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ZZZ - AUD > Day 9 > Flashcards

Day 9 Flashcards

1
Q

Procedure: obtain assurance that slow moving and obsolete items included in inventories are properly identified

A

Examine analysis of inventory turnover

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2
Q

What can an accountant do in a Preparation Engagement?

A
  1. If requested by MGMT - accountant can omit all stmts required by GAAP
  2. Accountant can assist MGMT with significant judgements - estimating impairment exp
  3. Accountant can advise client on which acctg policies to use

Each page = “no assurance provided”

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3
Q

What should the auditor do if engaged to do a Preparation Engagement: if unable to include stmt on each page - “no assurance is provided”?

A
  1. Issue a disclaimer of opinion
  2. Perform a compilation
  3. Withdraw from the engagement
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4
Q

Descriptive Analytics

A

What happened or what is happening with the data

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5
Q

What are Diagnostic Analytics used for?

A

utilized when an Org. wants to understand the underlying cause of results, essentially why something happened with the data

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6
Q

Descriptive Analytic Techniques:

A
  • Summary statistics
  • Data sorting
  • Aging data
  • Data reduction
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7
Q

Diagnostic Analytic Techniques:

A
  • Clustering
  • Drill-down & Drill-through analysis
  • Data mining
  • Variance analysis
  • Period-over-period analysis
  • Data profiling
  • Sequence Check
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8
Q

Predictive Analytics

A

make predictions, estimates, and assertions about future events

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9
Q

Name types of Predictive Analytic Techniques:

A
  • Regression analysis
  • Forecasting
  • Time-series modeling
  • Classification
  • Sentiment analysis
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10
Q

Prescriptive Analytics

A

Most advanced and complex type
**Build on predictive analytics - how to make something happen
**Prescribe courses of actions to help optimize decisions

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11
Q

Prescriptive Analytic Techniques:

A
  • What-if analysis
  • Decision support and automation
  • Machine learning
  • Natural language processing
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12
Q

Inventory Cycle: What assertion?

Inventory Report —> Prenumbered Inv. Tags

A

Existence

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13
Q

Inventory Cycle: What assertion?

Prenumbered Inv. Tags —> Inv. Report

A

Completeness

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14
Q

Inventory Cycle: What assertion?

Test Counts —> Inv. Report

A

Completeness

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15
Q

Inventory Cycle: What assertion?

Inv. Reports —> Test Counts

A

Existence

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16
Q

Inventory Cycle: What assertion?

Test Counts —> Prenumbered Inv. Tags

A

Accuracy

17
Q

What procedures are used to test Inventory’s Valuation, allocation and accuracy assertion?

A
  1. Inquiring about obsolete or damaged goods
  2. Examining vendor invoices
  3. Performing Inv. price tests for a sample of Inv.
18
Q

When to use Emphasis-of-Matter:

(Non-Issuers)

A
  1. Justified change in Accounting Principal
  2. Subsequently discovered facts that lead to a change in audit opinion
  3. FS are prepared in accordance with an applicable SPECIAL PURPOSE FRAMEWORK

Can be used with Auditor’s Professional Judgement:
Uncertainty related to litigation
**Major catastrophe
**Significant related party transactions
**Going Concern but have been adressed by MGMT and disclosed properly

19
Q

What is the structure of the Emphasis-of-Matter paragraph and what is included?

A
  1. use “Emphasis-of-Matter” heading to communicate KEY AUDIT MATTERS
  2. Describe the matter and the location of relevant disclosures in the FS
  3. Indicate the Auditor’s opinion is NOT modified
20
Q

When to use Other-Matter Paragraphs:

(Non-Issuers)

A
  1. In an audit report that restricts the use
  2. Subsequently discovered facts that lead to a change in audit opinion
  3. PY FS were audited by another auditor and report was not reissued
  4. CY FS = Audited and presented in comparative form when PY FS were Reviewed
21
Q

What factor would the auditor consider most regarding the client’s organizational structure in the context of control risk?

A

The suitability of the client’s lines of reporting

ZZZ - AUD (24 decks)

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