Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

AudTheo > Audit Process Notes > Flashcards

Audit Process Notes Flashcards

credit : Quizlet

1
Q

General Approach in auditing FS

A
  • FS assertions
  • audit procedures
  • audit evidence
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

FS Assertions

A

mgt implicitly or explicitly makes assertions regarding the recognition, measurement, presentation and disclosure of the various elements of FS and related disclo.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Assertions

A
  1. about classes of transactions and events for the period under audit
  2. about account balances at the period end.
  3. about presentation and disclosure
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

about classes of transactions and events for the period under audit (COCAC)

A

a. Classification - T&E have been recorded in the proper accts
b. Occurrence- transactions/events that have been recorded have occurred and pertain to the entity
c. Completeness- all T&E that should have been recorded have been recorded
d. Accuracy- amounts and other data relating to recorded T&E - appropriately
e. Cutoff- T&E - correct accounting period

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

about account balances at the period end (CREV)

A

a. Completeness- ALE that should have been recorded…
b. Rights and Obligations - Rights (assets), Obli (Liab)
c. Existence - ALE only
d. Valuation and Allocation - ALE included in FS at appro amounts

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

about presentation and disclosure (COCA)

A

a. classification and understandability- Fin Info is presented appropriately and describe and disclosures are explain
b. Occurrence and rights and obli- disclosed events, trans, and other matters have occurred and pertain to the entity.
c. Completeness- all disclosures that should have been included in the FS have been included.
d. Accuracy and valuation- financial and other info are disc. fairly and at appro amounts.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Audit Procedures

A

Use assertions for:

a. assessment of risks of material misstatements
b. design and performance of further audit procedure.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Basic Criterion of procedures selected

A

-it should enable the auditor to gather sufficient appro evi. about a particular assertion

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Audit Procedures (gather evidence) ICOCIA

A

a. inspection
b. confirmation
c. observation
d. computation
e. inquiry
f. analytical procedure

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Inspection

A

involves examining of records, documents or tangible assets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Confirmation

A

consists of the response to an inquiry to corroborate info contained in the accounting records

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Observation

A

consists of looking at a process or procedure being performed by others.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Computation

A

consists of checking the arithmetical accuracy of source documents and accounting records or performing indpnt calculations.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Inquiry

A

consists of seeking info from knowledgeable persons inside or outside the entity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Analytical Procedures

A

consists of analysis of significant ratios and trends

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Audit Evidence

A

info obtained by the auditor in arriving at the conclusions on w/c the audit opinion is based.

Composed of :

  • source docu
  • acctg records
17
Q

Audit evidence

A

either prove or disprove the validity of the management assertions

18
Q

Audit Process (AACPCI)

A

sequence of audit events

  1. Accepting an engagement
  2. Audit Planning
  3. Considering Internal Control
  4. Performing substantive test
  5. completing the audit
  6. issuing a report
19
Q

Accepting an engagement

A
  • require evaluation of the auditor’s qualifi.
  • require auditability of the prospective client’s fs

involves preliminary understanding of the client’s business and background investigation

20
Q

(AE) Preliminary planning Activities - PSA 300

A

a. performing proce. regad. the continuance of the client relationship and the specific audit engagement.
b. evaluating compliance w/ ethical reqts, including independence
c. establishing an understanding of the terms of the engagement

21
Q

Audit Planning

A
  • obtains more detailed knowledge about the client’s biz

- preliminary assessment of risk and materiality

22
Q

Considering the Internal Control

A
  • entity’s internal control directly affects the reliability of the FS
  • stronger IC- more assurance

-obtaining understanding of the entity’s control systems and assessing the level of control risk

Assess control risk:

  • sufficient appro evi must be obtained to prove that the IC is functioning well
  • evidence can be obtained by performing tests of controls
23
Q

Performing Substantive Test

A
  • to determine whether the entity’s FS are presented fairly in accordance with FRS
  • extent depends on auditors assessment of IC. if IC is good, then less scope of substantive
24
Q

Completing the Audit

A

additional audit procedure

a. review of subsequent events and contingencies
b. assessing the going concern assumption
c. performing overall analytical review proce
d. obtaining written representation from the client’s mgt

25
Q

Issuing a report

A

the opinion(audited fs) is communicated to various interested users

26
Q

Accepting an Engagement

A

Consideration on Accepting or Rejecting:

a. competence
b. independence
c. ability to serve the client properly
d. integrity of the prospective client’s mgt.

27
Q

Competence

A
  • it is acquired thru a combination of education, training and experience.
  • CPA should not portray themselves as having expertise which they do not possess
  • auditor should obtain preliminary knowledge to determine if has degree of competence required by the engagement or whether such competence can be obtained before the completion of audit.
28
Q

Independence

A

auditor should consider whether there are any threats to the audit team’s independence and objectivity and, if so, whether adequate safeguards can be established.

29
Q

Ability to serve client properly

A 
- engagement should not be accepted if there are no enough qualified personnel to perform the audit
PSA 220- assignment to proper personnel
- there should be sufficient direction,
supervision and review of work at all
levels
30
Q

Integrity of the Management

A

background tasks:

a. making inquiries of appro parties in the business
- banker, legal counsel, underwriter

b. communicating with the predecessor unit

31
Q

(I) communicating with predecessor unit

A

a. allows the incoming auditor to obtain info whether to accept or not

b. incoming auditor should obtain client’s permission
- REFUSAL: raise serious question as to whether
accept the engagement or not

If Permitted, asks preditor.

a. preditor’s understanding as to the reasons for the change of auditor
b. any disagreement between the preditor and client
c. any facts that might have a bearing on the integrity of the prospective client’s mgt

32
Q

Retention of Existing clients

A
  • client should be evaluated at least once a year or upon occurrence of major events
33
Q

Engagement letter

A

after accepting the audit engagement

34
Q

Contents of the Engagement letter

A

a. objective of the audit of FS w/c is to express an opinion on the FS
b. Mgt’s responsibility for the fair presentation of the FS
c. scope of the audit
d. forms or any reports or other communication that the auditor expects to issue
e. fact that because of the limitations of the audit, there is an unavoidable risk that material misstatements may remain undiscovered
f. responsibility of the client to allow the auditor to have unrestricted access to whatever records, documentation and other information requested in connection with the audit

35
Q

Addition of Engagement letter contents

A

a. billing arrangements
b. expectations of receiving mgt representation letter
c. arrangements concerning the involvement of others (experts, other auditors, internal auditors and other client personnel)
d. request for the client to confirm the terms of the engagement

36
Q

Importance of Engagement Letter

A

a. avoid misunderstanding with respects to the mgt.

b. document and confirm the auditor’s acceptance of the appointment

37
Q

Recurring audits

A

factors of sending new EL:

a. any indication that the client misunderstands the objective and scope of the audit
b. any revised or special terms of the engagement
c. a recent change of senior mgt, BOD, or ownership
d. a significant change in the nature or size of the client’s business
e. legal requirements and other gov’t agencies pronouncement

38
Q

Audit of components

A

When the auditor of parent and subsidiary is the same, factors whether to send separate letter:

a. who appoints the auditor of the subs
b. whether a separate audit report is to be issued on the component
c. legal requirements
d. extent of any work performed by other auditor
e. degree of ownership by parent
f. degree of independence of the component’s mgt

AudTheo (6 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions