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auditing > exam > Flashcards

exam Flashcards

1
Q

What are the assertions for the income statement

A

Completeness, occurrence, accuracy, cut-off, classification

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2
Q

What are the assertions for the balance sheet

A

Existence, rights and obligations, completeness, valuation and allocation

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3
Q

What is occurrence for the income statement

A

Have the transactions that have been recorded and occurred actually happened such as did the sales actually happen

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4
Q

What is completeness in the income statement

A

All transactions that should be recorded have been recorded

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5
Q

What is accuracy in the income statement

A

have things been recorded at the right amount

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6
Q

What is cut off in the income statement

A

Transactions have been recorded in the correct accounting period

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7
Q

What is classification in the income statements

A

transactions have been recorded in the proper accounts

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8
Q

What is the test for occurrence

A

Select a sample of entries from the sales general ledger and then match to the source document such as sales invoice

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9
Q

What is the test for completeness

A

Select a sample of customer orders and trace the sales invoices to the sales account in the general ledger

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10
Q

What is the existence in the balance sheet

A

Assets, liabilities do they actually exist

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11
Q

What is the rights and obligations in the balance sheet

A

does the entity hold the control and rights over the assets and liabilities

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12
Q

what is completeness in the balance sheet

A

All assets that should be recorded are recorded

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13
Q

What is valuation and allocation in the balance sheet

A

Ensuring the assets are valued at the right amount not over or under stated

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14
Q

Most important assertions for cash

A

Existence, completeness, rights and obligations

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15
Q

What procedure can auditors do to test cash

A

request bank comfirmation, bank reconciliation

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16
Q

What are the most important assertions for sales

A

Occurrence, cut-off and accuracy

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17
Q

What procedure can auditors do to test sales

A

the occurrence test, match prices between sales invoice and master price list, check that the sales before and after balance date are in the right period

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18
Q

What are the important assertions for accounts receivable

A

Existence, valuation and completeness

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19
Q

What procedure can auditors do to test accounts receivable

A

Debtor confirmation, substantive testing of sales invoices,

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20
Q

What is the important assertions for purchases

A

accuracy, completeness and cut-off

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21
Q

What procedure can auditors do to test purchases

A

do the completeness test, check the dollar amount on the purchase documents, check the dates before and after balance date to make sure they are in the right period.

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22
Q

What is the important assertions for inventory

A

Existence and valuation

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23
Q

What procedure can auditors do to test inventory

A

inspect the stock take, analytical procedures, pricing testing,

24
Q

What is an unmodified opinion

A

The report is true and fair

25
Q

what is a modified opinion

A

where there might be a material misstatement

26
Q

What is the modification that doesn’t effect the auditors opinion

A

Emphasis of matter

27
Q

Modifications that effect the auditors opinion

A

Qualified opinion, adverse opinion and disclaimer opinion

28
Q

What is an adverse opinion

A

indicating that a company’s financial statements are misrepresented, misstated, and do not accurately reflect its financial performance - does it effect the whole report

29
Q

What is a disclaimer opinion

A

the auditor could not obtain sufficient evidence to form an opinion on the financial statements

30
Q

What is emphasis of matter opinion

A

that everything is allgood but there is something they need to disclose

31
Q

What is going concern

A

a company that is financially stable enough to meet its obligations and continue its business for the foreseeable future.

32
Q

Subsequent events - adjusting

A

when there is changes in the financial report between the balance date and the authorisation date

33
Q

Examples of an adjusting event

A

Bankruptcy of client after year end which is considered a doubtful debt

34
Q

Subsequent events - non adjusting

A

do no result in changes in the financial statements

35
Q

Examples of non adjusting events

A

loss of assets due to fire or flood

36
Q

If there is a problem with the material what opinion should be given

A

Qualified`

37
Q

If the problem effects the whole financial statement and is pervasive then which opinion

A

Adverse

38
Q

What are the 7 objectives for internal controls

A

Real, recorded, valued, classified, summerised, posted and timely

39
Q

What does real refer too and what assertions effect it

A

no duplication transactions - occurrence, existence

40
Q

What does recorded refer too and what assertions effect it

A

to prevent wrong transactions - accuracy, completeness

41
Q

What does value refer too and what assertions effect it

A

that the correct amount is allocated to transactions - accuracy, valuation

42
Q

What does classified refer too and what assertions effect it

A

the transaction is charged to the right account - accuracy, valuation and classification

43
Q

What does summerised refer too and what assertions effect it

A

that the total of the transaction is correct - accuracy, value

44
Q

What does posted refer too and what assertions effect it

A

that accumulated totals in the general ledger are correct - accuracy, classification

45
Q

What does timely refer too and what assertions effect it

A

that transactions are recorded in the right period - cut-off completeness

46
Q

how can entities monitor internal controls

A

security of assets and records, segregation of duties, performance review budget vs actual,

47
Q

how could approving credit be more controled

A

have a credit limit, have a credit committee,

48
Q

how could shipping goods be more controled

A

having picking and delivery documents, monthly reconciliation on picking slips,

49
Q

How could processing orders be more controled

A

three way match order with order doc, dispatch doc and sales invoice

50
Q

What procedures need to be done for accuracy

A

Making sure the time sheets are matching the invoice and pre numbered, matching the sales invoices with the master price sheet

51
Q

What procedure need to be done for completeness

A

Match the source document with a general ledger, test for cut off, invoices not yet being recorded, bank confirmation

52
Q

What procedures need to be done for occurrence

A

Match the general ledger to the source documents, match the sales journal to the pre numbered receipts

53
Q

What procedures need to be done for existence

A

Debtor confirmation, stock takes

54
Q

What procedures need to be done for valuation

A

Bank confirmation,

55
Q

Cut-off procedures

A

examine the invoices for the new year to see if they are in the right period

56
Q
A

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