Chapter 5 Flashcards Preview

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Flashcards in Chapter 5 Deck (37):
1

statements made by management regarding the recognition, measurement, presentation, and disclosure of items included in the financial statements

Assertions

2

Assertions classes of transactions

Occurrence
Completeness
Accuracy
Cut-off
Classification

3

Transactions and events that have been recorded have occurred and pertain to the entity.

Occurrence

4

All transactions and events that should have been recorded have been recorded.

Completeness

5

Amounts and other data relating to recorded transactions and events have been recorded appropriately.

Accuracy

6

Transactions and events have been recorded in the correct accounting period.

Cut-off

7

Transactions and events have been recorded in the proper accounts.

Classification

8

recorded assets, liabilities, and equity interests exist

Existence

9

rights to assets held or controlled by the entity, and liabilities (obligations) of the entity

Rights and obligations

10

assets, liabilities, and equity interests are included in the financial statements at appropriate amounts and any resulting valuation or allocation adjustments are appropriately recorded

Valuation and allocation

11

quantity (sufficiency) and quality (appropriateness) of audit evidence gathered

Sufficient appropriate evidence

12

extent to which information is logically connected to an assertion

Relevance

13

extent to which information reflects the true state of the information

Reliability

14

evidence obtained as a direct written response to the auditor from a third party, in paper form, or by electronic or other medium

External confirmation

15

a letter sent directly by an auditor to their client's bank requesting information such as the amount of cash held in the bank (or overdraft), details of any loans with the bank, and interest rates charged

Bank confirmation

16

a letter sent directly by an auditor to their client's vendor or supplier requesting information about amounts owed by the client to the vendor or supplier

Payable confirmation

17

a letter sent directly by an auditor to their client's credit customers requesting information about amounts owed to the client by the debtor

Receivable confirmation

18

a letter sent directly by an auditor to a third party, who is asked to respond to the auditor on the matter(s) included in the letter in all circumstances (that is, whether they agree or disagree with the information included in the auditor's letter)

Positive confirmation

19

a letter sent directly by an auditor to a third party, who is asked to respond to the auditor on the matter(s) included in the letter only if they disagree with the information provided

Negative confirmation

20

information that provides evidence about details recorded in a client's list of transactions (for example, invoices and bank statements)

Documentary evidence

21

a letter sent to a client's lawyer asking them to confirm the details of legal matters outstanding identified by management

Legal letter

22

a letter from the client's management to the auditor acknowledging management's responsibility for the preparation of the financial statements and details of any verbal representations made by management during the course of the audit

Management representation letter

23

responses of key client personnel to auditor enquiries throughout the course of the audit

Verbal evidence

24

evidence gathered by an auditor checking the mathematical accuracy of the numbers that appear in the financial statements

Computational evidence

25

inspection of a client's tangible assets, such as its inventory and fixed assets

Physical evidence

26

data held on a client's computer, files sent by e-mail to the auditor, and items scanned and faxed

Electronic evidence

27

information created by the client (for example, customer invoices, purchase orders)

Internally generated evidence

28

information created by a third party (for example, supplier statements, bank statements)

Externally generated evidence

29

the auditor responsible for signing the audit report

Group engagement partner

30

an auditor who, at the request of the group engagement team, performs work on financial information related to a component for the group audit

Component auditor

31

an evidence-gathering procedure that involves watching a procedure being carried out by another party

Observation

32

an evidence-gathering procedure that involves asking questions verbally or in written form to gain an understanding of various matters throughout the audit

Enquiry

33

an evidence-gathering procedure that involves checking the mathematical accuracy of client records

Recalculation

34

an evidence-gathering procedure that involves redoing processes conducted by the client

Re-performance

35

an evaluation of financial information by studying plausible relationships among both financial and non-financial data

Analytical procedures

36

file that contains client information that is relevant for more than one audit

Permanent file

37

file that contains client information that is relevant for the duration of one audit

Current file