Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

ACCO 360 > Chapter 10 > Flashcards

Chapter 10 Flashcards

1
Q

5 requirements by CAS 300 to develop overall audit strategy

A
  1. characteristics of engagement that define its scope
  2. reporting requirements
  3. significant factors in directing audit team’s efforts
  4. results of preliminary engagement activities
  5. nature, timing and extent of resources necessary for engagement
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

overall audit strategy is also called

A

general overview of audit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

overall audit strategy provides basis for

A

audit plan

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

audit plan includes (2)

A
  1. nature, timing and extent of risk assessment procedures

2. nature, timing and extent of further audit procedures at assertion level

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

all audits require procedures related to

A

1) financial statement closing process and

2) assess fraud risks (management override i.e.)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

examples of financial closing processes

A
  1. enter transactions totals in ledger
  2. select and apply accounting policies
  3. initiate, authorize and record journal entries
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

5 types of audit tests to determine if financial statements are fairly stated

A
  1. risk assessment procedures
  2. test of controls
  3. substantive tests of transactions
  4. substantive analytical procedures
  5. substantive tests of balances
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

def: risk assessment procedures

A

assess the likelihood of material misstatement in financial statements

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

likelihood of material misstatements formula

A

inherent risk x control risk

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

what is the major subset of risk assessment procedures

A

procedures to obtain an understanding of internal control

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

def: test of controls

A

verify whether the client’s controls match the auditor’s understanding of them

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

tests of controls are designed to obtain evidence regarding

A

the effectiveness of controls

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

if controls are effective

A

substantive evidence may be reduced

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

test of controls can be done _____ from others

A

separately, but more efficient to do them with substantive tests of transactions

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

def: dual-purpose tests

A

provide evidence of whether or not the controls being tested were effective (from test of controls) AND whether there are misstatements in data produced by the accounting system (subs)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

def: Substantive analytical procedures

A

comparisons of recorded amounts to expectations developed by auditor

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

auditor standards require that substantive analytical procedures be done during

A

the planning and completion of audit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

if analytical procedures indicate a reasonable possibility of misstatement

A

additional procedures or substantive tests of details may be done

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

def: substantive tests of balances

A

detect material misstatements at the assertion level

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

which substantive tests are used to test transaction related assertions

A

substantive tests of balances

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

substantive tests of transactions and balances are often referred to as

A

test of details

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

per CAS 330, substantive procedures must be performed for

A

each material class of transactions, account balances and disclosure + each significant risk at assertion level

23
Q

if the auditor is not relying on controls he will perform

A

substantive tests of transaction only

24
Q

purpose of substantive analytical procedures in audit of account balances

A
  1. possible misstatements

2. provide substantive evidence

25
Q

the primary emphasis of most substantive tests of balances is

A

the ending balances on the balance sheet

26
Q

if controls are working as designed then auditor will conduct

A

more tests of controls and fewer substantive tests

27
Q

if controls are not functioning or are too expensive to test, the auditor will

A

conduct more tests of details

28
Q

more types of evidence are used for

A

tests of balances than any other type of test

29
Q

which test involves physical examination and confirmation?

A

substantive tests of balances

30
Q

inquiries of the client are made for

A

every type of tests

31
Q

inspection, reperformance and recalculation are used for every test but

A

analytical procedures

32
Q

types of tests according to cost (least to most costly)

A
  1. analytical procedures
  2. risk assessment
  3. test of controls
  4. substantive tests of transactions
  5. substantive tests of balances
33
Q

auditors use ____ to determine the mix of audit tests

A

professional judgement

34
Q

exception in a test of controls indicates

A

the likelihood of significant misstatements

35
Q

exception in a substantive test of transaction or balance is

A

a financial statement misstatement

36
Q

if analytical procedures identify unusual fluctuations

A

auditors should perform substantive tests trans/bal to determine if dollar misstatements occurred

37
Q

if control risk is assessed as high the auditor would

A

follow a substantive approach

38
Q

if control risk is assessed low the auditor would

A

follow a combined approach

39
Q

an audit program is normally split into three parts

A
  1. tests of controls and substantive tests of transactions
  2. substantive analytical procedures
  3. substantive tests of balances
40
Q

in part one of the audit program if there is no reliance on controls then

A

only substantive tests of transactions

41
Q

how to decide what to include in first section?

A

based on descriptive section documenting understanding obtained about internal control

42
Q

if cost beneficial tests of controls would be conducted for

A

key controls on which the auditor intends to rely

43
Q

audit program is normally listed in which format?

A

performance format (i.e. in order in which tests will be conducted)

44
Q

substantive analytical procedures are conducted at

A

each phase of the audit (planning stage, during, near the end)

45
Q

substantive analytical procedures in planning stage

A

help auditor decide other evidence needed to satisfy audit risk

46
Q

substantive analytical procedures during audit is done

A

in conjunction with tests of details of balances as part of substantive procedures

47
Q

substantive analytical procedures at the end of audit is done

A

as a final test of reasonableness

48
Q

the planned substantive tests of balances include

A

audit procedures, sample size, items to select and timing

49
Q

procedures must be selected and designed for

A

EACH account and each balance related audit objective within each account

50
Q

time frame of audit tests

A

throughout the year or if small –> concentrated period of time

51
Q

audit program is developed based on assumptions about

A

inherent risk, control risk and results of tests of controls and analytical procedures

52
Q

if assumptions change

A

the planned audit program will also require revision

53
Q

Def: roll forward

A

substantive work on journal entries and transactions from a date prior to the balance sheet date to the year end

54
Q

when is a roll forward done?

A

when clients want to issue statements soon after the balance sheet date so that work can be done during the interim period

ACCO 360 (11 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions