Deck 10 Flashcards Preview

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Flashcards in Deck 10 Deck (20):
1

Internal control questionnaire

Consists of a list of "Yes" or "No" questions to be answered

2

Narrative

Written version of a flowchart

3

What are automated controls suitable for?

High volume or recurring transactions

4

General controls

Relate to many applications

5

Application controls

Processing of individual transactions

6

Service organizations

Outside organizations that help entities process some portions of their accounting transactions

7

Service auditor report (Type 1)

Report on the design and implementation of a service organization's controls (does not provide operating effectiveness of the controls)

8

Service auditor report (Type 2)

Report on the design, implementation, and operating effectiveness of a service organization's controls

9

Assessing risk based on the effective operation of controls involves:

(1) identifying specific internal controls relevant to specific assertions that are likely to prevent or detect material misstatements in those assertions, and (2) performing tests of such controls to evaluate their effectiveness.

10

Test of details are used to:

Detect material misstatements in the financial statements after the auditor has assessed risk, not as part of making this assessment

11

If analytical procedures have revealed no unusual or unexpected results, the auditor may decide to:

Reduce tests of details for a particular audit objective

12

Nature of an audit procedure includes:

Both its PURPOSE (test of control vs. substantive procedure) and its TYPE (inspection, inquiry, observation, confirmation, etc)

13

When will you only do substantive procedures?

When control risk is assessed at maximum

14

Tests of controls are performed when:

- Controls are operating effectively
- Use of information technology

15

Nature of tests of controls

- Inquiry
- Observation
- Inspection
- Reperformance

16

Audit evidence hierarchy

- Auditor knowledge
- External evidence
- Internal evidence
- Oral evidence
- U-know it

17

Substantive procedures

Used to detect material misstatements at the relevant assertion level

18

In designing test of details, the extent of substantive procedures generally refers to:

Sample size

19

Vouching

Existence and occurrence (F/S => Events)

20

Tracing

Completeness (Events => F/S)