Lecture 7 Flashcards Preview

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Flashcards in Lecture 7 Deck (12):
1

Substantive testing =

Performed on client's data and underlying transactions

2

Substantive testing made up of (2)

- Tests of detail
- Substantive Analytical Procedures

3

Test of detail =

In depth tests eg inspection docs/ inquiry/ confirmation

4

Substantive analytical procedure =

Auditors form expectation using mathematical relationships and key ratios

5

3 considerations for determining level of substantive testing

- Assertions to be tested
- Level of risk attached to assertions
- Can we rely on any controls?

6

Low RoMM and effective controls >

Only need to do SAP, no TOD

7

High RoMM >

SAP and TOD

8

Moderate RoMM >

Judgment to determine level ToD and SAPs

9

Sampling for ToD (2)

- CAATS
- Manual > using specific criteria eg 1/3 PM. Must justify why selected, and ensure remaining balance doesn't include material misstatement

10

Materiality =

Audit difference threshold based on auditor judgement

11

ToD errors above audit difference threshold are added to

Differences list

12

At end of audit, differences list is..

Assessed to identify if misstatements are in excess materiality in aggregate