(A3)M4-M6 Flashcards
What does the relevance of audit evidence depend on?
Timing and whether procedure is designed to directly test an assertion/for an under or overstatement
Reliability refers to ___, while sufficiency refers to ___.
Quality, quantity
The auditors risk assessment affects these three elements of the audit ___, ___, and ___.
Nature, extent, and timing of audit procedures
What is the least reliable audit evidence?
Oral
What is the most reliable form of audit evidence?
Direct personal knowledge (examination, re-computation, inspection, and observation)
Does the amount of evidence obtained for a given audit procedure directly or indirectly impact the level of DR?
Directly
Give some examples of underlying accounting records (i.e., not corroborating evidence).
Journal entries, invoices, contracts, ledgers, checks, worksheets
When trying to identify predictable relationships for which to perform analytical procedures, an auditor would look at accounts belonging to which FS?
Income statement, accounts that are not subject to management discretion (e.g., interest expense, payroll)
T or F, inquiry alone is sufficient audit evidence.
F
which assertions do vouching and tracing test, and which assertion matches understatement and overstatement?
vouching = existence (overstatement) tracing = completeness (understatement)
when must the auditor obtain a management representation letter?
at the conclusion of fieldwork
what are the advantages of regression over ratio and trend analysis, and nonstatistical predictive modeling?
provides direct and quantitative measures of the precision of the expectation, allows for use of many independent variables, provides a precise method for forming an expectation
which procedures test for completeness?
tracing, analytical review, observation
procedures to test for cutoff
cutoff procedures: analyze transactions before/after YE
procedures to test valuation, allocation, and accuracy
inspection, footing, recalculation, reconciliation
