first rule in tests of completeness is to NEVER test from the general ledger.
Testing from the general ledger to support is a test of existence.
Testing from the source of the transaction to the general ledger is a test of completeness.
Completeness is focused on what is not there, whereas existence is focused on if what is there belongs there.
________ of an entreprise is the continuing power to determine its strategic operating, investing and financing policies without the cooperation of others.
Control
Name an effective and efficient way to audit FSAs and assertions within the BDO Audit Methodology.
Directional testing
Option that gives the holder the right, but not the obligation, to sell an underlying asset or instrument at a strike price in the future.
Put Option
Option that gives the holder the right but not the obligation to buy an underlying asset or instrument at a strike price in the future.
Call Option
If you are planning to stratify the population, do you need to increase the sample size by 25% to address variability?
No. Stratification of the population by size means you do not have to bump up your sample size by 25%.
There are other sampling techniques such as Monetary Unit Sampling (MUS) or Probability Proportional to Size (PPS) sampling that automatically take into account the variability in the population so no further adjustments to the sample size are required to address variability.
Under the new S3856 Financial Instruments how are are RoMRs classified as a liability measured?
Initial and subsequent measurement is at the redemption amount with no option to reclassify to equity even if conditions change.
True/False: It is never acceptable to do audit like procedures in a review engagement.
False.
CSRE 2400.57 states that if the practitioner becomes aware of a matter(s) that causes the practitioner to believe the financial statements may be materially misstated, the practitioner shall design and perform additional procedures sufficient to enable the practitioner to: (Ref: Para. A114-A118)
(a) Conclude that the matter(s) is not likely to cause the financial statements as a whole to be materially misstated; or
(b) Determine that the matter(s) causes the financial statements as a whole to be materially misstated.