A3 Flashcards

1
Q

If an auditor’s risk assessment is based on the effective operation of controls, the auditor will likely

A

Identify specific IC that are likely to detect or prevent material misstatements.

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

Auditors would consider situations that threaten financial stability or profitability, since such situations might provide an inventive to fraudulently misstate the FS. example is

A

The entity’s industry is experiencing declining customer demand

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

What type of analysis provides direct and quantitative measures of the precision of expectation… it is also an advances statistical technique that often uses software?

A

Regression analysis

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

Sampling used to estimate NUMERICAL measurements of a population

A

Variable Sampling

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

Detection Risk

A

can be changed at the auditor’s discretion

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

Control Risk & Inherit Risk

A

Exist independently of the FS Audit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

When determining sample size of TOC auditor should consider

A

Rate of Deviation, Allowable risk of assessing risk to low & Tolerable Deviation Rate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Auditor’s risk assessment

A

Affects the nature, timing and extent of Audit procedures NOT the relevance of AUDIT Evidence

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

Existence Assertion auditor works from…

A

Accounting records to supporting evidence.
encontre algo al auditar pero solo se si existe si busco evidencia

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

Completes Assertion auditor works from…

A

Supporting Evidence to Acct Records
Como se que la evidencia esta completa? la busco en los records

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

When control risk is assessed @ maximum level

A

Document Assessment
Auditor after documenting should make decisions to potentially perform + substantive testing

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

Audit eveidence

A

The + effective IC structure, the + assurance it provides about the reliability of the accounting data and FS

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

TOC example

A

Auditor interviews & observes appropriate personnel to determine segregation of Duties

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

Auditor assesses control risk b/c?

A

Affects the level of detection risk that the auditor may accept.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Primary objective of brainstorming is….

A

Assess the potential for material misstatement due to fraud

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

Inherent Risk- auditor assesses which

A

Susceptibility of FS assertion to be materially misstated assuming there are no related controls.

16
Q

if acceptable level of detection risk increases auditor may change

A

Timing of substantive test from YE to INT.

As detection risk increase substantive decreases so by moving it from YE to INT=The assurance decreases

17
Q

Which ratio would an engagement partner most likely consider i the overall review stage of an audit?

A

Inventory Turnover=
COGS/avg. Inventory

18
Q

Precision (sampling results)

A

Auditors evaluation of sampling results by calculating the possible error in either direction

19
Q

Primary objective of probability proportional to size

A

To identify overstatement of error.

20
Q

TOC in issuer client

A

An auditor must obtain evidence that the controls are operating effectively during the entire period of reliance if the auditor plans to assess Control Risk at LESS than the Maximum.

21
Q

Providing + supervision during audit in response to assessed risk of RMM is example of

A

An overall response

22
Q

Auditor’s analytical procedures most likely would be facilitated if entity…

A

Uses standard cost system that produces variance reports…
The report caparison of budget will already be performed y es probable que management ya los analyso previamente y tiene respuestas para los cambios

23
Q

Primary objective of analytics @ review (final) stage is to….

A

Assist the auditor in evaluating the overall FS presentation.

24
Primary objective of the FRAUD brainstorming
Assess the potential for material misstatement due to FRAUD Acordarme si hablamos de FRAUD entonces el assessment es de FRAUD
25
Response to an increase in risk of RMM in inventory will be to
Perform physical count on the last day of the current year
26
When auditor assesses control risk too HIGHT ....most likely occurred because
Control risk based on the auditor's sample is greater than the true operating effectiveness of the client's control activity
27
Auditor would consider confirming a LARGE complex sale when...
RMM (inherent risk & control risk) is HIGH
28
PCAOB standards state that the following is not of relevance regarding audit evidence
Audit Risk assessment