Deck 11 Flashcards Preview

Audit > Deck 11 > Flashcards

Flashcards in Deck 11 Deck (19):
1

What is the most important factor concerning an auditor's responsibility to detect errors and fraud?

The risk that mistakes, falsifications, and omissions may cause the financial statements to contain material misstatements.

2

Before performing substantive tests at an interim date, the auditor must:

Assess the difficulty in controlling the incremental audit risk from the interim date to the year-end date

3

An auditor's analytical procedures are facilitated when an entity:

Uses a standard cost system with variance reports

4

Analytical procedures

Involves comparison of an independently developed expectation to a recorded amount

5

One of the most effective ways to reduce attestation risk:

Examination of evidence

6

What type of accounts tend to be the most predictable?

Income statement accounts

7

What kind of audit evidence is the most persuasive?

Evidence obtained from outside the entity

8

Audit evidence supports:

The audit opinion

9

Gather audit evidence through 4 major procedures

1. Risk assessment procedures
2. Tests of Controls
3. Substantive procedures
4. Other audit procedures

10

Objective of substantive testing

Detect material misstatement in F/S

11

Types of audit evidence

Accounting records, corroborating evidence, and evidence in electronic form

12

Sufficiency of evidence is influence by:

- Risk of material misstatement
- Quality of audit evidence

13

Appropriate audit evidence must be:

Both reliable and relevant

14

Reliability is based on the hierarchy of audit evidence

AEIO

15

Substantive procedures give us information about:

- $ balances
- Transaction totals
- Disclosure amounts

16

Test of details

Used to gather evidence to support the account ($) balances as reflected in the financial statements

17

Relevant assertions for account balances

CVER (Completeness; valuation, allocation, and accuracy; Existence and occurrence; Rights and obligations)

18

Relevant assertions for transaction totals

COVEU (Completeness, cutoff, valuation, existence, understandability)

19

Relevant assertions for presentation and disclosure

CVRU