Chapter 11: Evidence and sampling Flashcards

1
Q

Name procedures to obtain evidence

A
  1. inspection
  2. observation
  3. analytical procedures
  4. inquiry
  5. external confirmation
  6. recalculation
  7. performance
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2
Q

What are the 3 main types of CAAT?

A
  1. test data
  2. audit software
  3. data analytics
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3
Q

Test data supports auditors in what test?

A

Test of control

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4
Q

What are the options for deciding upon test data?

A
  1. dummy data -> careful to reverse all effects
  2. real data -> data may not contain all the errors
  3. dummy data against a verified copy of the client’s system -> safer
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4
Q

What does audit software make use of?

A

Assurance providers’ own specialized software

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5
Q

Name some examples of what audit software can do

A

extract a sample according to specific criteria (random, over a certain amount, at certain dates, below a certain amount); calculate ratios and select those outside set criteria; prepare reports; check calculations and casts; follow items through a system and flag where they are posted

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6
Q

Audit software supports auditors in what test?

A

Substantive procedures

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7
Q

What can data analytics do?

A

discover and analyze patterns, deviations and inconsistencies, extract other useful information

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8
Q

Does data analytics have to create tailor-made software?

A

No

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9
Q

Name some examples of what data analytics can do

A

analyse all trans in a population, match trans, assist in segregation of duties, compare entity data to externally obtained data, manipulate data to assess different assumptions, three-way matches, matches of orders to cash and purchases to payments

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10
Q

Are analytical procedures compulsory in the performing stage?

A

No. Only compulsory in the planning stage and overall review stage

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11
Q

What are some factors that the auditors should consider when using analytical procedures as a substantive procedure?

A
  1. objectivity
  2. suitability
  3. reliability
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12
Q

If is overstated (existence), which directional test should auditors use?

A

Book to fact

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13
Q

If is understated (completeness), which directional test should auditors use?

A

Fact to book

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14
Q

Name some methods to audit accounting estimates

A
  1. use a point estimate
  2. review events occurring up to the date of the auditor’s report
  3. test the process that mgt used to estimate the figure
  4. test the operating effectiveness of controls over how mgt made the accounting estimate
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15
Q

What are the main objectives of the auditors using audit sampling?

A

To provide a reasonable basis for the auditor to draw conclusion about the population from which the sample is selected

16
Q

What is audit sampling?

A

The application of audit procedures to less than 100% of items within a population of audit relevance

17
Q

Name 2 approaches to sampling and their characteristics

A
  1. statistical sampling: random selection + the use of probability theory
  2. non-statistical sampling: opposite to the statistical sampling
18
Q
A