Responses to Assessed Risks Flashcards
Primary advantage of parallel simulation is ?
Any transaction during the period can be reprocessed.
Types of computer assisted auditing techniques programs include?
- Integrated test facility- enters dummy transactions into client’s program.
- parallel simulation - uses actual client data, its an auditor-developed program, compares its results to the client’s results.
- test data- using the client’s computer program under the auditor’s control to test data. It includes preparation of dummy transactions by the auditor.
Action to take when there is high risk of material misstatement.
Selection of more effective substantive procedures is appropriate in this situation. the evidence must be more persuasive therefore more relevant and reliable.
To obtain Evidence of operating control effectiveness the auditor performs a combination of inquiry and?
Either, inspection, recalculation, or reperformance, these are preferrable over inquiry and observation.
Substantive procedures to restrict detection risk for significant transaction classes should be performed regardless of?
The assessed RMM or the effectiveness of the relevant control.
this applies to each MATERIAL transaction class, account balance and Disclosure.
The Test Data approach uses the client’s computer system to process tests and the results are compared to?
The results of a test data are compared to the auditor’s predetermined results.
Test of controls can be performed using either actual or simulated transactions and the integrated test facility method (ITF) uses?
Both actual and simulated transactions.
The objective of test of details of a transaction is based on the specific purpose the auditor is using them for, to support relevant assertions or to detect material misstatements. For each action?
If used as relevant assertion or to detect material misstatements, then they are used as substantive procedure.
If used as test of control, its to evaluate the operating effectiveness of the control.
Another way of explaining substantive procedures is test of details.
en otras palabras, cuando se habla de substantive procedure, se esta diciendo que se va hacer test of details.
When substantive procedures are interim data of financial information shows no exceptions meaning controls working properly, then at the end of the year, the auditor?
Will not repeat the same procedures at year end, or in other words, will not process test of details at year end.
Account that an auditor would test prior to the balance sheet date is an income statement account accumulated during the year.
Example, Maintenance and Repair Expense
