Chapter 10 Flashcards
(17 cards)
1
Q
Identify Risks Through Understanding Entity (2)
A
- Document understanding of the entity in the working paper
- Purpose: identify and assess RMM
2
Q
When to Assess Risk and Develop Overall Risk Response
A
After risk is identified
3
Q
Overall risk response components (4)
A
- Types and allocation of resources
- Timing of the engagement
- Change to the nature timing
- Extent of audit procedure
4
Q
Overall audit strategy components (2)
A
- Overall risk assessment
- Risk response
5
Q
Working paper highlights (4)
A
- Scope - Accounting framework
- Timing - reporting deadline & when work will be performed
- Significant factors for the engagement team’s effort
- Nature and extent of resources necessary to perform the audit
6
Q
Where does Overall Audit Strategy info comes from (3)
A
- Entity and its environment
- Inherent risk factors
- Internal control system
7
Q
Risk assessment key points (3)
A
- Performance materiality
- Understanding the entity
- Nature of assessed risks
8
Q
Audit plan key planning decisions (4)
A
- RMM
- Approach
- Materiality
- Procedures
9
Q
Audit Approaches (3)
A
- Combined approach
- Substantive procedure only
- Test of control only
10
Q
What happens to substantive testing if you have good controls?
A
More control testing and less substantive testing is needed
11
Q
Test of control procedures (5)
A
- Inspection
- Observation
- Inquiries
- Recalculation
- Reperformance
12
Q
Test of detail procedures (5)
A
- Inspection
- Inquiries
- External confirmation
- Recalculation
- Reperformance
13
Q
Substantive analytical procedures (2)
A
- Inquiries
- Analytical procedures
14
Q
Risky areas (5)
A
- Non-routine related party trans
- Estimates
- Non compliance with law and regulations
- Going concerns
- Subsequent events
15
Q
Dual purpose test
A
Control & substantive test
16
Q
Major concern in audit (2)
A
- Risk of fraud from potential management override
- Presumed risk of fraud in revenue recognition
17
Q
Types of tests of detail (3)
A
- Inspection, confirmation, reperformance, recalculation (procedures)
- Extent of testing
- Timing (year-end/interim)
