Audit Planning and Risk Assessment Flashcards
Existence assertion
is generally not tested for Liabilities
Accounts receivable confirmation
is a test of existence (Overstatement) NOT completeness (Understatement)
Inventory
is an asset and with assets you worry about overstatement
Auditor may physically examine inventory to ensure existence (No Overstatement)
Auditor establishes Materiality for
1) F/S as a whole
2) Performance Materiality
2) Certain account Balances/Transactions/Disclosures
External Auditor can not delegate what to the internal auditor
1) Judgement decisions
2) Audit Decisions
3) Assessments pertaining to estimates
Actuary
is a Management Specialist
Who has primary responsibility for the audit
Engagement partner (NOT Supervisor)
Test of controls and test of details test
F/S Assertions account/transactions/balance
When determining if a risk is significant or not the auditor
should ignore impact of client’s internal controls related to that risk
If Internal controls are not working
1) Modify Risk assessment
2) Modify planned audit procedures
PCAOB recommends an auditor
perform analytical procedures related to risk assessment procedures
Fraud risk attributes assessed by the auditor in the current year only include
1) Type of risk
2) significance of the risk
3) Pervasiveness of the risk
4) Likelihood of the risk
What is done during the review phase of an audit
Reviewing F/S and Disclosures for unusual transactions or unexpected balances
Audit Strategy Includes
1) Preliminary assessment of materiality and tolerable misstatement
2) Outline reporting objectives
3) providing the scope of the audit
Audit plan includes
Nature
Timing &
Extent of audit procedures
