Brainscape's Knowledge GenomeTM

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


See full index

Audit & Assurance > Chapters 12-14 > Flashcards

Chapters 12-14 Flashcards

1
Q

what is the first step the auditors should do for NCA’s

A

compare NCA’s in the general ledger to the non current asset register

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

what substansive procedures do auditors need to perform to obtain sufficient and appropriate evidence to the disposal of assets and addition of assets

A

cast all of the additions together
inspect documents proving the disposal
inspect invoices
physically inspect additions

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

what are common examples of accounting estimates (3)

A

useful life of a NCA
Accrued revenue
provisions for legal settlements

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

how do you audit an accounting estimate

A

they need to obtain sufficient evidence as to where the figures have come from

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

can research be capitilised as an intangible asset

A

never, it is always an expense

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

what is the mnemonic for capitalising development

A 
Probable future economic benefits
Intention to complete
Resources are adequate
Ability to use 
Technical feasiblity
Ependiture can be measured
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

NCA

Audit procedure for Completeness assertion

A

reconcile the carrying amount and depreciation back to the opening balance
agree a sample of assets youve physically inspected back to the non current asset register

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

NCA

Audit procedure for Existence assertion

A

confirm the company physically inspects each NCA each year
Inspect high value assets
confirm the items inspected are in good condition and in use

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

NCA

Audit procedure for Valuation assertion

A

verify valuation to valuation certificate
reperform revaluation calculation
inspect draft accounts include revaluation losses as well as gains

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

NCA

Audit procedure for Depreciation assertion

A

ensure all NCA’s have been depreciated
ensure the depreciation for revalued assets has been done on the revalued amount
compare ratios of depreciation to previous years

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

NCA

Audit procedure for rights and obligation assertion

A

inspect deeds, leases and land registry certificates

confirm all vehicles are used for the clients business

obtain a certificate from soliciters stating the purpose of which the deeds are held and that its free from a mortgage

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

NCA

Audit procedure for Goodwill assertion

A

consider whether it being valued as an asset is reasonable
recalculate
review the impairment and discuss with management

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

5 steps for the counting process of stock counts

A

evaluate managements instructions and procedures for the count
observe the performance
inspect inventory
perform test counts
perform audit procedures over final figures

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

3 factors to consider when planning attendance at a stock count

A

internal controls related to inventory
locations at which inventory is held
timing of the count

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

6 procedures to follow during the attendance at the inventory count

A

observe if the staff are following the instructions
perform test counts
ensure procedures for valuing damaged items are effective
confirm inventory held by a third party is counted seperately
obtain copies of the last GRN in order to confirm cut off

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

why do auditors need to perform test counts

A

to ensure procedures and internal controls are working properly

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

what 2 test counts should auditors do

A

test counts from the inventory to the inventory sheet (for completeness)
and
inventory sheets to inventory ( for existence)

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

what can auditors do if test counts are unsatisfactory

A

request a re count

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

what do auditors need to do after the count

A

check the final inventory sheets have been properly compiled and the book value has been adjusted

20
Q

key tests for after the count

A

trace items that were test counted to final inventory records
agree sequence of inventory sheets
review replies from third party

21
Q

what is cut off testing

A

audit procedure performed after the count to ensure that all of the companys transactions have been included in the correct period

22
Q

should goods recieved after YE be included in the FS

A

no

23
Q

where should goods received before YE be included

A

expense, closing inventories, liability

24
Q

where should revenue be included if made before YE

A

Revenue, recievables but not inventory

25
Q

where should revenue be included if made after YE

A

only inventorys

26
Q

how should be inventories be valued

A

at the lower of cost and net realisable value

27
Q

what 3 procedures must external audit do on internal auditors before using there work

A

wether the work is planned, performed, supervised, reviewed and documented
whether there is sufficient apropriate evidence
whether conclusions reached are appropriate

28
Q

external auditors must reperform some of the internal auditors work. what might they do ?

A

examination of items examined by internal audit

observation of procedures

29
Q

what is direct assistance

A

direct assistance refers to the use of internal auditors to perform procedures, under the direction of external auditors

30
Q

when can external auditors not use direct assistance

A

when judgement is involved
when they are looking into work internal audit have done
relates to a higher risk of material misstatement
relates to decisions being made on the internal audit function

31
Q

what is an external confirmation

A

audit evidence obtained as a direct response to the auditor from a third party.

32
Q

what is a positive confirmation

A

where the third party responds directly to the auditor, indicating if they agree with the info in the request

33
Q

what is a negative confirmation

A

is where the third party responds directly to the auditor ONLY if they disagree

34
Q

when can you use negative confirmations

A

if material misstatement is low

35
Q

6 types of balances that should be included in the sample of accounts

A 
old unpaid accounts
accounts written off
accounts with credit balances
accounts settled by large sum payments
accounts with large balances
accounts with nil balances
36
Q

what is an exception

A

when there is a difference in the third partys accounts to yours

37
Q

audit procedures for completeness of trade receivables

A

compare previous and current years trade receivables breakdowns and discuss differences with management
select a sample of GDN’s and compare to relevant sales invoices

38
Q

audit procedures for rights and obligations of trade receivables

A

inspect responses from the confirmation for evidence of customers names and addresses
review monies recieved post year end

39
Q

audit procedures for accuracy, valuation and allocation of trade receivables

A

discuss the recoverability of old overdue amounts

compare TR collection period ratio for today and yesterday

40
Q

audit procedures existence of trade receivables

A

carry out a direct confirmation for a sample

inspect customer correspondence

41
Q

5 steps of testing revenue

A

identify contract with customer
identify performance obligations
determine transaction price
allocate transaction price to performance obligations
recognise revenue when a performance obligation is complete

42
Q

what should auditors consider when performing analytical procedure on revenue

A 
compare this year to last year by month
changes in quantity sold
changes in products and prices
level of goods returned
efficiency of labour as expressed in revenue
43
Q

how to test completeness of a prepayment

A

compare level of prepayments to previous year

review BS to ensure all prepayments are recorded

44
Q

how to test accuracy, valuation and allocation of a prepayment

A

recalculate the amount prepaid

45
Q

how to test existence of a prepayment

A

verify by reference to invoices, cash book and correspondence

Audit & Assurance (16 decks)

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