Audit Risk & Assertions Flashcards
(8 cards)
1
Q
What is the audit risk formula?
A
Audit risk = inherent risk x control risk x detection risk
2
Q
define inherent risk
A
the susceptibility of an assertion to material misstatement without considering controls
3
Q
define control risk
A
risk that the entity’s internal controls fail to prevent/detect material misstatements
4
Q
define detection risk
A
risk that the auditor’s procedures wont detect a material misstatement
5
Q
what are the 5 assertions for account balances?
A
existence,
rights & obligations,
completeness,
valuation,
presentation & disclosure
6
Q
what does vouching test
A
occurence/existence
7
Q
what does tracing test
A
completeness
8
Q
what are the 5 assertions for account transactions?
A
occurence,
completeness,
cut-off,
accuracy,
classification
