Audit 3 - Engagement Acceptance, Planning, & Risk Assessment Flashcards
1
Q
Financial Statement Assertions
COVER U
A
Completeness cutOff Valuation, allocation, & accuracy Existence & occurrence Rights & obligations Understandability & classification
2
Q
PCAOB Financial Statement Assertions
CEO APROVED
A
Completeness
Existence
Occurrence
Allocation Presentation Rights Obligations Valuation E Disclosure
3
Q
Audit Risk Model
A
Audit Risk = Risk of Material Misstatement x Detection Risk
RMM = Inherent Risk x Control Risk
4
Q
Assessing the Risks of Material Misstatement
IM A CPA
A
Internal Control - obtain an understanding Material misstatement - assess the risk Assessed level of risk response Control testing Perform substantive testing Audit evidence - evaluate
5
Q
Components of Internal Control
CRIME
A
Control environment Risk assessment Information & communication systems Monitoring Existing control activities
6
Q
Control Activities in a Strong System of Internal Controls
PAID TIPS
A
Pre-numbering
Authorization of transactions
Independent checks to maintain asset accountability
Documentation
Timely & appropriate performance reviews
Information processing controls
Physical controls for safeguarding assets
Segregation of duties
7
Q
Audit Evidence Hierarchy
AEIOU
A
Auditor knowledge External evidence Internal evidence Oral evidence U know it
