Audit Evidence - Concepts & Standards Flashcards
Does the Audit Risk Model apply to the financial statements as a whole?
No, at the assertion level only
Test of details provides what strength of evidence at what cost?
Stronger evidence, HIGHER cost
Analytical Procedures provide what strength of evidence at what cost?
Weaker evidence, lower cost
Pervasive use of IT for accounting data typically indicates what?
Can not rely on a pure substantive audit plan, must include test of controls
Factors that effect the effectiveness of Analytical Procedures
- Nature of Assertion
- Plausibility and Predictability of relationship
- Availability of data
- Precision of expectations
Do accounting records only provide sufficient audit evidence?
No
2 Characteristics of Audit Evidence, and what they truly represent
- Sufficient = Quantity
2. Appropriate = quality
3 Categories of Management Assertions
- Account Balance
- Presentation and Disclosure
- Classes of Transactions and Events
Management assertions for “Account Balances” (4)
- Completeness
- Existence
- Rights & Obligations
- Valuation & Allocation
Management assertions for “Presentation and Disclosure” (4)
- Completeness
- Accuracy and Valuation
- Occurrence and Rights & Obligations
- Classification and Understandability
Management assertions for “Classes of Transactions and Events” (5)
- Completeness
- Accuracy
- Occurrence
- Classification
- Cutoff
If a transaction is recorded after or before the correct period what management assertion of Classes of Transactions and Events has been violated?
Recorded Prematurely - Occurrence
Recorded after cutoff - Classification
2 Basic categories of Audit Evidence
- Accounting Records
2. Other information
2 Components of “Appropriate” audit evidence
- Relevance
2. Reliability
Evidence is only sufficient and appropriate of what happens?
It is reviewed
