Auditing

Question 1

Income statement accounts assertions

Answer 1

Occurrence,
Completeness, 
Accuracy,
Cut off,
Classification

Question 2

Balance Sheet accounts assertions

Answer 2

Existence
Completeness
Valuation
Rights and obligations

Question 3

Audit procedures steps

Answer 3

Risk
Assertion
Procedure

Question 4

Audit planning memo sections

Answer 4

Risk
Approach
Materiality

Question 5

Risk discussion points

Answer 5

What (issue)
Why (analysis- explain impact on Risk of Material Misstatement)
Type (inherent or control)
Recommendation

Question 6

Approach

Answer 6

Explain with case facts
Combined vs Substantive
Conclude

Question 7

Materiality

Answer 7

Based on the user
User 1 (what) + concern (why or analysis)
Conclude

Question 8

Rate suggested for income

Answer 8

3% - 7%

Question 9

Rate suggested for revenue/ assets

Answer 9

1% - 3%

Question 10

Performance materiality range

Answer 10

60% - 80%

75% being normal

Question 11

Inherent risk

Answer 11

_____ stems from the nature of the business transaction or operation without the implementation of internal controls to mitigate the risk (e.g. with business transactions, integrity of management,

Question 12

Control risk

Answer 12

______ arises because an organization doesn’t have adequate internal controls in place to prevent and detect fraud and error

Question 13

Detection risk

Answer 13

the risk that the auditors won’t detect a material misstatement in an organization’s financial statements

Question 14

Substantive approach

Answer 14

• Test of details: matching, transactions, account balance calculations, etc.
• Analytical procedures: analyzing trends, relationships of financial and non-financial data

Question 15

combined approach

Answer 15

testing controls + substantive procedures

Question 16

Risk of Material Misstatements stem from

Answer 16

Inherent risk and control risk

RMM occurs prior to auditor involvement