chap 6 how audit objectives are met

Question 1

what are the 2 categories of phase 3 procedures?

Answer 1

1. analytical procedures 2. tests of details of balances

Question 2

the auditor performs prcedcures to assess the risk taht what?

Answer 2

material misstatements in the FSs may be present

Question 3

in order to decide on the appropriate audit objectives and the evidence needed to meet those objectives, auditor follow an audit process. what is this?

Answer 3

a methodology for ogranizing an audit to ensure that the evidence gathered is both sufficient and appropriate and that all required audit objectives are both specified and met

Question 4

what is an analytical procedure?

Answer 4

consist of evaluations of financial info through analysis of plausible relationships among financial and nonfinancial data

Question 5

the audit plan should result in what ?

Answer 5

an effective audit at a reasonable cost

Question 6

what are Tests of details of balances ?

Answer 6

specific procedures intended to test for monetary misstatements in the financial statements

Question 7

what are the 3 key aspects of risk assessment procedures

Answer 7

1. obtain an understanding of the entity and its environments 2. understand internal control and assess control risk 3. assess risk of material mistatment

Question 8

what is the main objective of an audit?

Answer 8

accumulate enough evidence to provide an opinion on the financial statements

Question 9

what is the only blance related assertion without a similar transaction related assertion?

Answer 9

rights and obligations

Question 10

what 2 things does an auditor use to assess the risk of misstatements in the FSs?

Answer 10

1. the understanding of the clients industry and business strategies 2. the effectiveness of controls

Question 11

presentation ande disclosure related audit objectives are closely related to which objectives?

Answer 11

balance related

Question 12

why are tests of details of ending balances essential to the cocnduct of the audit?

Answer 12

because much of the evidence is obtained from third party sources so it is considered to be of high quality

Question 13

what does the process assessing control risk entail?

Answer 13

identifieing internal controls and evaluating their effectiveness

Question 14

in order to understand the entity and its environment the auditor should do what 3 things

Answer 14

1. study clients business model 2. perform analyuticla procedures 3. make comparison to competitors

Question 15

T/F the auditor must decide the appropriate audit objectives and the evidence to accumulate to meet those objectives on every audit

Answer 15

T

Question 16

what are Two overriding considerations affect how an auditor approaches the audit

Answer 16

1. Sufficient appropriate evidence must be accumulated to meet the auditor’s professional responsibility. 2. The cost of accumulating the evidence should be minimized

Question 17

T/F auditors often perform tests of controls and substantive tests of transactions at separate times

Answer 17

F

Question 18

what does the process substantive tests of transactions entail?

Answer 18

evaluating the clients recording of transactions by verifying the monetary amounts of transactions

Question 19

the auditor must obtain sufficeitn appropriate audit evidence to support all management assertions in the FSs…how is this done?

Answer 19

by accumulating evidence in support of some appropratiate combo of transaction related and balance related audit objectives

Question 20

what are the 4 phases of the audit process?

Answer 20

1. plan and design an audit approach based on risk assessment procedures 2. perform tests of controls and substantive tests of transactions 3. perform substantive analytical procedures and tests of details of balances 4. complete the audit and issue an audit report

Question 21

what are risk assessment procedures?

Answer 21

the procedures an auditor performs to assess the risk that material misstatements in the FSs may be present

Question 22

After all procedures have been completed, the auditor will reach what?

Answer 22

an overall conclusion as to whether the financial statements are fairly presented.

Question 23

when analytical procedures are sued to provide assurance about an account balance, they are refered to as?

Answer 23

substantive analytical procedures

Question 24

PCAOB auditing standard 5 requires what ?

Answer 24

that the audit of the effectiveness of internal control be integrated with the audit of the FSs

Question 25

the risk of misstatement in the FSs is reduced if the client has effective controls over what?

Answer 25

computer operations and transaction processing

Question 26

tests of controls refers to ?

Answer 26

the procedures for testing effectivness of the internal controls