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Audit Test 1 > Audit test 2 > Flashcards

Audit test 2 Flashcards

1
Q

Business process

A

he set of connected activities linked with each
other for the purpose of achieving one or more business objectives

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2
Q

Top-Down

A

Begins at the entity level with the organization’s objectives, and then identifies the key processes critical to the success of each of the organization’s objectives.

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3
Q

Bottom-Up Approach

A

Begins by looking at all processes directly at the activity level, and then aggregates the identified processes across the organization.

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4
Q

Business processes/risks (Retail Store)

A

Customer selects goods - Pays for or promises to pay - customer accepts possession of goods.

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5
Q

Responses to Risks

A

Accept
Avoid
Pursue - action take to accept risk in order to improve performance
Reduce - action taken to reduce risk, while still continuing current operations
Share - action taken to reduce risk by transferring some risk to another party

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6
Q

Quality of audit

A

Competence and independence

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7
Q

Individual Objectivity

A

: an unbiased mental attitude.

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8
Q

Organizational Independence

A

: The freedom from conditions that threaten the ability of the internal audit function to carry out internal audit responsibilities free from interference.

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9
Q

Due Professional Care

A

: The care and skill expected of a reasonably prudent and competent internal auditor.

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10
Q

Integrity and Objectivity rule

A

In the performance of any professional
service, a member shall maintain objectivity
and integrity, shall be free of conflicts of
interest, and shall not knowingly
misrepresent facts or subordinate his or her
judgment to others.

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11
Q

Prohibited Business Relationship

A

The independence of a CPA is impaired if CPA performs a managerial or other significant role for an entity’s organization during the time period covered by an attest engagement

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12
Q

Risk management

A

Is a process conducted by management to understand and deal with uncertainties that could affect the ability to achieve its business objectives

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13
Q

Competence and capabilities

A

Experience & expertise

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14
Q

Professional Due Care

A

care and skill expected from an competent internal auditor

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15
Q

Professional Skepticism

A

Auditors take nothing for granted, they continuously question what they hear and see and critically assess audit evidence.

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16
Q

reasonable Assurance:

A

A level of assurance that is supported by GAAP procedures and judgements

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17
Q

Vouching

A

Tracking information backward from one document or record to a PREVIOUSLY prepared document or record or to a tangible resource.

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18
Q

Tracking

A

Tracking information FORWARD from one document, record, or tangible resource to a subsequently prepared document or record.

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19
Q

Analytical Procedures

A

Assessing information obtained during an engagement by comparing the information with expectations identified or developed by the Internal Auditor

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20
Q

Persuasiveness of Audit

A

Relevant, Reliable, Sufficient

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21
Q

Relevant

A

does the evidence pertain to the audit objective? Does it logically support the internal auditor’s conclusion or advice

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22
Q

Sufficient

A

Has the internal auditor obtained enough evidence?

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23
Q

Reliable

A

Did the evidence come from a credible source? Did the Internal Auditor directly obtain the evidence

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24
Q

Persuasiveness of evidence

A

Competent-relevant, reliability
Sufficiency - Quantity

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25
Q

Reliability of Evidence

A

High - Documents prepared by internal Auditors. Documents sent directly from 3rd party. (Cutoff bank stmts)

Medium - Documents created by 3rd party, sent to organization, then sent to internal auditors. (Vendor invoices)

Low - Documents created by organization (written policy stmts, time cards)

26
Q

Inspection procedure

A

examine stuff

27
Q

Reperformance

A

Recalculation to confirm amounts are EXACT

28
Q

Confirmation

A

going to 3rd party to confirm account numbers

29
Q

Existence or occurrence

A

Going Backward to get to the beginning of the transaction.

30
Q

Rights and obligations

A

Company holds the rights to the assets, while liabilities are the obligations of the company

31
Q

Competness

A

Starting at the beginning and working forward to the end of the transaction.

32
Q

Valuation

A

The way in which a company gets depreciation expense or allowance for doubtful accounts

33
Q

Accuracy

A

The correct #s are on the financials

34
Q

presentation and disclosure

A

Accounts are classified in accordance to GAPP and financial stmt disclosures are complete, appropriate, and clear

35
Q

Authorization

A

all transactions are properly authorized

36
Q

SALES

Shipping document -> Sales Journal -> G/L

A

Completeness - all earned income was recorded

37
Q

SALES

Shipping document <- Sales Journal <- G/L

A

Existence - all recorded transactions are valid or earned

38
Q

PURCHASES

Receiving Report -> vendor invoice -> Purchases journal

A

Completeness - make sure all recieving reports have made it to the books

39
Q

PURCHASES

Receiving Report <- vendor invoice <- Purchases journal

A

Existence - To make sure all recorded purchases are valid

40
Q

Audit risk model

A

AR = IR * CR * DR

41
Q

Coso cube component’s

A

Control Environment, Risk Assessment, Control Activities, INFO/Communication, monitoring activities.

42
Q

Planning Audit Engagement

A
  1. determine objectives/scope
  2. understand auditee, including auditee objectives and assertions
    3.Identify and assess risks
    4.Identify key controls
    5.Evaluate adequacy of control design
  3. Create a test plan
  4. Develop a work program
  5. allocate resources to engagement
43
Q

Ask the organization’s outside legal counsel to provide info about any litigation claims, and/or assessments against the organization

A

Inquiry

44
Q

Compare a sample of check copies to support voucher packets to test the validity of the checks

A

Vouching

45
Q

Examine selected inventory items to determine their condition

A

Inspection

46
Q

Watch employees involved in executing and recording cash disbursement transactions to determine whether they are performing their assigned responsibilities

A

observation

47
Q

Track internal auditor test counts of inventory to the auditee’s inventory compilation records to verify that the counts are properly included in the compilation

A

tracking

48
Q

Recalc accumulated depreciation expense to verify that they were calculated correctly

A

Reperformance

49
Q

calc accounts payable turnover for the current year and preceding 2 periods as evidence of vendor payment periods

A

Analytical procedures

50
Q

Contact banks to ensure that the recorded account bank balances agree w their records

A

confirmation

51
Q

There are no unrecorded receivables

A

completeness

52
Q

Receivables have not been sold

A

rights+obligations

53
Q

There is adequate provision for uncollectible accounts

A

valuation

54
Q

All accounts in AR TB are expected to be collected within one year

A

disclosure/presentation

55
Q

Any agreement or condition that restricts the nature of trade receivables is known to be disclosed

A

disclosure/presentation

56
Q

All accounts on the list arose from the normal course of business and are not due from related parties

A

disclosure/presentation

57
Q

No sales transactions from the next period were recorded in the current period

A

Cutoff

58
Q

Total AR subsidiary accounts agree with the total in the AR TB

A

Accuracy

59
Q

There are no receivables that do not correspond w goods having been shipped

A

Existence

60
Q

All credit sales adhere to the credit policy

A

authorizations

61
Q

Documents for A/R-Sales

A

Shipping document (BOL) - Sales invoice - Sales journal

62
Q

Documents for Purchases/AR

A

Receiving report - Vendor invoice - Purchases Journal

Audit Test 1 (4 decks)

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