READ THIS EVERYDAY Flashcards
(45 cards)
correct statements concerning probability proportional to size (PPS) sampling, also known as dollar unit sampling
The auditor controls the risk of incorrect acceptance by specifying that risk level for the sampling plan.
Overstated units have a HIGHER probability of sample selection than units that are understated, because with PPS sampling, each item is given a probability of selection in proportion to its recorded amount (probability proportional to size)- ng ta dung PPS de tim overstated errors nen may so lon bi nghi ngo la overstated units thuong co kha nang cao bi chon lam sample cho PPS.
the auditor performs an assessment of risks at the assertion level and financial statement level. Which statement correct?
Identified financial statement level risks could also have a potential impact on many of the client’s relevant assertions.
Which audit procedure related to the understandability of presentation and classification of the F.S with respect to inventory?
Confirming inventories pledged under loan agreements. (this should be disclosed in the F.S)
(NOTE: consignment agreement help to ensure the rights and obligation assertion)
Last year’s audit resulted in relatively low response rate from the client’s customer is NEVER the reason for not sending A.R confirmation this year audit.
Reasons to NOT use A.R confirmation:
1. Using A.R confirmation would be ineffective method.
2. The A.R are deemed immaterial
3. Inherent and control risk are very low and other procedures can be used to reduce audit risk to a low level.
which following types of evidence would an auditor most likely examine to determine whether the I.C are operating as designed?
1. Confirmations of receivables verifying account balances.
2. Client records documenting the use of EDP programs.
3. Attorneys’ reponeses to the auditor’s inquiries.
4. Letters of representation corroborating inventory pricing.
- Client records documenting the use of EDP programs.
Why? b/c this is a test of control. Other answers are substantive tests.
To determine whether checks are being issued for unauthorized expenditures, an auditor would select items for testing from the population of all:
1. Purchase orders
2. Receiving reports
3. Canceled checks
4. Approved vouchers
- Canceled checks
muon tim dc unauthorized purchases, thi phai tim trong canceled checks. Tui no huy het PO, Receiving report thi lam sao ma tim duoc.
An auditor may achieve audit objectives related to particular assertions by:
Performing analytical procedures
b/c analytical procedures are one type of substantive procedure.
In a compilation engagement, the accountant should read the F.S for obvious material misstatements.
In a review engagement, the accountant would ask about actions taken at board of directors’ meetings that affect the F.S. Inquiry is not part of a compilation engagement.
auditor perform substantive procedures on a client’s accounts payable. Which procedure to test the existence and occurrence assertion?
Vouch selected amounts from the accounts payable listing to the client’s voucher packages.
Which of the following types of control best describes procedures to ensure appropriate systems software acquisition?
General controls( support tinh nang hieu qua, hoat dong phu hop ve he thong thong tin)
(Application controls apply to the processing of individual transactions and help to ensure that transactions occurred, are authorized, complete, accuracy and reported)
In performing a F.S audit in accordance with Goverment Auditing Standards, an auditor is required to report on the entity’s compliance with laws and regulations. This report should
STATE that the audit should be PLANNED TO OBTAIN REASONABLE ASSURANCE about WHETHER NONCOMPLIANCE COULD HAVE MATERIAL EFFECT on the entity’s program.
1 su bao dam hop li la ko tuan thu luat thi co the anh huong nghiem trong den cai chuong trinh dand bi kiem toan.
Which matters would include in a REP LETTER?
Li do cho gia dinh quan trong dung de uoc tinh ke toan ( the reasonableness of significant assumptions used in making accounting estimates.)
Management acknowledges its responsibilites for the design, implementation, and maintenance of internal control to prevent and detect fraud, but doesn’t thua nhan trach nhiem bat duoc lua dao-detect fraud.
Which procedure is consider a test of controls?
An auditor interviews and observes appropriate personnel to determine segregation of duties.
(an auditor reviews the audit workpapers to ensure proper sign off IS NOT a test of control- cai nay la QUALITY CONTROL cho viec kiem toan dc thuc hien day du- ko lien quan toi TEST OF CONTROL for client company)
Which sampling methods would be used to estimate a numerical measurement of a population, such a dollar value?
SAMPLING FOR VARIABLES
( Numerical sampling la xao, ko co thiet, make up words )
Return on assets
Net Income/ Average total assets
Subsequently discovered facts that lead to a change in an audit opinion may be presented in
Emphasis of matter paragraph
Also in Other Matter Paragraph
Test completeness assertion for Inventory
Performing cutoff procedures for shipping and receiving
(scanning perpetual inventory, production, and purchasing records would include ONLY transactions have been RECORDED, the completeness assertion is focused on unrecorded transactions)
A insurance client uses an actuary in assist in technical matters related to the preparation of the company’s F.S. The actuary above would best be described as a
Management specialist
(Not external accounting expert-not directly related to pure accounting work but most likely to technical actuarial insurance matters)
An auditor consider which one when evaluating the ability of a company to continue as a going concern?
Management’s plans for disposal of assets.
(Not a lawsuit for which judgment is not anticipated for 18 months- ket qua se ko co trong vong 18 thang toi. The future outcome of a pending lawsuit that is more than 1 year away is a CONTINGENCY that WOULD NOT HAVE A significant impact on a going concern issue for a current audit. Under US. GAAP, the going concern period is one year.
Which procedure that auditor perform to obtain assurance that slow moving and obsolete items included in inventories are properly identified?
Examining an analysis of inventory turnover.
Helps to ID slow moving, excess, defective, and obsolete items included in inv. For inv to be properly valued, these items need to be written down.
(NOT tracing inventory observation test counts to perpetual listings, chi biet dc completeness)
Which one NOT considered an attest engagement subject to attestation standards?
An engagement to review the F.S of a non public company( Attest engagements under SSAE EXCLUDED SSAR.)
SSAE: examination, review report, or an agreed upon procedures report on subject matter that is the responsibility of a party other than the practitioner.
A compilation of F.S in accordance with SSAR is LIMITED TO
a compilation of F.S in accordance with SSAR is LIMITED TO info in the form of F.S that is representation of management.
Which one is NOT a possible reason why a properly designed system of internal control may fail to prevent or detect fraud?
Inadequate segregation of duties may allow 1 person to both perpetrate and conceal fraudulent activity.
This imply that the system of internal control was not properly designed.
Understandability of presentation and classification deal with whether financial info is appropriately presented and described, and disclosures are clearly expressed.
Follow-up of errors reported by customers NOT IMPACT the proper presentation, description, and disclosure of account receivable in the F.S
