AUD Vocab of Aud proecedures

Question 1

FIVE CARROT CARS for standard auditing procedures

Answer 1

F = Footing
I = INQUIRY
V = VOUCHING
E = EXAMINATION / INSPECTION

C = CONFIRMATION
A = A/Ps
R = REPERFORMANCE
R = RECONCILIATION
O = OBSERVATION 
T = TRACING

C = CUTOFF REVIEW
A = AUD RELATED ACCTS
R = REP LETTER 
S = SUBSEQ. EVENTS REVIEW

Question 2

WHICH PROCEDE AUD W/USE TO SUBSTANTIATE VALUATION OF FIN. ACCTS AND ALLOCATION OF ITEMS LIKE DEPRECIATION, AMORT, AND ACCRUALS

Answer 2

RECALCULATION

Question 3

REQUESTING INFORMATION FROM KNOWLEDGABLE PARTIES BOTH INTERNALLY AND EXTERNALLY

Answer 3

INQURY

Question 4

Directional testing in which aud examines support for what has been recorded in the records and statements

Answer 4

Vouching = Existence/occurence

Question 5

These procedures are often refferred to as examination of evidence and includes scanning, scruitinizing and reading

Answer 5

inspection / examination = Provides evidence about existence assertion (not ownership/rights/obs/valuation) and of terms of contracts/loans/committments

Question 6

Specific type of inquiry that involves obtaining reps from independent external third parites about acct bals and trans or events

Answer 6

confirmations

Question 7

evals of financial info made by a study of meaningful realtionships among data to help highlight unusual fluctuations that could be the result of errors or fraudulent omissions or overstatements.

Answer 7

A/Ps

Note: Scanning m/be also considered an A/P, where aud uses profess. judgment to search for large/sig. unusual items in acctg records

Question 8

Aud independently performs procedes or controls that were originally performed as part of an entity’s IC

Answer 8

Reperformance

Question 9

This procedure substantiates the existence and valuation of accounts. It involves comparing financial amounts from two independent sources for agreement

Answer 9

Reconciliation = physical invnetory count w/perpetual inventory records, or lead schedules to GL amounts

Question 10

Aud looks at a process or procedure performed by others

Answer 10

Observation (ie touring facility, observe inventory etc)

Question 11

Directional test looking forward for assur. that event is given proper recognition in bokks/records

Answer 11

Tracing - u.statement (coverage)

Question 12

Which year-end trans s/be reviewed during cutoff review?

Answer 12

Inventory, cash, purchases, sales, accruals

Question 13

Which accounts c/be audited simultaneously?

Answer 13

• LT liabs and interest expense
• Capital additions to plant and equip w/ repairs and maintenance exp.
• Investement and dividends together w/interest income

Question 14

Sources of Govt aud standards =

Answer 14

GAGAS and GAAS. OMB Circular A-133 is a source of supplementary requirements