Engagement Planning, Obtaining Understanding, Assessing Risk Flashcards
Management assetions that have a meaningful bearing on whether an account balance, transaction, or disclosure is fairly stated
Relevant assertions
Management assertion that all trnasactions/events that are recorded have occurred and all assets/liabilities/equity stated actually exist
Occurence/existence
Management assertion that all transactions/assets/liabilities/disclosures have been recorded
Completeness
Management assertion that all amounts recorded have been recorded appropriately
Valuation/accuracy
Management assertion that trnasactions and events have been recorded in teh correct accounting period
Cutoff
Management assertion that transactions and events habe been recorded in the proper accounts and disclosure information is presented and described cleary
Classification
The standards and benchmarks used to measure and prsent the subject matter and against which the CPA evaluates the subject matter under AT 101 Attestation Standards
Suitable criteria
A type of attest engagement in which teh CPA selects from all available procedures and provides a high level of assurance to limit attestation risk to an appropriately low level
Examination
An attest egagement in which the CPA generally limits procedures to inquiries and analytical procedures and rpovides a moderate level of assurance to limit attestation risk to moderate level
Review
An attest engagement in whichte CPA is engaged by a client to issue a report of findings based on specific procedures performed on subject matter
Agreed-upon procedures
Consists of the risk that an account and its related assertiosn contains mateiral misstatemetns and teh risk theat the auditor will not detect such misstatements
Audit risk
Refers tothe likelihood of material misstatement of an assertion, assuming no related internal control
Inherent risk
The likelihood that a mateiral misstatement will not be prevented or detected on a timely basis by internal control
Control risk
the likelihood that an auditor’s procedures lead to an improper conlcusion that no material misstatement existas in an assertion, when in fact one does
–primarily relies on substantive procedures
Detection risk
The magnitude of an omission or misstatement of accounting information that, in light of surrounding circumstances, makes it probable that the judgment of a reasonable person relying on the information would have been changed or influencedby the omission or misttatement
Materiality
A description of the nature, timing, and extent of the audit procedures to be performed–oftendocumented with an audit program
Audit plan
A detailed listing of the specific audit procedures to be performed in thecourse of an audit engagement–tailored to the risksa nd internal control of each engagement
Audit program
Standards on quality control that relate to the CPA firm itself and apply to the auditing and accounting practices that the CPA firm is engaged in
Statements on Quality Control Standards (SQCS)
A type of peer reivew that involves peer reviewers’ study and appraisal of a CPA firm’s system of quality control to perform accounting and auditing work; uses inquiry of CPA firm personnel, review of documentation, and selection of a sample of the CPA firm’s engagements for review
- pass rating
- deficiency rating
- rail
System review
A type of peer review in which the peer reviewer selects a sample of a CPA firm’s actual accounting work to evaluate whether the reports and procedures are appropriate–availbe only for CPA firms taht do NOT perform audits, but do perform accounting work (reviews/compilations)
Engagement review
Used during risk assessment to enhance the auditor’s understanding of the client’s business and significatn transactions and events that have occurred since the prior audit
Analytical procedures
