Flashcards in Evaluate, Test and Report 1(a)(i)-(ii) and 4 Deck (11):
Describe 4 Factors under "Information Assurance":
Describe 3 Factors under "Information Quality":
- Info relevant and pertinent to business
- Info needs to be timely, correct, consistent, and usable to be effective
- Info must get to right place at right time to have quality
- Cost of info is related to efficiency of info
Describe 3 Factors under "Information Presentation":
(2) Fitness for Use
- Decision making has set of criteria
- In order for info presented to be valuable, must fit use determined by set of circumstances surrounding situation or
- Proper disclosures s/b presented w/ info to provide user any supplemental
- Ex: If data from diff internal sources, or if some data is internal and external, then info presentation should identify sources.
Describe 2 Factors under "Information Timeliness":
- Data s/b designed w/ usefulness in mind
(2) Current Data
Describe 2 Factors under "Information Auditability":
(1) Source Traceability
- Need trace back to original data used to create that info
- To ensure integrity and reliability of info
- Usually “audited” by using data mining or CAAT tools
(2) Transformation Traceability
- Need trace data through process, usually automated
- Design of middleware and transfer systems need to be tested to ensure transformation traceability which will ensure integrity auditability of the info
What is the Public Companies Accounting Oversight Board (PCAOB)?
- Standard setting, regulatory body
- Authoritative body for GAAS
- Formed w/ SOX Act of 2002, reshaped hierarchy of GAAS
- PCAOB answers to SEC and partners w/ SEC as authority over auditing regs for public companies.
- Public accounting firms are req'd to register w/ PCAOB as prereq's to auditing issuers
- Firms req'd to follow all standards, principles, rules and interpretations issued by PCAOB
What is Auditing Standards Board (ASB)?
- Created by AICPA
- Authoritative body for establishing GAAS related to non-issuers (nonpublic companies)
- Consolidating all previous technical committees and bodies.
Why is "absolute assurance" not attainable?
- An absolute level of assurance is not attainable bc of nature of audit evidence and characteristics of fraud.
- Although reasonable assurance is high level of assurance, it is not absolute assurance.
What should an auditor evaluate in determining whether a particular assertion is relevant to a significant acct balance or disclosure?
• The nature of assertion
• The volume of transactions or data related to assertion
• The nature and complexity of systems, including use of IT, by which entity processes and controls info supporting the assertion
What are auditors required to do under the Statements of Audit Standards (SAS)?
• Gather info on entity’s environment, including internal control, to assess RMM
• Evaluate that info to assess risks at assertion level
• Design and perform further audit procedures based on those risks
• Evaluate audit evidence obtained
• Reach conclusions