D251 rebooted

Question 1

Internal Controls reguarding nature timing and extend

Answer 1

write out answer

Question 2

sampling for tests of controls

Answer 2

attribute testing 0 or 1

Question 3

direct test for account balances and assertions

Answer 3

monetary testing $

Question 4

sampling risk

Answer 4

risk of wrong conclusion due to auditing a sample rather than the population

Question 5

non sampling risk

Answer 5

risk of being wrong for any reason other than sample not being representative of the population

Question 6

statistical sampling enables you to

Answer 6

quanitfy the risk you are taking by using sampling

Question 7

attribute testing

Answer 7

form of statistical sampling that allows you to estimate the failure rate of control procedure

Question 8

tolerable mistatment

Answer 8

The maximum amount of misstatement in population that an auditor can accept without giving a qualified opinion or audit adjustment

Question 9

MUS(PPS) and do you round up or down

Answer 9

Dollar mistreatment rather than control failure rate tests for overstatements when few misstatements are expected ie always down 15999 is 15000

Question 10

When is sampling appropriate

Answer 10

confirmations, reperform calculations or inquire

Question 11

expected failure rate

Answer 11

expected population deviation rate or in other words expected failure in population so the larger is it, the higher the sample size

Question 12

if misstatement exceeds tolerable misstatement

Answer 12

propose adjustments to client

Question 13

stratification

Answer 13

divide the population into two or more groups

Question 14

control risk

Answer 14

susceptibility of a misstatement occurring that could be material to the financial statements before considering internal controls

Question 15

Materiality(Overall, Planning)

Answer 15

is the financial statement materially correct?

Question 16

Sampling interval?

Answer 16

Population size divided by sample size

Question 17

What happens after a mistatment is detected?

Answer 17

Management and auditor jointly decide if it’s material enough to require corecting

Question 18

Tatined percentage

Answer 18

relates to book value the amount of misstatement/items book value

Question 19

allowance for sample error

Answer 19

factor used in planning samples that represent precision required to keep sampling level at required level

Question 20

What management assertion would cause an auditor to use nonstatiscal

Answer 20

existence/occurence-how can you use stats when it doesn’t exist?

Question 21

judgmental misstatements

Answer 21

Auditor thinks machine is 15 managment thinks machine is worth 14

Question 22

summary of unadjusted audit differences(SUAD)

Answer 22

known and projected misstatements + carryover from Prior year. Communicated in management representation letter letter to audit commitie

Question 23

intentional mistatment

Answer 23

reevaluate audit risk, consider revising nature(type), timing(year end or not) and extent of audit procedures. Consider resigning

Question 24

Dual method

Answer 24

roll over(Focuses on current year and correcting previous years allows mistamtents on balance sheet) and iron curtain(focuses on years end balance sheet being correct does not take into account previous years misstatements)

Question 25

Corruption preception index

Answer 25

0 to 10 how much corruption is believed to exist 0 high corruption 10 low corruption

Question 26

Going concern what opinion?

Answer 26

Can management probably mitigate it for a year? unqualified. Disclosures appropriate? UNQualified emphasis of matter. Disclosures not appropriate qualified rather than qualified

Question 27

Z scores

Answer 27

likelihood of bankruptcy below 1.81 high risk 2.99 very low risk

Question 28

Management letter

Answer 28

not required recommendations to management

Question 29

Existence occurance

Answer 29

actually exist

Question 30

completness

Answer 30

all transactions are recorded

Question 31

rights and obligations

Answer 31

actually owned by organization

Question 32

Valluation(Accuracy, allocation)

Answer 32

Properly valued and recorded in correct period

Question 33

Sampling 2 tests

Answer 33

test of controls(attribute) Account balances(monetary)

Question 34

What are the significant accounts of the acquisition and payment cycle?

Answer 34

Accounts payable, inventory, AR, and other expense accounts