L6 Flashcards
key concepts of auditing
ethical conduct, integrity
audit risk
due care
quality control
stages of audit process
before year end:
1. preliminary
2. systems work
3. transaction testing
4. pre of final work
after year end
5. final work
preliminary stage
tender for audit
gain understanding of entity and its enviroment
consider engagement risk
planning of audit
systems work
medium stage
objective- reliance on acc records (gen, acc complete)
strong & effective control increase reliabilty of acc records
efficiency - more reliance on control, less substantive (never none)
Internal control
process designed, implemented and maintained by TCWG management to provide reasonable assurance
test of control
audit procedure designed to evaluate effectives in controls preventing or detecting and correcting material misstatements
Substantive procedure
audit procedure designed to detect material misstatements at the assertion level
what if the controls are good
test the controls and if they are good, then reduced substantive testing and after that its complete to report
if test of controls bad then full substantive test first
what if the controls are bad?
full substantive testing:
1. analytical procedures
2. test of details
then form a report
object of internal control
proper:
* recorded and authorized
* valued and classified
valid
complete
correct accounting period
inherent limitations of controls
cost effectiveness
design of control fault- lack of understanding
human invention/error
seg of duties- challenge with small org
components of internal control
control enviroment
entity’s risk assessment process
info system
control activites
monitoring of controls
control environment
governance
* management attitude and fucntion
* attitude of tcwg and managment controls
sets tone of org
control environment-governance
management functions and attitudes
attitude of TWCG to internal
elements of control environment
physical safeguarding of assets and records
participation by TCWG
org structure
