Deck 7 Flashcards Preview

Audit > Deck 7 > Flashcards

Flashcards in Deck 7 Deck (19):
1

Substantive procedures

Used to detect material misstatements and include test of details and substantive analytical procedures

2

Test of details

Applied to transaction classes, account balances, and disclosures

3

Six main financial statement assertions

Completeness
Cutoff
Valuation, Allocation, and accuracy
Existence and Occurrence
Rights and Obligations
Understandability and Classification

4

Completeness

Everything that should have been recorded has been recorded and included in the financial statements

5

Cutoff

Transactions have been recorded in the correct period

6

Valuation, Allocation, and Accuracy

Everything is recorded fairly and at appropriate amounts

7

Existence and Occurrence

Balances and transactions that exist and have been recorded have actually occurred and pertain to the entity

8

Rights and obligations

The entity holds or controls the rights to assets and liabilities are obligations of the entity

9

Understandability and Classification

Transactions have been recorded in the proper accounts

10

PCAOB Financial statement assertions:

Completeness
Existence
Occurence
Allocation
Presentation
Rights
Obligations
Valuation
E
Disclosure

11

Audit Plan

Listing of audit procedures that the auditor believes are necessary to accomplish the objectives of the audit

12

How is competence of the internal audit function reflected?

Reflected by education, professional certification, experience, performance evaluations, the audit plan, audit procedures, and the quality of internal audit documentation

13

How is objectivity of the internal audit function reflected?

Reflected by the organizational level to which the internal audit reports

14

Audit risk

Risk that the auditor may unknowingly fail to appropriately modify the opinion on financial statements that are material misstated
(expressing the wrong opinion on the financial statements)

15

Factual misstatements

Misstatements about which there is no doubt

16

Judgmental misstatements

Differences arising form the judgments of management concerning accounting estimates that the auditor considers unreasonable or the selection or application of accounting policies that the auditor considers inappropriate

17

Projected misstatements

The auditor's best estimate of misstatements in populations

18

Audit Risk Model

AR = (IRxCR) x DR

19

Risk of material misstatement

Exists independent of financial statement audit