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Old Audit > A3 > Flashcards

A3 Flashcards

1
Q

When are analytical procedures required?

A

IN THE PLANNING AND FINAL REVIEW STAGE

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2
Q

What kind of sampling is used to see if controls put in place by management are operating effectively?

A

ATTRIBUTE SAMPLING

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3
Q

What should the auditor perform when substantive procedures alone cannot provide sufficient appropriate audit evidence?

A

TEST OF CONTROLS

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4
Q

Analytical procedures used in the planning phase use aggregated ______ at a ______ level.

A

DATA;
HIGH

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5
Q

What kind of sampling is used for test of controls?

A

ATTRIBUTE SAMPLING

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6
Q

When does an auditor consider the risk of incorrect acceptance?

A

DURING THE PLANNING STAGE

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7
Q

Test of controls include:
(I, Id, O, R)

A

INQUIRY, INSPECTING DOCUMENTATION, OBSERVATION, AND REPERFORMANCE

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8
Q

What procedures used in the planning phase of the adult help the auditor better understand the events and transactions that have taken place since the previous audit?

A

ANALYTICAL PROCEDURES

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9
Q

What type of analysis provides direct and quantitative measures of the exact expectation

A

REGRESSION ANALYSIS

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10
Q

In every audit, the auditor ______ obtain sufficient understanding about relevant controls over financial reporting in the five components of internal controls.

A

SHOULD

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11
Q

In every audit, the auditor ______ obtain sufficient understanding about relevant controls over financial reporting in the five components of internal controls.

A

SHOULD

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12
Q

True/False: A narrative is one way the auditor can show their understanding for internal controls.

A

TRUE

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13
Q

Knowledge about the design and implementation of the controls should be used to identify what?

A

THE TYPES OF MISSTATEMENTS THAT COULD OCCUR

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14
Q

When RMM increases, detection risk decreases. What needs to increase in order to satisfy the auditor?

A

ASSURANCE PROVIDED FROM SUBSTANTIVE PROCEDURES

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15
Q

What determines sample size?

A

The amount of sample risk the auditor is willing to have.

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16
Q

What does an auditor most likely perform to evaluate the design of controls?

A

RUSH ASSESSMENT PROCEDURES

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17
Q

When RMM is high, does the auditor select a higher or lower amount of samples?

A

HIGHER

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18
Q

The auditor should refrain from issuing what if the quality control review has not been completed?

A

AUDIT REPORT

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19
Q

When a company has substantial doubt about their ability to continue as a going concern, what should the company do?

A

NOT SOEND AS MUCH CASH

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20
Q

Review of documents helps an auditor do what?

A

OBTAIN AN UNDERSTANDING

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21
Q

What type of sampling is used to evaluate numerical numbers?

A

VARIABLES SAMPLING

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22
Q

What type is sampling is used to test internal controls?

A

ATTRIBUTE SAMPLING

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23
Q

What is the objective of data security roles?

A

TO MAKE SURE CHANGES ARE AUTHORIZED

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24
Q

How does statistical sampling help an auditor?

A

THEY CAN QUANTIFY THE AUDIT RISK WHICH HELPS LIMIT IT TO AN ACCEPTABLE LEVEL

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25
Q

When analytical procedures are performed as the principle substantive test of an assertion, the audit is required to document both the expectations and the ________.

A

REASONS WHY THEY HAD THOSE EXPECTATIONS.

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26
Q

True/false: the auditor does not need to document their understanding of an entitys internal controls that help carry out management objectives and the control environment that helped planned the audit,

A

FALSE: THEY NEED TO DOCUMENT BOTH

27
Q

An auditor selecting inappropriate audit procedures is an example of what type of risk?

A

NONSAMPLING RISK

28
Q

If a payment has been mailed to the client but has not been recorded, how would the auditor classify that confirmation?

A

AS AN EXCEPTION

29
Q

What type of sample is designed to detect overstatement errors?

A

PROBABILITY PROMOTIONAL TO SAMPLE SIZE (PPS)

30
Q

If an auditor concludes that an entity has a substantial doubt I’ve gone concerned for a reasonable amount of time in the client adequately discloses those in the report, could the auditor issue issue a disclaimer of opinion

A

YES

31
Q

When an auditor plans to rely on internal controls that have changed since last tested, the auditor should test the controls in the ______ audit.

A

CURRENT

32
Q

If an entity labeled as a going concern has been alleviated what paragraph should the auditor add to the report?

A

EMPHASIS OF MATTER

33
Q

Projected estimate of a propulsion formula

A

Known misstatement / sample included percentage

34
Q

Projected estimate of a propulsion formula

A

Known misstatement / sample included percentage

35
Q

Upper deviation rate for formula:

A

SAMPLE DEVIATION + ALLOWANCE FOR SAMPLING

36
Q

The auditor should obtain assurance from ______ that management has disclosed all claims the lawyers have deemed probable.

A

MANAGEMENT

37
Q

Are substantive audit procedures required in an audit of internal control and/or a financial statement audit?

A

FINANCIAL STATEMENT ONLY

38
Q

Why are an auditors analytical procedures facilitated when an entity uses a standard cost system with variance reports?

A

Because the comparison of budget to actual would have already been done

39
Q

Management would consider tolerable misstatements, ________, acceptable level of risk, characteristics of the population size and ______ when determining the sample size for substantive test.

A

EXPECTED AMOUNTS OF MISSTATEMENTS;
ASSESS LEVEL OF RISK

40
Q

Conditioning with third parties who have made arrangements to help finance a company helps the auditor identify events that indicate the company had substantial doubt about their ability to contribute as a ______.

A

GOING CONCERN

41
Q

What type of controls help ensure the company has good system software acquisition?

A

GENERAL CONTROLS

42
Q

Relationships from ______ tend to have the most predictability because they stew over a period of time, therefore they helps the auditors most when using analytical procedures.

A

INCOME STATEMENT ACCOUNTS

43
Q

How does the auditor assess control risk when the true population deviation rate exceeds the tolerance rate and the maximum deviation rate was less than the tolerable rate?

A

LOW

44
Q

Reliability of ________ is enhanced by the internal control structure.

A

AUDIT EVIDENCE

45
Q

When the population has greater variability, how is the sample size affected?

A

IT INCREASES

46
Q

What type of sampling does the auditor use when explicitly considering the tolerable misstatement for determining the sample size?

A

VARIABLE SAMPLING

47
Q

Auditor most likely obtain from the clients lawyer to assess in a evaluating loss contingencies?

A

LETTER OF AUDIT INQUIRY

48
Q

When an auditor has substantial doubt about an entity ability to continue as a going concern, what types of opinions may be issued?

A

UNQUALIFIED WITH EXPLANATORY PARAGRAPH;
DISCLAIMER OF OPINION

49
Q

“ in connection with an audit of financial statements, management has prepared, and furnished to our auditors a description and evaluation of certain contingencies” is a statement from ________?

A

AUDIT INQUIRY LETTER

50
Q

Financial statement risks could have impacts on the financial statements and on clients relevant _______.

A

ASSERTIONS

51
Q

Are derivatives that are on the balance sheet at quarter end consisted contingencies?

A

NO

52
Q

The objective of ________ is the protect the information by ensuring that storage media is only accessed, changed, or deleted after proper authorization.

A

DATA SECURITY CONTROLS

53
Q

The objective of ________ is the protect the information by ensuring that storage media is only accessed, changed, or deleted after proper authorization.

A

DATA SECURITY CONTROLS

54
Q

What does it mean if an auditor assesses control risk as high?

A

They don’t think the clients internal control are operating effectively.

55
Q

What does it mean if an auditor assess control risk as low?

A

THEY BELIEVE THE CONTROLS ARE WORKING

56
Q

What does it mean is an auditor assesses inherent risk as high?

A

THERE IS A HIGHER CHANCE OF A MATERIAL MISSTATEMENTS

57
Q

What does it mean if an auditor assess inherent risk as low?

A

THERE IS A LOWER RISK OF A MATERIAL MISSTATEMENT

58
Q

What does it mean If an auditor assesses detection risk as high?

A

THE AUDITOR IS LIKELY TO DETECT A MISSTATEMENT

59
Q

What does it mean if an auditor assesses detection risk as low?

A

THEY ARE NOT AS LIKELY TO DETECT A MISSTATEMENT

60
Q

What does it mean if an auditor assesses RMM as high?

A

THE FINANCIAL STATEMENTS HAVE A HIGHER LIKELIHOOD OF BEING MISSTATED

61
Q

What does it mean if an auditor assess RMM as low?

A

THE FINANCIAL STATEMENTS ARE LESS LIKELY TO BE MATERIALLY MISSTATED

62
Q

RMM =

A

IR x CR

63
Q

Audit Risk =

A

IR x CR x DR

Old Audit (6 decks)

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