Exam

Question 1

What is sufficient auditing vs. appropriate auditing? CH 5

Answer 1

Sufficient - Quantity of auditing

Appropriate - Quality of auditing

Question 2

What are the Evidence Types?

Answer 2

(CCEVRPD)
Confirmation: evidence obtained as a direct written response to the auditor from a third party, in proper form, or electronic medium
Computational: evidence gathered by an auditor checking the mathematical accuracy of numbers appearing in financial statements
Electronic: Data that is held on clients computer, files sent by email/ fax/ scanned to the auditor
Verbal: responses of a client personnel to auditor inquiries throughout the course of the audit i.e Interviews with Employees
Representations: evidence that is gathered through legal matters involving their client
Physical: Inspection of clients tangible assets
Documentary: information provides evidence about details recorded in a clients list of transactions

Question 3

What is Statistical Sampling vs. Non Statistical Sampling?

Answer 3

Statistical Sampling: random selection is used to select samples, probability theory is used to evaluate the sample results. USES FORMULA TO DETERMINE
Non Statistical Sampling: allows auditor to select samples deemed appropriate (any other sample selection method than statistical) USES AUDITORS JUDGEMENT

Question 4

What are the four main assertions and four other assertions

Answer 4

(CAVE)
Completeness - have all been recorded
Accuracy - have been recorded appropriately
Valuation - recorded values correct
Existence - inventory and recorded values exist
(CCDP)
Classification - recorded items are in proper accounts
Cut-Off - recorded values are in the proper period
Disclosure - disclosure notes are included and accurate
Presentation - records are properly presented and clearly described

Question 5

What are the types of Sampling Techniques?

Answer 5

(RSBHJ)
Random Selection:
Systematic Selection:
Block Selection:
Haphazard Selection:
Judgmental Selection:

Question 6

What is the process for Control Testing

Answer 6

gather evidence that control is effective –> test attributes –> more testing OR change audit plan

Question 7

What is the process for Substantive Testing

Answer 7

gather evidence that there is no misstatements –> test dollars –> conclude errors, may change audit opinion

Question 8

What are techniques for testing IC?

Answer 8

Inquiry, Observation

Inspection, Performance