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Flashcards in Engagment Planning Deck (38):
1

When a audit strategy and audit plan is revised, what is it based on?

Results of audit procedures

2

What does PCAOB standards state that the nature and extent of necessary planning activities depend on?

Size and complexity of the company, auditor's previous experience with the company, and changes in circumstances that occur during the audit

3

What is the engagement partner responsible for?

Planning the audit, supervising the work of engagement team members, and compliance with relevant auditing standards

4

Should an auditor obtain an understanding of the client's industry and business once the engagement has been accepted?

Yes

5

What are the most common sources of industry information?

AICPA accounting and audit guides, trade publications and professional trade associations, government publications, and AICPA Accounting Trends and Techniques

6

What may the auditor do when gaining knowledge of the client's business?

Tour client facilities, review the financial history of the client, obtain an understanding of client accounting, and inquire of client personnel

7

What does the scope of the audit equal?

Extent

8

What does Reporting Objectives, Audit Timing, and Required Communications equal?

Timing

9

What does factors that determine the focus of the audit equal?

Nature

10

What are the 3 preliminary evaluations used to develop an overall audit strategy?

Materiality, Audit risk, and Internal control

11

PCAOB standards state that when establishing an overall audit strategy should consider?

Knowledge of the company's internal control, Matters affecting the industry, Matters relating to the company, Extent of recent changes in the company, Auditor's preliminary judgments about materiality risk, control deficiencies previously communicated, Legal or regulatory matters, and the Relative complexity of the company's operations

12

When assessing materiality, the auditor should use?

The smallest level of misstatement that could be material to any one of the financial statements

13

What types of judgments are used to make the preliminary assessment of materiality?

Quantitative and qualitative judgments

14

What are the 3 categories of cycle tests?

Transactions, account balances, and disclosures

15

What are the different types of cycle tests?

Revenue, expenditure, inventory, investment, PP&E, payroll, and financing

16

Can preliminary assessments of materiality be revised as the audit progresses?

Yes

17

What is the auditor required to communicate with those charged with governance?

Planned scope and timing of the audit

18

What does the audit plan outline?

Nature, extent, and timing of the procedures to be performed during the audit

19

Is a written audit plan required?

Yes

20

What are procedures categorized as?

Risk assessment procedures, further audit procedures, and timing of audit procedures

21

What does further audit procedures include?

Tests of the effectiveness of internal controls and substantive procedures

22

What are tests of controls used for?

To evaluate the operating effectiveness of internal controls in preventing or detecting material misstatements

23

What are substantive procedures used for?

To detect material misstatements

24

What does substantive procedures include?

Test of details and substantive analytical procedures

25

What are the 6 main financial assertions?

Completeness, CutOff, Valuation, Allocation, and Accuracy, Existence and Occurrence, Rights and Obligation, and Understandability and Classification

26

What are the relevant assertions for transactions and events?

Completeness, cutoff, accuracy, classification, and occurrence

27

What are the relevant assertions for account balances?

Completeness, allocation and valuation, rights and obligations, and existence

28

What are the relevant assertions for presentation and disclosure?

Completeness, understandability and classification, rights and obligations, and valuation and accuracy

29

PCAOB standards state that the financial statement assertions are?

Completeness, Existence, Occurrence, Allocation, Presentation, Rights, Obligations, Valuation, Disclosure

30

What is the mneumonic for PCAOB assertions?

CEO APROVED

31

What must internal auditors maintain?

Objectivity and integrity

32

Are they considered independent of the client?

No

33

The independent external auditor cannot share with the internal auditor any of the responsibility for?

Audit decisions, judgments, or assessments made as part of the audit

34

What are the external auditor responsibilities in regards to the internal auditor?

Obtain an understanding of the internal audit function and assess competence and objectivity

35

The auditor should have a sufficient understanding of the specialist's field of expertise to enable the auditor to?

Determine the nature, scope, and objectives of the work of the auditor's specialist and evaluate the adequacy of the specialist's work for the auditor's purposes

36

If information to be used as audit evidence is prepared using the work of a a management's specialist, the auditor should?

Evaluate the competence, capabilities, and objectivity of the specialist, obtain an understanding of the work of the specialist, and evaluate the appropriateness of the specialist's work as audit evidence for the relevant assertion

37

When vouching during tests, what assertions are involved?

Existence, support, and occurrence

38

When tracing during tests, what assertions are involved?

completeness and coverage