Deck 20 Flashcards Preview

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Flashcards in Deck 20 Deck (20):

Specific contents of work papers

1. Permanent file
2. Current file


Permanent file

Includes audit documentation that has a continuing interest from year to year


Current file

Contains all audit documentation applicable to the year under audit


Test data

- Data (with a predetermined result) that is run through the client's computer system. The auditor creates one transaction of each type of valid and invalid conditions in which the auditor is interested and runs them through the client's processing system
- done off-line and under auditor's control


Embedded audit module

Sections of the application program code that collect transaction data for the auditor
- built into the application program
- Embedded audit modules are sections of the application program code that collect transaction data for the auditor. Embedded audit modules are usually built into the application program when the program is developed. This would require that the auditors be involved in the system design of the application to be monitored.


Generalized audit software packages

- Allow the auditor to perform tests of controls and substantive tests directly on the client's system
- Advantages: little technical knowledge; results in more reliable audit


In computer audit applications, efficient and effective system usage requires:

1. Identification of the appropriate audit tasks and
2. Appropriate software to perform the selected audit tasks.


Integrated test facility (ITF)

- Runs test transactions through the "live" system and posts to simulated (dummy) files to provide an auditor with information about the operating effectiveness of controls.
- Uses test data commingled with actual data to test transactions
Ex: fictitious customer, branch, or vendor



- Computer-assisted audit techniques
- Auditing through the computer


Parallel simulation (reperformance test)

Auditor reprocesses some or all of the client's live data and then compares the results with the client's files (Auditors system is used to process the client's files)


According to the PCAOB, what tax service may be provided jointly with the audit of an issuer's financial statements without impairing independence?

Reviewing a proposed transaction and informing the client of the tax consequences


According to Government Auditing Standards, basic elements of a report on compliance include:

A statement that the audit should be planned to obtain reasonable assurance about whether noncompliance could have a material effect on the programs audited


GAGAS prescribe additional standards on:

Direct reporting of illegal acts and reporting on internal controls


A report on compliance would include:

An opinion on whether the entity complied, in all material respects, with the applicable compliance requirements


Sub recipient according to Title 2

A nonfederal entity that expends federal financial assistance administered by another entity


How is materiality determined under the single audit act?

Materiality is determined separately for each major federal financial assistance program


Government Audit Standards define three types of engagements:

1. financial audits
2. Attest engagements
3. Performance audits


Single audits and program specific audits are defined by:

2 CFR 200 and the Single Audit Act


Sources of Government auditing standards



Presumptively mandatory requirements

Auditor "should" comply