A4 Flashcards
(21 cards)
Audit evidence
Information the auditor uses to arrive at opinion
Audit evidence is gathered while
Risk assessment
Test of controls
Substantive procedures
Other audit procedures
Types of evidence
Accounting record Corroborating evidence (minutes, confirmation, inquiry) - gives additional evidence
Evidence should be
Audit persuasive rather than conclusive
Hierarchy of audit evidence
Auditor’s direct personal knowledge
External evidence
Internal evidence
Oral evidence
Substantive procedures
Test of details
Substantive analytical procedures
Analytical procedures
Comparison of financial data
Ratio analysis
Expectation during procedures based on
Financial information for comparable prior periods
Anticipated results from budgets and forecasts
Relationships among data
Fin data vs non-fin data
Industry norm
Test of details
Tracing forward from source doc to journal entry (completeness)
Vouching backward from entry to source (existence)
Extrernal confirmation
Received directly from third party
Positive and negative
Positive - direct respond
Negative - only if disagree
Standard auditing procedures
Footing, cross-footing, recal -math accuracy Inquiry Vouching Examination/inspection (records, docs, assets) Confirmation (bank) Analytical procedures Reperformance Reconciliation (balance with physical) Observation Tracing Cutoff review Auditing related accounts simultaneously Representation letter Subsequent events review
Transaction cycles
Revenue (+receivables, cash receipt) Expenditure (+payables, cash disbursement) Inventory Investment PP&E Payroll and personnel Financing
Revenue risks
Fraud risk (early, fictious, no returns, channel stuffing) Internal control (order-approval-shipment-billing-accounting)
Lapping
Cash concealed by failing to account receipt
Kiting
Draw check in another bank
Audit objectives regarding related parties
Recognize fraud risk factors
Conclude whether fair presentation
Evidence that disclosed, identified and accounted
Procedures regarding related parties
Evaluating the company's controls related to the authorization and approval Asking managements for the names Reviewing the sec filings Reviewing material transactions Reviewing prior year
Identifying RP transactions
Loan guarantees
Unusual transactions near year-end
Nonmonetary transactions
Procedures regarding estimates
Review and test procedures
Develop independent estimate
Review subsequent events
Who performs analytical procedures during overall review?
Manager/partner
