Chap 1 Flashcards

1
Q

Auditing

A

The objective of a financial audit is to enable the auditor to express an opinion.

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2
Q

Audit

A

Is a systematic process of objectively obtaining and evaluating evidence regarding assertion

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3
Q

Auditing is a systematic process

A

Proceeds by means of an ordered and structured series of steps

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4
Q

Are representations made by an entity about economic actions and events

A

Assertions

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5
Q

Are needed to judge the validity of the assertions

A

Established criteria

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6
Q

Is conducted to determine whether the financial statements of an entity are fairly presented in accordance with the applicable financial reporting framework

A

Financial Statements audit

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7
Q

Involves a review of an organization procedures to determine whether the organization

A

Compliance Audit

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8
Q

Is a study of a specific unit of organization for the purpose of measuring it’s performance

A

Operational Audit

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9
Q

The ones who generally perform financial statement audits

A

External Auditors

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10
Q

To assist the members of the organization in the effective discharge of the responsibilities

A

Internal Auditor

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11
Q

Main concern is to determine whether persons or entity comply with government laws and regulations

A

Government Auditors

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12
Q

To provide only reasonable assurance

A

Assurance provided by Auditor

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13
Q

Persuasive rather than conclusive in nature

A

Nature of evidence

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14
Q

Including those pertaining to independence relating to financial statements audit engagements

A

Ethical requirements

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15
Q

Contain the basic principles and essential procedures which the auditor should follow

A

PSA

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16
Q

Is essential to the proper conduct of the Audit

A

Apply professional judgement

17
Q

Is needed to support the opinion expressed in the auditor’s report.

A

Audit Evidence

18
Q

The auditor should plan and perform the audit with an attitude of

A

Professional Skepticism

19
Q

Financial statements may be viewed as the report by management

A

Conflict of interest between management and users financial statements

20
Q

Auditing requires expertise in verifying the quality of the financial information

21
Q

Usually prevented from directly assessing the reliability of the information

A

Remoteness

22
Q

Could have substantial economic consequences for a decision maker

A

Financial consequences

23
Q

Is essential for ensuring the credibility of the auditor’s report

A

Independence

24
Q

What is employee fraud often accompanied by?

A

False or misleading financial statements

Employee fraud can lead to distorted financial reporting, impacting stakeholders’ decisions.

25
What is lapping of accounts receivable?
A method of stealing cash from accounts receivable and covering it up by applying subsequent payments to previous accounts ## Footnote This technique often involves manipulating financial records to conceal the theft.
26
What does misappropriation of assets involve?
Theft of an entity's assets ## Footnote This can include stealing cash, inventory, or other resources from the organization.
27
What is embezzling?
The act of wrongfully taking or misappropriating funds placed in one's trust or belonging to one's employer ## Footnote Embezzlement often involves deceitful practices to hide the theft.
28
Fill in the blank: Fraud involves motivation to commit the act and _______.
Opportunity ## Footnote Both motivation and opportunity are crucial for fraud to occur.
29
What are two types of fraud relevant to financial reporting?
* Misstatements resulting from misappropriation of assets * Misstatements resulting from management fraud ## Footnote These types of fraud can significantly affect the integrity of financial statements.
30
What does intentional misapplication of accounting policies refer to?
Deliberately using incorrect accounting methods or principles ## Footnote This can lead to misleading financial statements and affect decision-making.
31
What is the result of manipulation, falsification, or alteration of documents?
Fraudulent financial reporting ## Footnote This practice is intended to deceive users of financial statements regarding the true financial position of the entity.
32
True or False: Employee fraud is always committed by external parties.
False ## Footnote Employee fraud is typically perpetrated by individuals within the organization.
33
What can fraudulent financial reporting involve?
Intentional misstatements or omissions of amounts or disclosures in financial statements ## Footnote This type of fraud aims to mislead financial statement users.