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Undeleted > Chapter 5 > Flashcards

Chapter 5 Flashcards

1
Q

Comparing a sample of shipping documents to related sales invoices is testing for what management assertion.

A

Completeness

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2
Q

In testing the existence assertion for an asset, an auditor ordinarily works from the…

A

Accounting records to the supporting documents

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3
Q

The measure of reliability of audit evidence lies in the auditor’s judgement (T/F)

A

True

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4
Q

Vouchering goes from what to what, and determines what management assertion?

A

From the GL to the Source Documents, testing the Occurrence assertion

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5
Q

Tracing goes from what to what, and determines what management assertion?

A

From the Source Document to the GL, testing the Completeness assertion.

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6
Q

The assurance bucket is filled in what order?

A

1) Risk Assessment
2) Test of Controls
3) Substantive Analytical Procedures
4) Test of Details

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7
Q

What is the primary purpose of final analytical procedures?

A

Assist the auditor in assessing the validity of the conclusions reached.

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8
Q

The substantive analytical procedure know as Trend Analysis is best described by…

A

The examination of changes in an account over time.

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9
Q

An audit document that reflects the major components of an amount reported in the financial statements.

A

Lead Schedule

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10
Q

Audit documentation is property of who?

A

The Auditor

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11
Q

What two functions do working papers serve per auditing standards?

A

1) Support for the Audit Report

2) Planning, Performance, and Supervision

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12
Q

An auditor can rely purely of test of controls for assurance (T/F)

A

False

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13
Q

Confirmations relate to which to assertions

A

1) Completeness

2) Existence

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14
Q

What are two forms of low reliability types of evidence

A

1) Observations

2) Inquiries

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15
Q

What are three forms of highly reliable audit evidence

A

1) Recalculation
2) Reperformance
3) Inspection of Tangible Assets

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16
Q

The bulk of audit evidence is gathered how?

A

Inspection of records or documents

17
Q

Audit evidence must of what two qualities

A

Sufficient and Appropriate

18
Q

The characteristics of Sufficiency and Appropriateness of audit evidence has what type of relationship?

A

Inverse

19
Q

The nature of Audit evidence refers to what?

A

Form

20
Q

What is one way to receive more reliable evidence from an audit client?

A

Better Internal Controls

21
Q

Assertions about Classes of Transactions and Events

A

1) Completeness
2) Cutoff
3) Classification
4) Authorization
5) Accuracy
6) Occurence

22
Q

Assertions about Account Balances

A

1) Completeness
2) Existence
3) Rights & Obligations
4) Valuation & Allocation

23
Q

Assertions about Presentation and Disclosure

A

1) Completeness
2) Accuracy & Valuation
3) Occurrence & Rights & Obligations
4) Classification & Understandability

24
Q

The heading of audit documentation must include what?

A
  1. Name of the Client
  2. Title of Working Paper
  3. Client’s Year-End Date
25
Q

Concepts of Audit Evidence

A
  1. Nature

2. Sufficiency & Appropriateness

26
Q

Appropriate Evidence refers to what

A

Quality

27
Q

Sufficient Evidence refers to what

A

Quanity

28
Q

How long must an auditor keep audit documentation?

A

7 years

29
Q

The relevance of audit evidence depends on the assertion being tested (T/F)

A

True

30
Q

The auditor must use his or her professional judgement to determine the amount of audit evidence to be gathered (T/F)

A

True

31
Q

In testing PPE balances, and auditor may physically inspect new additions listed on the summary of PPE transaction for the year. What assertion T&E assertion is being tested?

A

Occurence

32
Q

What is the primary purpose of audit procedures?

A

To gather corroborative evidence about management’s assertions

33
Q

A confirmation is used to…

A

Verify a representation from a third party

34
Q

Vouchering is used primarily to test what type of assertion about classes of transactions.

A

Occurrence

35
Q

In determining whether transactions have been recorded, the direction of the audit testing should start from the…

A

Original source document

36
Q

A company’s accounting data cannot be considered sufficient audit evidence to support the financial statements (T/F)

A

True

37
Q

Relationship within which financial statement tend to be most predictable for purposes of analytical procedures applied as substantive procedures?

A

Income Statement

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