Chapter 5 Flashcards
(48 cards)
1
Q
Audit evidence (2)
A
- Info applied to audit procedure
- Can corroborate or contradict management’s assertions
- Can be internal/external sources
2
Q
Audit procedure
A
How the info is gathered for audit evidence
3
Q
Risk assessment procedure (3)
A
- To understand entity and assess misstatement
- Not enough evidence alone
- Used to plan audit
4
Q
Test of control (2)
A
- Test if internal controls are effective
- Never used alone
5
Q
Substantive procedure (2)
A
- Focus on transaction or account balance
- Test of detail or analytical procedure
6
Q
ATT
A
- Automated Tool Technique
- Use tech for audit procedure (AI, robotic, machine learning)
7
Q
Relevance (3)
A
- Assertions/accounts
- Period of time
- Level of detail
8
Q
Reliability (2)
A
- Source of info
- Nature of info
9
Q
Type of audit procedures (7)
A
- Inspection
- Observation
- Confirmation
- Recalculation
- Reperformance
- Analytical Procedure
- Inquiry
10
Q
Inspection (2)
A
- Present or remote
- Examine asset & documents
11
Q
Observation (4)
A
- Look at process performed by others
- Present or remote
- Provide physical evidence
- Limited to a point in time
12
Q
Confirmation (3)
A
- Directed by a 3rd party
- Reliability depends on 3rd party
- Provide direct response
13
Q
Recalculation
A
Check if the math is good
14
Q
Reperformance
A
Test internal controls
15
Q
Analytical procedure (2)
A
- Evaluate data and their relationships
- Look for inconsistencies
16
Q
Inquiry
A
Obtain info from knowledgeable people in or outside the entity
17
Q
Examine
A
Look through documentation
18
Q
Scan
A
Scroll though
19
Q
Compute
A
Calculation
20
Q
Recompute
A
Recalculation
21
Q
Foot
A
Calculate the total
22
Q
Trace
A
Start from backup, then fins the entry
23
Q
Vouch
A
Start from the entry, then find the backup
24
Q
Inquire
A
Asking
25
Most expensive procedures (2)
- Physical inspection
- Physical confirmation
26
Moderate costly procedure (3)
- Inspection
- Analytical procedure
- Reperformance
27
Element of appropriate audit procedure (3)
- Effectiveness of nature, timing and extent
- Unbiased
- Clearly written
28
Nature of audit (3)
- Purpose of procedure
- Find which type of procedure to do
- Manual vs. ATT
29
Timing of audit (3)
- When is it done compared to end of period
- Further audit if done at interim
- Based on when evidence is more effective
30
Extent of procedure
Quantity performed
31
Selecting items (3)
- Select specific
- Select all
- Audit sampling
32
Clearly written
Detailed and specific
33
Appropriateness (4)
- Quality of evidence
- Relevance & reliability
- Effectiveness of audit design
- Auditor performance
34
Sufficiency (3)
- Quantity of evidence
- More risky = more evidence
- More quality = less evidence
35
Persuasiveness (3)
- Appropriateness & Sufficiency
- Consider costs
- Goal: obtain best evidence at the lowest cost
36
Type of analytical procedures (2)
- Trend analysis
- Ratio analysis
37
Reasonableness testing
Analysis of change in accounts from prior periods compared to present period
38
Precision of Analytical Procedure (3)
- More detailed more precise
- More reliable, more precise
- More plausibility & predictability, more precise
39
Steps of effective SAP (4)
- Develop ind. expectation
- Define significant differences
- Compute differences
- Investigate differences
40
Benefits of ATT (2)
- Easier to analyze data
- Increase variety of relevant info sources
41
ADA
- Audit data analytics
- Data analytics for audit evidence
42
Types of ADA (4)
- Descriptive
- Diagnostic
- Predictive
- Prescriptive
43
Step to draw conclusion from ADA (5)
- Determine ADA appropriateness
- Determine data accessibility
- Prepare data
- Evaluate reliability & relevance of data
- Interpret results
44
Factor effecting reliability of ext info (3)
- Expertise & reputation
- Extent of regulatory oversight
- Relationship of source with entity
45
Disadvantage of ATT (5)
- Depends on quality of data
- ML need a lot of data to train
- AI doesn't work well with drastic change
- Automation bias
- Can't replace human element
46
Purpose of audit documentation (3)
- Plan audit
- Record evidence
- Determine type of report
47
File archive (4)
- Final version of audit
- Made within 60d of audit report
- Additional info added at the front of the files
- Maintain audit integrity
48
Ownership of working paper
- Property of auditor
- Retained at PA firm's premise or offsite
- Need to maintain confidentiality with client
