Chapter 6 Flashcards
purpose of audit
is to provide f/s users with an opinion by the auditor on whether the f/s are presented fairly in all material respects in accordance with the applicable financial accounting framework
auditors
verify that the f/s are free of material misstatement
reasonable assurance
measure of the level of certainty that the auditor has obtained at the completion of the audit
error
an unintentional misstatement of the financial statements,
fraud
intentional misstatement
misappropriation of assets
defalcation or employee fraud
ex: employee steals customer money meant for purchase
fraudulent financial reporting
management fraud
professional skepticism
attitude auditors take in audits
noncompliance with laws and regulations
illegal acts
financial statement cycles
sales and collection cycle acquisition and payment cycle payroll and personnel cycle inventory and warehousing cycle capital acquisition and repayment cycle
transaction related audit objectives
these are objectives that tell if a transaction is properly recorded
balance related audit objectives
objectives that verify if account balances are correct
presentation and disclosure related audit objectives
objectives that verify that all items are disclosed correctly and fully
management assertions
implied or expresses representations by management about classes of transactions and the related accounts and disclosures in the financial statements
occurence
did it really happen?