Day 8 Flashcards
What’s included on a Security Count Worksheet?
An acknowledgement from the client that securities were returned intact
What is the objective of tests of details of transactions performed as substantive tests?
To detect material misstatement in the FS
Why did the inventory turnover ratio increase when inventory and sales remained the SALY?
= COGS / Avg. Inventory
To increase = COGS must increase OR inventory must decrease
GROSS PROFIT PERCENTAGE deceased
The earliest date for the audit report?
The date the Auditor obtained sufficient and appropriate evidence to support the opinion
Standard Bank Confirmations are limited because:
The bank employee may be unaware of all the clients financial accounts/relationships
Department of Labor: Independence Impairment
- Direct or material indirect financial interest
If interest is held during reporting period, at the date of the opinion, or during the period covered by the FS = IMPAIRED - Accountant maintains financial records
- Immediate family member of auditor has a financial interest
What do Audit Data Analytics do?
- To update existing analytics with revised financial numbers
- To gain comfort that no material misstatement went unidentified
- To give the auditor a deeper knowledge/understanding of the client
Vouching a sample of cash receipts and disbursements is what?
Procedure auditing the Cash BALANCE
Procedure to audit the Statement of Cash Flows:
Reconcile the amounts on the stmt of Cash Flows to other FS amounts
What is a sampling risk associated with the efficiency of the audit?
Risk of assessing control risk too high
What represents a significant risk requiring special consideration?
- Related party transactions
- Improper revenue recognition
- Nonroutine, unusual, or complex transactions
How does the Scope, Procedures, and Purpose in an audit of Internal Controls differ from a FS Audit?
Different, Different, Different
Scope and Procedures are more extensive in an Internal Control Audit and the Purpose is focused on Internal Controls
What should the auditor do: Reporting in comparative form - Nonissuer - PY were complied FS - CY FS are audited
Either or:
1. The PY complied FS should be reissued
OR
- The CY audited report should include a separate paragraph describing the responsibility assumed for the PY compiled FS
What is a weakness in internal controls for payroll?
WEAKNESS = Payroll clerk distributes signed checks and undistributed checks are returned to the Payroll Dept.
Unclaimed checks should be given to an INDEPENDENT PARTY
Risk Assessment procedures:
- Inquiries of MGMT
- Analytics, such as high level data to compare PY to CY
- Observation and inspection, such as walk throughs
