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ACC-420 > Chapter 6 > Flashcards

Chapter 6 Flashcards

1
Q

Evaluations of financial information through analysis of plausible relationships among financial and nonfinancial data

A

Analytical Procedures

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2
Q

Eight audit objectives that must be met before the auditor can conclude that any given account balance is fairly stated

A

Balance-Related Audit Objectives

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3
Q

What are the 8 Balance-Related Audit Objectives?

A

Existence, Completeness, Accuracy, Classification, Cutoff, Detail Tie-in, Realizable Value, and Rights and Obligations

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4
Q

A method of dividing and auditing by keeping closely related types of transactions and account balances in the same segment

A

Cycle Approach

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5
Q

An unintentional misstatement of the financial statements

A

Error

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6
Q

An intentional misstatement of the financial statements

A

Fraud

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7
Q

Intentional misstatements or omission of amounts or disclosures in financial statements to deceive users; often called management fraud

A

Fraudulent Financial Reporting

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8
Q

Implied or expressed representations by management about classes of transactions, related account balances, and presentation and disclosures in the financial statements

A

Management Assertions

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9
Q

A fraud involving the theft of an entity’s assets (also called defalcation)

A

Misappropriation of Assets

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10
Q

Failure to comply with applicable laws and regulations (also called illegal acts)

A

Noncompliance with Laws and Regualtions

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11
Q

The four aspects of a complete audit

A

Phases of Audit Process

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12
Q

What are the phases of the audit process

A

Plan and design an audit approach, perform tests of controls and substantive tests of transactions, perform analytical procedures and tests of details of balances, and complete the audit and issue an audit report

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13
Q

The four audit objectives that must be met before the auditor can conclude that presentation and disclosures are fairly stated

A

Presentation and Disclosure-Related Audit Objectives

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14
Q

What are the 4 presentation and disclosure-related audit objectives

A

Occurrence and rights and obligations, completeness, accuracy and valuations, and classification and understandability

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15
Q

Assertions that have a meaningful bearing on whether an account is fairly stated and used to assess the risk of material misstatement and the design and performance of audit procedures

A

Relevant Assertions

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16
Q

Audit procedures testing for monetary misstatements to determent whether the six transaction-related audit objectives have been satisfied for each class of transactions

A

Substantive Tests of Transactions

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17
Q

Audit procedure to test the effectiveness of controls in support of a reduced assessed control risk

A

Test of Controls

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18
Q

Audit procedures testing for monetary misstatements to determine whether the eight balance-related audit objectives have been satisfied for each significant account balance

A

Test of Details of Balances

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19
Q

Six audit objectives that must be met before the auditor can conclude that the total for any given class of transactions is fairly stated

A

Transaction-Related Audit Objectives

20
Q

What are the 6 transactions-related audit objectives

A

occurrence, completeness, accuracy, classification, timing, and posting and summerization

21
Q

Misstatements are considered BLANK if the combined uncorrected errors and fraud in the financial statements would likely change the decisions of a reasonable person using the statements

A

Material

22
Q

Three reasons the auditor is responsible for reasonable assurance and not absolute assurance

A

Audit evidence results from testing a sample of a population, accounting presentations involve complex estimates that involve uncertainty, and fraudulently prepared financial statements are extremely difficult for the auditor to detect

23
Q

What is the auditors best defense when material misstatements are not discovered?

A

The audit was conducted in accordance with audit standards

24
Q

Auditing standards require an audit be designed to provide reasonable assurance of detecting both BLANK and BLANK

A

material errors and fraud

25
Q

The six characteristics of skepticism:

A

Questioning Mindset, Suspension of Judgement, Search for Knowledge, Interpersonal Understanding, Autonomy, and Self-Esteem

26
Q

5 auditing cycles

A

Sales and collection, Acquisition and payment, Payroll and personnel, Inventory and warehouse, and capital acquisition and repayment

27
Q

This cycle that is the primary focus of most audits

A

Sales and Collection

28
Q

The capital acquisition cycle is closely related to the BLANK cycle

A

Acquisition and Payment

29
Q

The BLANK cycle is closely related to all other cycles

A

Inventory and Warehouse

30
Q

Auditors have found that the most efficient and effective way to conduct audits is to obtain BLANK

A

some combination of assurance for each class of transaction and for the ending balance in the related accounts

31
Q

BLANK are part of the criteria management uses to record and disclose accounting information in financial statements

A

Management Assertions

32
Q

3 categories of assertions

A

Assertions about classes of transactions and events for the period under audit, account balances at period end, presentation and disclosure

33
Q

Recorded transactions exist (Transaction-Related)

A

Occurrence

34
Q

Existing transactions are recorded (Transaction-Related)

A

Completeness

35
Q

Recorded transactions are stated at the correct amounts (Transaction-Related)

A

Accuracy

36
Q

Recorded transactions are properly included in the master files and are correctly summarized (Transaction-Related)

A

Posting and Summerization

37
Q

Transactions included in the client’s journal are properly classified (Transaction-Related)

A

Classification

38
Q

Transactions are recorded on the correct dates (Transaction-Related)

A

Timing

39
Q

Amounts included exist (Balance-Related)

A

Existence

40
Q

Existing amounts are included (Balance-Related)

A

Completeness

41
Q

Amounts included are stated at the correct amounts (Balance-Related)

A

Accuracy

42
Q

Amounts included in the client’s listings are properly classified (Balance-Related)

A

Classification

43
Q

Transactions near the balance sheet date are recorded in the proper period (Balance-Related)

A

Cutoff

44
Q

Details in the account balance agree with related master files amounts, foot to the total in the account balance and agree with the total in the general ledger (Balance-Related)

A

Detail Tie-in

45
Q

Assets are included at the amounts estimated to be realized (Balance-Related)

A

Realizable Value

ACC-420 (16 decks)

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