Flashcards in Responding to the Assessed Risks of Material Misstatement Deck (23)
What are the 3 elements of further audit procedures?
Nature, extent, and timing
What does the nature of an audit procedure include?
Purpose and type
What does the extent of audit procedures refer to?
Quantity to be performed
When can audit tests be performed?
Interim date or at period end
The auditor's specific approach to identified risks at the relevant assertion level may consist of either?
A substantive approach or combined approach
What does substantive approach consists of?
Only substantive procedures
When does substantive approach occur?
When control risk is assessed at maximum
Control risk is assessed at maximum because?
No effective controls, Implemented controls are assessed as ineffective, or it would not be efficient to test the operating effectiveness of controls
What tests are used in a combined approach?
Tests of the operating effectiveness of controls and substantive procedures
If controls are operating effectively, how much assurance will be required from substantive procedures?
Tests of controls are generally required when?
Entity conducts its business using IT, highly automated processing with little or no manual intervention, or audit evidence is obtained in electronic form
For all significant risks, the auditor should?
Evaluate the design of the entity's related controls and determine whether the controls have been implemented and perform substantive procedures that are clearly linked and responsivve to the risk
What procedures are used to detect material misstatements at the relevant assertion level?
Substantive procedures are required for?
Material transaction class, account balance, or disclosure
What are the 2 types of substantive procedures?
Tests of details and substantive analytical procedures
In designing tests of details, the extent of substantive procedures generally refers to?
The results of further audit procedures may lead the auditor to?
Reassess the risks of material misstatement
When there is a change in the assessed level of risk, the auditor should modify?
Planned audit procedures
What does the auditor use to evaluate the sufficiency and appropriateness of audit evidence?
PCAOB standards state that the following factors are relevant to the conclusion that sufficient appropriate evidence has been obtained?
Significance of uncorrected misstatements, results of audit procedures performed, auditor's risk assessment, and appropriateness of the audit evidence obtained
Documentation requirements for audit procedures?
Overall response, nature, extent, and timing, linkage of those audit procedures, results of audit procedures, and conclusions
What does vouch test for?
Existence, support, and occurrence