Deck 4

Question 1

a ________ test is a test of controls that is performed concurrently with a test of details on the same transaction

Answer 1

DUAL PURPOSE TEST

Question 2

(T/F) tests of controls are only performed when the auditor’s risk assessment is based on the assumption that controls are operating effectively or when substantive procedures alone are insufficient (tests of controls are not always necessary in a F/S audit)

Answer 2

TRUE

Question 3

the ___________ review of the prior year estimates helps the auditor to evaluate mgmt’s judgments and to identify and assess RMM

Answer 3

RETROSPECTIVE REVIEW

Question 4

Assessing risk based on the effective operation of controls involves (1) identifying specific 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. (T/F)

Answer 4

TRUE

Question 5

______ analysis provides direct and quantitative measures of the precision of expectation. It’s a statistical technique used to understand the relationship between one dependent variable and one or more independent variables. it helps PREDICT or estimate an outcome based on historical data using PREDICITVE ANALYTICS

Answer 5

REGRESSION ANALYSIS

Question 6

vouching a sample of transactions from the F/S to the source docs tests the ________ assertion

Answer 6

EXISTENCE AND OCCURRENCE ASSERTION

Question 7

to test _______ assertion, the auditor would use observation, tracing of documents, performing analytical review procedures

Answer 7

COMPLETENESS ASSERTION

Question 8

to test the _________ assertion, the auditor would use third-party confirmations, vouching transactions, performing observation, inspection, and examination of assets, processes or procedures

Answer 8

EXISTENCE AND OCCURRENCE ASSERTION

Question 9

______ testing is an audit procedure where the auditor tests the flow of transactions in a specific direction to verify particular F/S assertions; the procedures are vouching that test existence/overstatement and tracing that tests completeness/understatement.

Answer 9

DIRECTIONAL TESTING

Question 10

when the auditor starts with items recorded in the accounting records (like journal entries or ledger balances) and traces them BACKWARD to the supporting source docs (invoices or contracts), this tests _____

Answer 10

VOUCHING (tests existence/overstatement)

“from books to proof”
*vouching is validation of existence
*you vouch what’s in the books by checking if it actually happened

VOUCHING is BACKWARDS
OVERstatement is BACKWARDS

Question 11

when the auditor starts with source docs and traces them FORWARD to the accounting records is testing _____

Answer 11

TRACING (tests completeness/understatement)

“from real world docs to the books”
*tracing is tracking what’s missing
*tracing ensure nothing got lost on the way to the ledger

TRACING is FORWARD
UNDERSTATEMENT is FORWARD

Question 12

The auditor determines whether a risk is significant (or not) by its inherent risk alone. (T/F)

Answer 12

TRUE

Question 13

the objective of tests of _____ of transactions performed as $ubstantive tests is to detect material (dollar) misstatements in F/S

Answer 13

TESTS OF DETAILS

Question 14

______________ are required to be applied to some extent in planning and in the final review stage; they MAY be used as a substantive test when they are more effective or efficient than tests of details (not required to be used as a substantive test)

Answer 14

ANALYTICAL PROCEDURES

Question 15

If the auditor performs a reconciliation of supporting schedules to the client’s general ledger entries, the auditor would most likely be testing the ________ assertion for a particular transaction cycle.

Answer 15

VALUATION, ALLOCATION, AND ACCURACY ASSERTION

Question 16

What do these correlate to? (CVERUP)
*Completeness
*Valuation, Allocation, and Accuracy
*Existence and Occurrence
*Rights and Obligations
*Understandability of Presentation and Classification

Answer 16

ACCOUNT BALANCES AND RELATED DISCLOSURES; NO CUTOFF (would be covered by the existence or occurrence and the completeness assertions)

*when audit procedures relate to B/S
*PCAOB Standards for F/S assertion

Question 17

What do these correlate to? (COVEUP)
*Completeness
*CutOff
*Valuation, Allocation, and Accuracy
*Existence and Occurrence
*Understandability of Presentation and Classification

Answer 17

TRANSACTIONS, EVENTS, AND DISCLOSURES; NO RIGHTS AND OBLIGATIONS

*when testing transactions

Question 18

U.S. auditing standards require the auditors to perform analytical procedures related to _______

Answer 18

REVENUE

Question 19

If substantial doubt about the entity’s ability to continue as a going concern has been removed in the current period, the separate going concern section included in the prior period auditor’s report should be repeated, explain the reasons or plans for recovery need be included. (T/F)

Answer 19

FALSE; the section should NOT be repeated and NO Description of the reasons or plans need to be included

Question 20

An independent auditor should assess the organizational status of the director of internal audit. The auditor assesses the organizational status primarily to evaluate the objectivity of the internal auditor. (T/F)

Answer 20

TRUE

Question 21

_______ analytics provide expected or predicted outcomes based on historical data

Answer 21

PREDICTIVE

Question 22

_______ analytics explains WHY something happened

Answer 22

DIAGNOSTIC

Question 23

________ analytics prescribe or recommend actions to be taken based on advanced analytics to reach a desired goal

Answer 23

PRESCRIPTIVE

Question 24

_____ analytics describe what happened within the data

Answer 24

DESCRIPTIVE

Question 25

_____ key serves as a unique identifier to allow a user to identify a specific record in a database. It's required so that a table record is always uniquely identifiable

Answer 25

PRIMARY KEY

Question 26

______ key is a column (or column group) found in a relational database table that links data between two tables. it references the primary key of another table

Answer 26

FOREIGN KEY

Question 27

the ____ of a database if the organization of data that represents the construction of the database mgmt system

Answer 27

SCHEMA

Question 28

a _____ key is a non-identifying column or column set used to find a row in a table, it serves as a candidate key for the primary key but is not actually the primary key chosen

Answer 28

SECONDARY

Question 29

data analytics aka data mining involves taking raw data, looking for trends, and then transforming that information into insights (T/F)

Answer 29

TRUE