Chapter 4 Section 1: Audit Evidence Flashcards
Define audit evidence
All the information the auditor uses to arrive at the conclusions on which the audit opinion is based.
What is the objective of substantive testing?
Detection of material misstatement
When is audit evidence gathered?
When performing: risk assessment procedures tests of controls substantive procedures other audit procedures
What is included in corroborating evidence?
Meeting minutes, confirmations, industry analyst report, competitor data, observation, inquiry, inspection
Are balance sheet or income statement accounts more predictable for analytical procedures?
Income statement
What is a positive confirmation?
Stating that the party agrees or disagrees with the information in the request
What is a negative confirmation?
Responding only if they disagree with the information in the request
What are the standard auditing procedures?
FIVE CARROT CAR
Footing, cross-footing, and recalculation Inquiry Vouching Examining/inspecting Confirmation Analytical procedures Reperformance Reconciliation Observation Tracing Cutoff review Auditing related accounts simultaneously Representation letter Subsequent events review
Define footing, cross-footing, and recalculation
Verifying mathematical accuracy
Define vouching
Examine support for what has been recorded in the records and statements
Define tracing
Starting with source documents and making sure they’re recorded properly
Define cutoff review
Review year-end transactions
Which assertions apply to account balances?
CVER
Completeness
Valuation, allocation, and accuracy
Existence and occurrence
Rights and obligations
Which assertions apply to transaction events?
COVEU
Completeness Cutoff Valuation, allocation, and accuracy Existence and occurrence Understandability and classification
Which assertions apply to presentation and disclosure?
CVRU
Completeness
Valuation, allocation, and accuracy
Rights, obligations, and occurrence
Understandability and classification
