Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

adm 3349 > 5.2 types of adt evi > Flashcards

5.2 types of adt evi Flashcards

1
Q

adt evi

A

information gathered by adtr to help form an opinion abt the fair presentation of thr FS

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

mgt responsibility

A
  1. to prepare FS according to GAAP
  2. implementation of internal control to prevent and detect MM so as the FS is fairly presentation
  3. maintain accurate acc records
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

professional scepticism

A
  1. maintain a questioning attitude th”out whole adt, remain alert for any indication of Fraud
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

sufficient app evi

A
  1. quantity and quality of adt evi gathered th”out adt
  2. affected by adt risk
  3. when CR high, DR set low and more high quality evi required
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

sufficiency

A
  1. direct relationship between qty of evidence gathering when testing assertion and the risk of MM
  2. also. a matter of professional judgement
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

appropriateness

A
  1. relates to reliability and relevance
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

relevance

A

how logically connected to assertion

e.g if testing for inv, risk of overstatement high, plan to spend more quality time in existence and occurrence than completeness

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

reliability

A
  1. true state of info
  2. influenced by:

-expertise of respondent: if the respondent is able to provide knowledgeable answer e.g confirmation

-source of info: if externally generated //internally generated//third party more// unbiased inform is more desirable

-if sourced by Internal control:produced by effective internal control, more reliable

-consistency of info: info from one source to another similar//more reliable//e.g inquiries responses from mgt and personnel similar

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

list of types of adt evidence

A
  1. confirmation
    2.documentary
  2. representation
  3. verbal
  4. computational
  5. physical
  6. electronic
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

confirmation

A

letter sent to third party to confirm info contained in the letter. most persuasive evidence obtained as responses come directly from third party

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

bank confirmation def

A

1.sent to the bank to request information abt :
-cash held by the client,
-details abt loans,
-pledges to guarantees and
-info abt contingent liabilities
-interest rates.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

bank confirmation assertion

A

1.R&O,

2.accuracy

3.completeness

4.AVA

  1. existence
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

PAYABLE Confirmation

A

1.sent to suppliers to confirm details of outstanding amt owed by client

2.only sent when adtr has complete list of suppliers (to ensure completeness)

  1. also when when zero or small balances to ensure that there is no unrecorded payables esp. when sig. balances are owing in the prior year
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

PAYABLE Confirmation assertion

A

1.R&O,

2.AVA ,

3.COMPLETENESS

4.ACCURACY

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

receivable Confirmation explained

A
  1. sent to client’s customers to confirm amt owed to the clients
  2. criteria to consider:
    -age of account
    -materiality of acc
    -location of the customers
  3. do not confirm intention to pay, thus only confirm amt owed
  4. can also be sent to 3rd party.g in a consignment scenario to confirm for inventory
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

receivable Confirmation assertion

A
  1. existence
  2. R&O
  3. VERY LITTLE AVA
  4. COMPLETENESS (CONSIGMNT)
17
Q

2 types of confirmation sent

A
  1. +ve confirmation
    2-ve confirmation
18
Q

positive confirmation explained

A

1.client to respond in all circumstances

  1. superior evidence than negative confirmation
  2. primary assertion tested is existence. still needs to perform other procedures as risk that customer/debtor will not not throughly check the amt and just sign the confirmation
  3. also provides evidence for AVA
19
Q

negative confirmation

A
  1. to respond only if amt is incorrect
  2. non response is assumed that the information is correct
  3. undermines existence assertion, for example.g a non response from fictitious customers is deemed as correct amt. this leads to inaapppropriate conclusion as revenue overstated
  4. best used to corroborate other evidence
20
Q

documentary evidence def

A

1.providing information abt the clients details recorded in the list of trsn

  1. includes invoices, supplier stmt, bank stmt, legal agreement, minutes of meetings
  2. internally generated or externally generated
21
Q

documentary evidence def

A
  1. involves vouch where adtr will start with client acc records and moves backwards to supporting doc.
22
Q

documentary evidence Assertion

A

1.R&O,

2.AVA,

3.CLASSIFICATION,

4.PRESENTATION ,

5.EXISTENCE,

6.COMPLETENESS,

7.ACCURACY

23
Q

legal letter/representation

A

1.letter sent to client lawyers requesting to confirm legal matters outstanding identified by mgt

  1. CAS 501 requires adtr to gather evidence abt legal matters of their clients
  2. adtrs review evidence like minutes meeting .has reason to believe that legal issue will affect f/s
  3. will send a legal letter to clients’ lawyers to ask their opinion, details abt the legal issue in which lawyer is in disagreement with client
24
Q

mgt representation letter/ representation

A

letter outlining mgt responsibility in preparing fair fs, compliance with acc stds and GAAP and law and key discussion occurring with adtrs during adt (documenting verbal evi) between mgt and adtrs

A letter from the client’s management to the auditor acknowledging management’s responsibility for the preparation of the financial statements and details of any verbal representations made by management during the course of
the audit

25
Q

verbal evidence def

A

responses of key audit personnel to enquiries from adtr thru’out the audit process

26
Q

verbal evidence as type of evidence

A
  1. used when gaining undertanding abt client and its internal controls
  2. Not adequate alone rather used to corroborate other forms of evidence

3, documented in the auditor working papers as a record of key discussions

27
Q

computational evidence explained + assertions

A
  1. checks for mathematical accuracy of numbers from F/S
  2. evidence for AVA
  3. complex calculations or calculations related to foreign currency
  4. when conducting recomputations, an adtr will trace amt included in the calculations to externally prepared documentary evidence.
28
Q

physical evidence

A

gathered thru inspection to assess conditions of tangible assets and to reconcile to records

29
Q

assertions for physical evidence

A
  1. existence
  2. completeness
  3. inspection of maintenance evidences AVA
30
Q

electronic evidence+ assertions

A
  1. data held in client computers, files emailed to adtrs and faxes or scanned items
  2. provide evidence for occurrence assertion e.g the process of a sales trans involving emails between clients and the customer
  3. extent to rely depend on the effectiveness of internal controls as adtr needs to consider factors like information risk

adm 3349 (26 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions