Assurance Flashcards
assurance
an assurance firm’s satisfaction as to the reliability of an assertion being made by one party for the use of another party
contents of a letter of engagement
MC SOAR
-management’s responsibility
-confirmation of reports
-scope of audit
-objective
-opinion (positive)
-auditor’s responsibility
-reporting framework
what is in the audit strategy
MR BICEP
-Materiality and risk
-Resources
-Business understanding
-Internal
-Control
-Environment
-People (team)
Audit procedures
AEIOU RC
-Analytical procedures
-Enquiry
-Inspection
-Observation
-Recalculation
-Reperformance
-Confirmation
Materiality thresholds
Revenue (0.5-1%)
Assets (1-2%)
Profit before tax (5-10%)
Fundamental principles (ethics)
COPPI
-Confidentiality
-Objectivity
-Professional competence & due care
-Professional behaviour
-Integrity
Assertions (SPL)
Completeness
Classification
Cut-off
Occurence
Accuracy
Presentation
Assertions (SFP)
Completeness
Classification
Presentation
Existence
Rights and obligations
Valuation
Items only stated by exemption
Returns adequate for audit received from branches not visited
Agreement
Proper accounting records
Information and explanations + access to all records
Director’s emoluments correctly disclosed in financial statements
Components of internal control
Control activities
Risk assessment
Information systems
Monitoring
Environment
Objectives of internal control
Safeguard assets
Comply with laws and regulations
Reduce fraud
Effective Business
Accurate financial reporting
Minimise business risks
Limitations of internal control
Collusion
Human error
Expense
Weird transactions
Types of control activity
Physical/logical controls
Authorisation & approval
Reconciliations
Information processes
Segregation of duties
Verification
Activities of Internal Audit
Testing
Accounting advice
Monitoring
Examining
Reviewing
Documentation
Title
Reference
Accounting period
Client’s name
Date
Originator (preparer)
Reviewer
