Evidence Accumulation and Evaluation Flashcards
All the information used by the aduitor in arriving at the conclusions on which the audit opinion is based–includes info contained in accounting records and other information
Audit evidence
Type of evidence collection procedure that includes procedures such as inspecting assets, confirming receivables and observing the counting of inventory
Search and verification procedures
Type of evidence collection procedure that includes discussions with firm representatives and analytical procedures such as ratio analysis
Internal inquiry and comparision procedures
Type of accounting engagement that offeres the highlest level of assurance
Examination (an audit is an examination of financial statements)
A measure of the quanitty of audit evidence that should be obtained
Sufficient
a measure of hte quality of audit evidence that should be obtained–measured by its relevance and reliability
Appropriate
An audit procedure used to obtain an understanding of the entity and its environment, including its internal control
Risk assessment procedures
Audit procedure used, when necessary, or when the auditor has decided to do so, used to test the operating effectivenss of controls at the relevant assertion level
Test of controls
Audit procedure usedto detect material misstatemensts in trnasactions, account balances, and disclosures. Include analytical procedures and test of details
Substantive prcoedures–used to restrict detection risk
A substantive procedures that consists of evaluations of financial information made by a study of plausible relationships among financial and nonfinancial data
–REQUIRED during risk assessment and near the end of hte audit, but NOT required as a substantive procedure (even though it’s one type that may be used)
Analytical procedures
Substantive procedure used to examine the acutal details making up the various account balances and disclosures
Test of details
A listing of ledger accounts with current year-end balances, with columns for adjusting and reclassifying entries as well as for final balnces for hte current year
Working trial balance
Schedules that summarize like accounts, thetotal of which istypically transferred to hte working trial balance
Lead schedule
The combination of numbers and/or leggers given to a workpaper page for identifcationand organization purposes
Index
Files that contain corroborating information pertaining to the current year’s audit program (ex. cash confirmation)
Current workpaper files
Files taht contain information that is expeted to be used bytheauditor on many future audits of a client
permanent workpaper files
No deletions of audit documentation are allowed after this date
Documentation completion date
A form of fraud that overstates cash by causing it to be simultaneously included in 2 or more bank acounts–possible because a check takes several days to clearthe bank
Kiting
shows the dates of all transfers of cash among the client’s various bank accounts–primary purpose is to help auditors detect kiting
Bank transfer schedule
A bank statement for hte first 8-10 business days after year-end–primary purpose is to help auditors verify reconciling items on the year-end bank rec
Bank cutoff statements
A form used by auditors to obtain informtion from financial instuttions by requesting informtion on deposit and loan balances–designedto substantiate evidence primarily on the existence assertion
Standard confirmation form
Deposits that have been sent to the bank prior to year-end but have not been received by the bank as of year-end
Deposits in transit
A transaction in which a customer agrees to purchase goods but hte seller retains physical posession until the customer requests shipment to designated locations–should not be included in revenue
Bill and hold transactions
Agreements usedto alterhte terms and conditions of recorded sales transactions, often toconvince customers to accept delivery of goods and services–may preclude revenue recognition
Side agreements
A marketing practice that wsuppliers sometimes use to boost sales by inducing distributors to buy substantially more inventory than they can promptly sell–may result in need to increase the level of anticipated sales returns
Channel stuffing (trade loading)
