Mneumonics Flashcards
Auditor should examine evidence obtained from the following Procedures: “ADMITS”
- Analytical Procedure
- Debt Compliance – review loan agreements
- Minutes – review minutes of BOD meetings
- Inquiry – client’s legal counsel
- Third Parties
- Subsequent Events Review
Conditions and Events that may be indicative of substantial doubt: “FINE”
- Financial Difficulties – (ie. loan defaults, denial of usual trade credit, debt restructuring)
- Internal Matters – (ie. labor difficulties, work stoppages, significant revision of operations)
- Negative Trends – (ie. recurrent losses, working capital deficiencies, negative cash flows)
- External Matters – (ie. legal proceedings, new legislation, loss of a key franchise, natural disaster)
Updated opinion – only “DORCS” change their mind:
- Date of the auditor’s previous report
- Opinion type previously issued
- Reason for the prior opinion
- Changes that have occurred
- Statement that the “opinion…is different”
Auditor’s responsibility for Subsequent Events: “PRIME”
- Post balance sheet transactions
- Representation letter should be obtained from management
- Inquiry – (ie. new commitments, sale of assets, unusual accounting adj., legal counsel)
- Minutes of BOD meetings
- Examine latest available interim FS – compare to FS under audit
Understanding a Client’s business for a Compilation include: “STAFF”
- Staff Qualifications
- Transaction types and frequency
- Accounting basis used to prepare the FS
- Form of accounting records
- Financial statements’ form and content
Performance requirements applicable for a Review audit: “U LIAR CPA”
- Understanding with client should be established
- Learn and obtain sufficient knowledge of entity’s business
- Inquiries should be addressed to appropriate individuals
- Analytical procedures should be performed
- Review – other procedures should be performed
- Client representation letter should be obtained from management
- Professional judgment should be used to evaluate results
- Accountant (CPA) should communicate results
Agreed-Upon Procedures include: “I AM SURE”
- Independence of the Practitioner
- Agreement of the Parties
- Measurability and Consistency – (Implied)
- Sufficiency of the Procedures – (Implied)
- Use of the report is Restricted to Specified Parties
- Responsibility for the Subject Matter – (Client)
- Engagements to perform on Prospective Financial Statements
Six main Financial Statement Assertions: “COVER U”
- Completeness – (Tracing, Analytical Review, Observation)
- Cut-Off – (before and after YE)
- Valuation, Allocation, and Accuracy – (Inspection, Footing, Independent Recalculation, Recon.)
- Existence and Occurrence – (Confirmation, Vouching, Observation/Inspection/Examination)
- Rights and Obligations – (Inspection)
- Understandability and Classification – (Inspection, Review, Inquiry of Management)
COSO framework for components of Internal Control: “CRIME”
- Control Environment: the overall tone of the organization
- Risk Assessment: managements identification of risk
- Information and Communication Systems: way of recording transactions and communicating
- Monitoring: assessment of internal control performance over time
- Existing Control Activities: control policies and procedures
Existing Control Activities for a strong internal control: “PAID TIPS”
- Prenumbering documents
- Authorization of transactions
- Independent checks to maintain asset accountability
- Documentation
- Timely and appropriate performance reviews
- Information processing controls
- Physical controls for safeguarding assets
- Segregation of duties
Segregation of Duties should always include: “ARC”
- Authorization
- Record Keeping
- Custody
Audit Evidence Hierarchy: “A E I O U”
- Auditor Knowledge and Performance – (Inquires, Observation, Inspection, and Performance)
- External Evidence
- Internal Evidence
- Oral Evidence
- U – Know it!
What are the Ethics requirements relating to Government Auditing Standards (GAGAS): (SIOPP)
- Serving the Public Interest
- Integrity
- Objectivity
- Proper use of Government Information, Resources, and Positions
- Professional Behavior
Six interrelated elements of Quality Control are: “HELP ME”
- Human Resources
- Engagement/client acceptance and continuance
- Leadership Responsibilities
- Performance of the engagement
- Monitoring
- Ethical Requirements
What are the three general standards?
let me give you a TIP on how to remember this
Training
Independence
Professional Care
