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AUD > misc concepts > Flashcards

misc concepts Flashcards

1
Q

positive assurance most useful for

A

low assessed audit risk

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2
Q

negative assurance

A

1) the assessed risk of material misstatement is low,
(2) a large number of small homogeneous balances is involved,
(3) a very low exception rate is expected,
(4) the auditor has no reason to believe that the recipients of the requests are unlikely to consider them, and
(5) the auditor has obtained sufficient appropriate evidence about the effectiveness of relevant controls

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3
Q

Effective Internal controls and audit evidence

A

effective internal controls provides more assurance as the reliability of audit evidence

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4
Q

completeness
existence
rights and obligations
valuation

A

proper recordance
truly exists
entity has ownership of items (ASSETS AND LIABILITIES)
items are at appropriate amounts

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5
Q

A/R confirmations provide the strongest assertions for

A

existence and rights and obligations

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6
Q

RISK OF AUDIT

A

OVERSTATED ASSETS

UNDERSTATED LIABILITIES

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7
Q

DIFFICULTY IN CONFIRMATIONS

A

AUDIT INDIVIDUAL INVOICES WHICH ARE EASY TO CONFIRM

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8
Q

TO INCREASE CONFIRM ACCURACY ALWAYS SHOW

A

DETAILS

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9
Q

most effective in determinining A/R

A/R testing in general

A

subsequent review of cash receipts

ALWAYS HAS TO DO WITH CONDUCTIBILITY

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10
Q

accounts receivable confirm usually detects

A

lapping

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11
Q

confirmations not received

A

only apply additional tests to accounts that do not receive a 2nd confirm

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12
Q

any internal function

example internal construction/scrapping

A

difficult to detect deficiences because there is little outside evidence

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13
Q

noncash financing and investing activities must be

A

DISCLOSED

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14
Q

DIRECT LIABILITY

A

NEVER REPORT PRINCIPLE

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15
Q

TESTING OF SUB DISBURSEMENTS

A

LOW ASSESSED RISK OF MATERIAL MISSTATEMENT

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16
Q

SUBSTITUTION

A

CASH AND ASSETS AUDIT TO PREVENT ASSETS FROM BEING USED TO COVER CASH SHORTAGES

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17
Q

SUBSQUENT EVENTS IT IS NOT NECESSARY TO

A

COMMUNICATE MATERIAL WEAKNESS IN IC

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18
Q

going concern procedure

A

inquire to legal

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19
Q

summary of financial statements

A

MUST STATE CONSISTENCY W/ FS

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20
Q

AUTHORITY DESIGNED FORM MAKES UNJUSTIABLE ASSERTION AUDITOR

A

REWORDS

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21
Q

RSI

A

NEED NOT BE INCLUDED ; HOWEVER SEPERATE PARAGRAPH IN AUDIT REPORT

ALWAYS UNAUDITED

MUST PROVIDE LIMITED PROCEDURES NEVER AN OPINION - make sure no materiality exists to FS

22
Q

BASIC F/S NAMES CHANGED

A

IF AUDITOR DISAGREES QUALIFY

23
Q

REVIEW

A

MATERIAL MODIFICATIONS NEEDED

CONSISTS OF ANALYTICAL + INQUIRY

24
Q

COMFORT LETTERS
AUDITED
UNAUDITED

A

OPINION ON AUDITED TO COMPLIANCE W/ SEC

NEGATIVE ASSURANCE

25
Q

OTHER INFORMATION EXCLUDES

A

RSI

26
Q

group auditor decision cycle

A

1 - decide if they may serve as group auditor

2 - question component auditors competence

27
Q

continuing auditor uses comparative statements MUST

what date used

A

update prior report regardless of opinion issued

if not revisions made then use original report date

IF NOTE ADDED FROM PREVIOUS STILL USE ORGINAL DATE

28
Q

preclude

A

prevent from happening

29
Q

unaudited in relation to auditors responsibility

A

auditor must verify that it does not material effect F/S; can refer to in reports

30
Q

group auditor reference

immaterial component reliance

A

relies on component audit work; no additional paragraph

no reference needed

31
Q

inventory restatement

A

ALWAYS AT LOWER OF COST OR MARKET

32
Q

balance sheet audit tests

A

only ending VALUES

33
Q

predecessor reissuing report must

A

1 - read and compare current F/S
2 - obtain rep letter from current auditor
3 - obtain rep letter from management

34
Q

does auditor provide assurances as to managements rep letter

A

no an do not refer to

35
Q

reference to anothers work is found where

A

intro paragraph

36
Q

prospective financial report does not allow

prospective financials criteria

A

REVIEWS

assumptions

37
Q

projections contain

A

hypothetical assumptions; never for general use

38
Q

compliance attest cannot perform what service

A

reviews

39
Q

agreed upon procedures
1 - auditor
2 - client
3 - specified party

A

1 - employed by the client to aid specified party
2 - client employs specified party to evaluate assertion
3 - require that findings be independently derived.

40
Q

IFI

A

procedures used to review are part of report

41
Q

specificied elements an opinion report can be issued on

A

A/R; royalties; profit participation; inventory

42
Q

OBOA contractual agreements must be between

A

client and third party

43
Q

GAAS

A

audits only

44
Q

pro forma

A

historical statements that are presented when there is a change found at a later date

45
Q

SSARS engagement management is responsible for

A

F/S fairly presented ONLY

46
Q

compilation does not require

A

management rep letter

47
Q

pro forma financial information

A

1 - can be reviewed or audited

2 - can only provide assurance to the same level or greater then was provided on historical F/S

48
Q

COMPLIANCE REVIEWS

A

NO REPORTS

49
Q

examination rules apply to

A

ATTEST Service requirements

50
Q 
SOX
402
403
404
406
A

402 unlawful for credit lent
403 10%+ ownership file SEC report
404 management responsible for IC
406 adoption of ethic code for senior financial officers

AUD (15 decks)

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