Audit In Swing Flashcards
Tests of controls
TERROR
T = test data, test sequential numbering of docs E = enquire R = reperform reconciliations R = recalculate O = observe procedures/authorisations/physical controls R = review docs to see if authorised/if another doc is attached
Audit evidence should be…
SUFFICIENT
• judgemental
• as risk increases, need for evidence increases
APPROPRIATE
• relevant > must cover one or more of assertions
• reliable > more risk, more need for reliability
written > oral
external > internal
auditor generated > other
ASSERTIONS: SoFP (4)
- existence
- completeness
- rights & obligations
- valuation
ASSERTIONS: IS/SoPL (5)
- occurence
- completeness
- accuracy
- cut-off
- classification
Audit reports: explicit opinions (3)
- whether f-s’s give true and fair view (UK and int)
- whether they have been properly prepared (UK and int)
- whether info given in directors’ report is consistent with f-s’s (UK only)
Audit reports: implied opinions (6)
- adequate accounting records kept
- adequate returns from branches not visited
- accounts agree with accounting records
- all info and explanations received
- details of directors’ emoluments disclosed
- particulars of loans and other transactions with directors disclosed
Audit report includes… (6)
- responsibilities of auditors and directors
- scope of audit
- opinion
- introduction: what’s been audited (pages x-y)
- independent audit report to shareholders
- signed by senior statutory auditor (not just firm)
Working papers should be kept for…
6 years from end of accounting period
Analytical procedures (5)
- used at all stages of audit: planning, reviewing, evidence
- planning: used to understand business and assess risk
- analysis of significant fluctuations from expected results
- comparison of absolute figures and ratios
- highlight figures with high % mvt or above materiality threshold
Evidence and sampling: procedures (6)
- inspection
- observation
- inquiery
- confirmation
- reperformance/recalculation
- analytical procedures > used at all stages
Accounting estimates
Method and effectiveness
Testing provisions: see how much of provision was used last year (bad debts etc.)
2 types of effectiveness of controls:
• design effectiveness
> is it a good control/well-designed?
• operating effectiveness
> is it carried out/operated properly by appropriate level of management?
Audit tests: AEIOU
Should all have an action
A = analyse E = enquire I = inspect O = observe U = calcUlate
Representation letter must include…
Management has…
- fulfilled responsibility for prep of f-s’s
- provided auditor with all relevant info and access
- recorded and reflected all transactions in f-s’s
All as agreed in terms of audit engagement
