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Introduction to Auditing and Internal Control > An Introduction to Auditing > Flashcards

An Introduction to Auditing Flashcards

1
Q

What are the 4 types of auditors?

A

External auditors
Internal auditors
Government auditors
Forensic Auditors

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2
Q

Who must all auditors be independnent of?

A

The department they are auditing.

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3
Q

What is the purpose of external audits?

A

To provide reasonable assurance that financial statements are faithful representations.

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4
Q

What Acts significantly affects auditing?

A

The Companies Act 71 of 2008
The Auditing Profession Act 26 of 2005

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5
Q

How often must public companies be audited?

A

Annually

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6
Q

What is considered when determining whether to audit non-public for-profit and non-profit companies?

A

Annual turnover
Size of workforce
Nature and extent of activities

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7
Q

What are 5 advantages of being audited?

A

Detection and rectification of errors

Audited statements are readily accepted by authorities

Increased statement credibility

Audited statements provide reasonable basis for company valuation

Provides platform for accounting system advice

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8
Q

What are 2 disadvantages of being audited?

A

Cost of auditing fees

Disruption to company operations

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9
Q

Who must auditors be registered with?

A

The Independent Regulatory Board for Auditors (IRBA)

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10
Q

What must auditors to do be registered?

A

Complete a prescribed training period and the ITC and APC exams

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11
Q

Who represents the interests of internal auditors globally?

A

The Institute of Internal Auditors (IIA)

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12
Q

What are assurance engagements?

A

Engagements that result in an auditor expressing an opinion on whether financial statements comply with IFRS.

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13
Q

What are the 7 components of assurance engagements?

A

A registered auditor

Users of financial statements

Parties responsible for preparing financial statements

A subject matter

Suitable criteria

Sufficient appropriate evidence

Written assurance report

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14
Q

What is reasonable assurance?

A

A high, but not absolute, level of assurance

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15
Q

What is fair presentation?

A

Presenting information in a manner that is:
relevant
reliable
comparable
understandable

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16
Q

What internal control?

A

The process designed by governance to provide reasonable assurance about:
the entity’s financial reporting reliability
operational efficiency
legal and regulatory compliance

17
Q

How long may an auditor serve for?

A

No more than 5 consecutive years.

18
Q

What right does an auditor have?

A

The right of access at all times to the accounting records and all books and documents of the company being audited.

19
Q

What is a reportable irregularity?

A

Any unlawful act or omission that may cause material financial loss to the entity or stakeholder, any fraudulent act and any act that represents a material breach of fiduciary duty.

20
Q

What is fiduciary duty?

A

The legal duty to act solely in another party’s interests.

21
Q

What are the International Standards on Auditing?

A

The ISA are a set of professional standards created to provide guidance for the performance of external audits

22
Q

Who sets ISAs?

A

The International Auditing and Assurance Standards Board (IAASB), under the International Federation of Accountants (IFAC).

23
Q

What are the 3 categories of directors assertions?

A

transactions

account balances

presentation and disclosure

24
Q

What are the 5 assertions about transactions?

A

Occurence
Completeness
Accuracy
Cut-off
Classification

25
Q

What are the 4 assertions about account balances?

A

Existence
Rights and obligations
Completeness
Valuation and allocation

26
Q

What are the 4 assertions about presentation and disclosure?

A

Occurrence and rights and obligations
Completeness
Classification and understandability
Accuracy and valuation

27
Q

What are the 5 Fundamental Principles of IRBA’s code of professional conduct?

A

Integrity
Objectivity
Professional competence and due care
Confidentiality
Professional behaviour

28
Q

What is the conceptual framework approach?

A

An approach used to ensure compliance to the 5 Fundamental Principles

29
Q

What are the 5 categories of threats?

A

Self-interest threats
Self-review threats
Advocacy threats
Familiarity threats
Intimidation threats

30
Q

What are the 2 categories of safeguards?

A

Safeguards created by the profession, legislation or regulation
Safeguards in the work environment

Introduction to Auditing and Internal Control (10 decks)

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