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Flashcards in Roger mnemonics Deck (33)
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1
Q

What is unconditional requirement and what is presumptively mandatory requirement?

A

Unconditional requirement- must, is required to

Presumptively mandatory requirement- should.

2
Q

What are the 10 GAAS?

A
Training and Proficiency
Independence
Professional Care
Planning and supervision
Internal Control
Corroborative Appropriate Audit Evidence
Accounting Principles in Accordance with GAAP
No new Principles-Consistency
Omitted Disclosures- None
Express an Opinion
3
Q

Attestation Engagements Independence needed:

A
Compilations (unless lack of independence indicated)
Agreed upon procedures
Reviews
Examinations (audits)
Special Reports
4
Q

Need not be independent for:

A

Compilations
Taxes
Consultations
Other non attest services (bookkeeping/payroll)

5
Q

Inquiries of predecessor auditor RIDC

A

Reasons for change
Integrity of mgmt
Disagreements during audit
Communication with mgmt or those charged with governance.

6
Q

Communicated to those charged with governance: DISAPPROVE

A
Disagreements with mgmt
Noncompliance with applicable laws and regulations (illegal acts)
Significant accounting policies
Adjustments
Prior discussions with mgms
Problems
Responsibilities
Other info
View of other accountants
Estimates
7
Q

What are the elements of an engagement letter? FACSIMILE

A
Fees
Auditor's responsibility
Confirmation of engagement
Scope and Objective of engagement
Internal Control
Mgmt's responsibility
irregularities-Fraud
illegal Acts
Errors.
8
Q

What are the steps in planning an audit? BRAINSTOPS

A
Basic discussions with the client
Review of audit documentation
Ask about recent developments
Interim FSs
Non audit personnel
Staffing
Timing
Outside assistance
Pronouncements
Scheduling with the client.
9
Q

What are the elements of audit risk and how does reliance impact RMM, DR, Substantive procedures?

A

AR=IRxCRxDR (IR and CR=RMM)
if reliance low, RMM high, DR low, Sub High
If reliance high, RMM low, DR high, Sub Low

10
Q

The elements of Fraud Triangle?

A

Motivation
Rationalization
Opportunity

11
Q

What are the elements of quality control? HEAL ME

A

Human resources (personnel mgmt)
Ethical Requirements (independence)
Acceptance and continuance of client relationships and specific engagements
Leadership responsibilities for quality within the firm
Monitoring
Engagement performance.

12
Q

independence should be maintained in:

A

In fact (state of mind) and in appearance (How it appears to the public)

13
Q

What are the mgmts assertions? PERCV

A
Presentation and disclosure
Existence or occurrence
Rights and obligations
Completeness
Valuation or allocation
14
Q

Substantive tests? ICORRIIA

A
Inquiry
Confirmation
Observation
Recalculation
Re performance
Inspection of tangible assets
Inspection (examination) of records or documents
Analytical Procedures
15
Q

What is the documents completion time period for AICPA and PCAOB?

A

AICPA: document completed within 60 days of report release date
PCAOB: document completed within 45 days of report release date

16
Q

Management is responsible for the establishment and maintenance of ICs. We want reasonable assurance that ICs are achieving certain Objectives: ACE

A

Accurate and reliable financial reporting
Compliance with laws and regulations
Effectiveness and efficiency of operations.

17
Q

What are the elements of IC? CRIME

A
Control Environment
Risk assessment
Control Activities
Information and communication
Monitoring
18
Q

What are the elements of Control Environment? CHOPPER

A
Commitment to competence
HR policies and practices
Organizational structure
Participation of those charge with governance
Philosophy of mgmt and operating style
Ethical value and integrity
Responsibility assignment.
19
Q

What are the elements of Control activities: PIPS ARCC

A
Performance reviews
Info processing
Physical controls
Segregation of duties
Authorization of transactions
Recording (posting) of transactions)
Custody of assets
Comparisons
20
Q

What are the 2 elements of Info and communication?

A

Info system

Communication

21
Q

What are the 6 steps in obtaining an understanding of IC:

A
  1. Obtain an understanding of the design of IC (perform risk assessment procedures CRIME)
  2. Document the understanding of IC
  3. assess risk of material misstatement (RMM=IRxCR)
  4. Perform tests of controls
  5. Reassess risk of Material Misstatement and evaluate results
  6. Document conclusions and determine the effect on the planned substantive procedures.
22
Q

What are the ways to document IC? FIND

A

Flowcharts
IC questionnaire
Narrative or memo
Decision table/tree

23
Q

What procedures are used in Tests of Controls? RIIO

A

Re performance
Inspection
Inquiry
Observation.

24
Q

What are the inherent limitations? COCO

A

Collusion
Override by mgmt
Competence
Obsolescence

25
Q

What are the 4 personnel in the payroll cycle?

A

Personnel (Authorize) Hire, Fire, Salary RAtes
Payroll (recording) Calculate payroll
Treasurer (Custody) signs and distributes checks, custody of cash
Controller (Comparison) Bank reconciliation.

26
Q

No audit can be performed without Test of details: ICORRIIA

A
Inquiry
Confirmation
Observation
Recalculation
Reperformance
Inspection of records
Inspection of documents
Analytical procedures
27
Q

What is Tracing and what is Vouching?

A

Tracing: Completeness: Trace from source document into books
Vouching: Existence or occurrence: Vouching from books to source.

28
Q

So for Substantive Testing:

A

ICORRIIA -> UPERCV

29
Q

For Internal Control:

A

RIIO-> ARCCS

30
Q

Distinguish between positive/negative/blank confirmations:

A

Positive: need response
Negative: No response needed
Blank: Customer asked to provide amt without being told value on client records.

31
Q

Loss contingencies: accrue/disclose:

A

Remote-Slight=no not disclose or accrue
Reasonably possible= Disclose, but do not accrue
Probable and estimable= Disclose and accrue
Probable and not estimable=Disclose, but do not accrue.

32
Q

What are the 2 types of risks in sampling?

A
Nonsampling risk (human error)
Sampling Risk (bad sample, sample is not representative of population)-risk of drawing wrong conclusion.
33
Q

What are the 2 types of sampling risk?

A

Type 1: Efficiency error: Population is ok, but based on the sample, don’t rely. Incorrectly reject
Type 2: Less effective: Population is bad, but base on the sample, the auditor believes everything is ok. Incorrect acceptance.