Acronyms Flashcards
Communication with Predecessor Auditor (RID-CU)
R- Reasons for change
I- Integrity of management
D-Disagreement during audit
C- Communication with management
U- Understand related parties transactions
Audit Model
Audit Risk = inherent risk x control risk x detection risk
Procedures performed before balance sheet date
- knowledge of internal controls
- knowledge of business environment
- other risk assessment procedures
- certain substantive testing
Procedures performed after balance sheet date
- Send legal letter
- Cut-off testing
- Evaluate going concern
- Verify leins and collateral
Elements of Engagement Letter (Facsimilie)
F- Fees
A- Auditors Responsibilities
C- Confirmation of engagement
S- Scope & Objective
I- Internal Controls
M- Management responsibility
I- Irregularities
L- Illegal Acts
E- Errors
Control Testing (RIIO)
R- Re-performance
I- Inspection
I- inquiry
O- Observation
Risk Assessment Procedures (AIIO)
A- Analytical Procedures
I- Inquires
I- Inspection
O- Observation
Financial Statement Assertions (COCA- CURVE)
C- Completeness -traces physical assets to subsidiary ledgers
O- Occurrence- Vouch ledger to documents
C- Cutoff-
A- Accuracy- recompute account balances
C- Classification- validate correct acct with doc
U- Understandability- read disclosures
R- Rights and obligations- ownership and obligations
V- Valuation & Allocation- look for logical relationships between fin and nonfin info
E- Existence- vouch ledgers to physical assets
Analytical Comparisons (CRAFT)
C- Client vs Industry
R- Related Accounts
A- Actual VS Budget
F- Financial VS Non-Financial
T- This year VS Last year
Components of Internal Control (CRIME)
C- Control Activities
R- Risk Assessment
I- Information & Communication
M- Monitoring of controls
E- Control Environment
Control Environment (Chopper)
C- competence
H- human resource policies and practicies
O- organizational structure
P- participation of those charge with governance
P- philosophy and operating style of management
E- ethical values and integrity
R- responsible assignment
Control Activites (PIPS)
P- performance reviews
I- information processing
P- physical controls
S- segregation of duties
Components of Internal Control (CRIME)
C- control activities
R- risk assessment
I- information and communication
m- monitoring of control
E- control environtment
Internal Control Objectives (ACE)
A- accurate financial and non-financial reporting
C- compliance of laws and regulations
E- effective and efficient operations
Internal Control Inherent Limitations (COP)
C- collusion among employees
O- override by management
P- poor judgement and errors
Segregation of Duties
A- authorization
R- record keeping
C- custody
C- comparison
Monetary Policy
management of interest rates and the total supply of money in circulation and is generally carried out by central banks, such as the U.S.
Fiscal Policy
tax and spending actions of governments
CPA’s Quality Control Policies (HEAL-ME)
H- Human Resources
E- ethical requirements
A- acceptance and Continuance
L- Leadership responsibilities for quality
M- monitoring
E- engagement performance
High Elasticity
> 1
7% decrease in demand relating to 3% increase in price
Unitary Elasticity
=1
7% decrease in demand relating to 7% increase in price
Inelasticity
<1
7% decrease in demand relating to 10% increase in price
Recession
tarts not long after an economy hits its peak and continues until it reaches its minimum
Deflation
measured by a decrease in the Consumer Price Index. Decrease in products and Services
