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Audit: AC 472 > Chapter 1 > Flashcards

Chapter 1 Flashcards

1
Q

Audit is based on using _____ and _______ skills

A

analytical, logical

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2
Q

What are the two types of assurances?

A

account, transaction

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3
Q

What transaction assertion describes transactions have been recorded or disclosed, and those transactions pertain to the entity?

A

occurence

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4
Q

What transaction assertion describes that all transactions should have been recorded and all related disclosures have been included in the financial statements

A

completeness

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5
Q

What transaction assertion describes that all transactions have been properly authorized

A

authorization

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6
Q

What transaction assertion describes that amounts and other data related to recording transactions have been recorded appropriately

A

accuracy

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7
Q

What transaction assertion describes that all transactions have been recorded in the correct accounting period

A

cut off

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8
Q

What transaction assertion describes that transactions are recorded in the proper accounts

A

classification

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9
Q

What transaction assertion transactions and events are appropriately
aggregated or disaggregated and clearly described, and related
disclosures are relevant and understandable in the context of
the requirements of the applicable financial reporting framework.

A

presentation

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10
Q

Which assertion describes that assets, liabilities, and equity interests exist?

A

existence

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11
Q

Which assertion describes that the entity hold or controls the rights to assets and liabilities are obligations of the entity?

A

rights and obligations

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12
Q

Which assertion describes that All assets, liabilities, and equity interests that
should have been recorded have been recorded, and all related
disclosures that should have been included in the financial
statements have been included.

A

completeness

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13
Q

Which assertion describes that assets, liabilities, and equity
interests are included in the financial statements at appropriate
amounts and any resulting valuation or allocation adjustments
are appropriately recorded.

A

valuation and allocation

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14
Q

Which assertion describes that Assets, liabilities, and
equity interests have been included in the financial statements
at appropriate amounts, and any resulting valuation or allocation
adjustments have been appropriately recorded, and related
disclosures have been appropriately measured and described

A

accuracy, valuation, and allocation

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15
Q

Which assertion describes that Assets, liabilities, and equity interests have
been recorded in the proper accounts.

A

classification

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16
Q

Which assertion describes that Assets, liabilities, and equity interests are
appropriately aggregated or disaggregated and clearly
described, and related disclosures are relevant and
understandable in the context of the requirements of theapplicable financial reporting framework.

A

presentation

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17
Q

What are the three fundamental concepts in conducting an audit?

A

materiality, risk, evidence

18
Q

What is the magnitude of an omission or misstatement of
accounting information that, in light of surrounding
circumstances, makes it probable that the judgment of a
reasonable person relying on the information would have
been changed or influenced by the omission or
misstatement.

A

materiality

19
Q

What is the risk that the auditor expresses an
inappropriate audit opinion when the financial
statements are materially misstated.

A

audit risk

20
Q

What is the highest level of clearance an auditor can give an audit

A

reasonable assurance

21
Q

What is relevance in an audit?

A

is evidence related to the specific assertion being tested

22
Q

What is reliability in an audit?

A

can the evidence be relied upon to signal the true state of the specific assertion being tested

23
Q

What are the types of audit reports?

A

unqualified, qualified, adverse, disclaimer

24
Q

What is a “clean” audit report called?

A

unqualified

25
Q

What does a qualified audit report entail?

A

It is mainly good, but he/she finds it necessary to qualify that their is a misstatement identified by the author

26
Q

What is an adverse report?

A

a statement saying the financial statements are not presented fairly and should not be relied upon

27
Q

What is a disclaimer report?

A

a statement saying it is not possible to express an opinion on the fairness of the financial statements

28
Q

Which source of information is the most cost effective, and most indirect to collect as an auditor?

A

the company’s internal controls

29
Q

As a general rule, if the misstatements of a company’s total income exceed ____ %, this will cause financial statements to be materially misstated

A

5

30
Q

If a small difference is unlikely to affect an investor’s decisions in any significant way, the auditor will likely consider the difference to be _________

A

immaterial

31
Q

If UNA is required to obtain an audit to prove that rules and regulations in regards to student loans are being followed, what type of audit should they have?

A

Compliance

32
Q

What is the highest level of assurance that can be offered to managers?

A

audits

33
Q

Which is not a result of Sarbanes Oxley?

A

required publicly traded entities financial statements to be audited,
required that private companies have their financial statements audited at least every other year

34
Q

What type of auditor is responsible for auditing the annual financial statements of publicly traded companies?

A

external auditors

35
Q

Which of the following is an example of a principle?

A

absentee owners

36
Q

Based on the evidence provided and fraud characteristics, an auditor is able to obtain assurance that is ________ and __________

A

reasonable, not absolute

37
Q

what are the types of auditors?

A

external, internal, fraud, government

38
Q

When was Sarbanes Oxley passed?

A

2002

39
Q

Who is in charge of guidelines for nonpublic companies?

A

auditing standards board

40
Q

who is in charge of the guidelines for public companies

A

PCAOB

41
Q

The risk that information circulated by a company’s management could be false or misleading

A

information risk

42
Q

the concept that the manager has more information about the true financial position and results of operation of the entity than the absentee owner does

A

information asymmetry

Audit: AC 472 (2 decks)

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