Adhoc 2 Flashcards
What two things should auditors do on being invited to accept an engagement?
Check they have adequate resources
Ensure they are professional qualified to act
What reduces a current ratio?
A large sale and paying payable out of positive cash balance
If tests of control controls are inconclusive, what do you do?
Continue testing
What is the principal limitations for the preparation of accounts payable reconciliation?
Human error due to inherent limitations
What is the consequence of no segregation of duties between the preparation and authorisation of payroll?
The company may pay employees who left
Give three reasons why ass assurance providers record their work
Help assurance team plan and perform
Record date of review
Retain record of matters of significance
What type of file does the engagement letter sit?
Permanent file
How many years should the auditor working paper be retained by the auditor? Under ICAEW.
Six years from end of accounting period
What does the inspection of purchase invoice confirm?
Cost of inventory
Are written representations appropriate evidence also if they do not agree with evidence should order a trust representation
The auditor can trust other representation.
Written representation is not sufficient as it exposes an inability to obtain order evidence
Written representation cannot be used as substitute for evidence that is expected to be available
Why are sales verified by testing IC?
There is a high volume of similar transactions
Control controls over sales are often strong
What threat to independence is exposed when the auditor becomes engaged to FD daughter?
Self interest
When does management and self review threats arise?
When accepting advisory work
What is a modified and un modified opinion?
Unmodified is if conclusion is true and fair
Modified is if there’s not enough evidence
