Responding to the Assessed Risks of Material Misstatement Flashcards Preview

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Flashcards in Responding to the Assessed Risks of Material Misstatement Deck (23):
1

What are the 3 elements of further audit procedures?

Nature, extent, and timing

2

What does the nature of an audit procedure include?

Purpose and type

3

What does the extent of audit procedures refer to?

Quantity to be performed

4

When can audit tests be performed?

Interim date or at period end

5

The auditor's specific approach to identified risks at the relevant assertion level may consist of either?

A substantive approach or combined approach

6

What does substantive approach consists of?

Only substantive procedures

7

When does substantive approach occur?

When control risk is assessed at maximum

8

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

9

What tests are used in a combined approach?

Tests of the operating effectiveness of controls and substantive procedures

10

If controls are operating effectively, how much assurance will be required from substantive procedures?

Less assurance

11

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

12

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

13

What procedures are used to detect material misstatements at the relevant assertion level?

Substantive procedures

14

Substantive procedures are required for?

Material transaction class, account balance, or disclosure

15

What are the 2 types of substantive procedures?

Tests of details and substantive analytical procedures

16

In designing tests of details, the extent of substantive procedures generally refers to?

Sample size

17

The results of further audit procedures may lead the auditor to?

Reassess the risks of material misstatement

18

When there is a change in the assessed level of risk, the auditor should modify?

Planned audit procedures

19

What does the auditor use to evaluate the sufficiency and appropriateness of audit evidence?

Judgment

20

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

21

Documentation requirements for audit procedures?

Overall response, nature, extent, and timing, linkage of those audit procedures, results of audit procedures, and conclusions

22

What does vouch test for?

Existence, support, and occurrence

23

What does trace test for?

Completeness and coverage