(A3)M4-M6 Flashcards

1
Q

What does the relevance of audit evidence depend on?

A

Timing and whether procedure is designed to directly test an assertion/for an under or overstatement

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2
Q

Reliability refers to ___, while sufficiency refers to ___.

A

Quality, quantity

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3
Q

The auditors risk assessment affects these three elements of the audit ___, ___, and ___.

A

Nature, extent, and timing of audit procedures

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4
Q

What is the least reliable audit evidence?

A

Oral

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5
Q

What is the most reliable form of audit evidence?

A

Direct personal knowledge (examination, re-computation, inspection, and observation)

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6
Q

Does the amount of evidence obtained for a given audit procedure directly or indirectly impact the level of DR?

A

Directly

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7
Q

Give some examples of underlying accounting records (i.e., not corroborating evidence).

A

Journal entries, invoices, contracts, ledgers, checks, worksheets

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8
Q

When trying to identify predictable relationships for which to perform analytical procedures, an auditor would look at accounts belonging to which FS?

A

Income statement, accounts that are not subject to management discretion (e.g., interest expense, payroll)

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9
Q

T or F, inquiry alone is sufficient audit evidence.

A

F

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10
Q

which assertions do vouching and tracing test, and which assertion matches understatement and overstatement?

A
vouching = existence (overstatement)
tracing = completeness (understatement)
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11
Q

when must the auditor obtain a management representation letter?

A

at the conclusion of fieldwork

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12
Q

what are the advantages of regression over ratio and trend analysis, and nonstatistical predictive modeling?

A

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

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13
Q

which procedures test for completeness?

A

tracing, analytical review, observation

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14
Q

procedures to test for cutoff

A

cutoff procedures: analyze transactions before/after YE

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15
Q

procedures to test valuation, allocation, and accuracy

A

inspection, footing, recalculation, reconciliation

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16
Q

procedures to test for existence and occurrence

A

confirmation, observation, inspection, examination, vouching

17
Q

procedures to test rights and obligations

A

inspection

18
Q

procedures to test for understandability and classification

A

inspection, review, inquiry

19
Q

when an account is dependent on another account (e.g., commission is dependent on sales), should the auditor use the dependent account to create an expectation for the independent account (sales)?

20
Q

year-over-year percent change formula

A

(current-prior)/prior

21
Q

when an analytical procedure is performed during the overall review stage, what are the documentation requirements?

A

there are no specific documentation requirements

22
Q

unrealized gains on available-for-sale securities should be recorded in what account?