Other AUD Materials Flashcards
10 GAAAS - WHAT ARE THEY?
GENERAL TIP, FIELD PIC, REPORT ACDE (3,3,4)
T - TRAINING & PROFICIENCY
I - INDEPENDENCE
P - DUE PROFESSIONAL CARE
P - PLANNING & SUPERVISION
I - INTERNAL CONTROL
C - CORROBORATIVE AUDIT EVIDENCE
A - ACCT PRINCIPLES IN ACCORDANCE WITH GAAP (EXPLICIT)
C - CONSISTENCY YOY (IMPLIED)
D - DISCLOSURES (IMPLIED)
E - EXPRESS OPINION (EXPLICIT)
IF TESTS OF CONTROLS = HIGH (STRONG), HOW ARE SUBSTANTIVE TESTING, EVIDENCE, AND RMM AFFECTED?
HIGH RELIANCE ON I/C = LESS SUB TESTS & LESS EVIDENCE NEEDED & LESS RMM
IF TESTS OF CONTROLS = LOW (WEAK), HOW ARE SUBSTANTIVE TESTING, EVIDENCE, AND RMM AFFECTED?
LOW RELIANCE ON I/C = MORE SUB TESTS & MORE EVIDENCE NEEDED & HIGH RMM
DO WEAK INTERNAL CONTROLS = FS MISTATED?
NO, MEANS NEED MORE TO SUPPORT OPINION
GAAS
GENERALLY ACCEPTED AUDITING STANDARDS
AUDITING: WHAT? WHY? WHEN? WHO? HOW? WHERE?
WHAT: EXAMINATION OF F/S
WHY: EXPRESS OBJ OPINION IF F/S FAIRLY STATED
WHEN: MGMT PROVIDES F/S IN GAAP
WHO: AUDITOR FORMS OPINION
HOW: USING GAAS FOR AUDIT PROCEDURES
WHERE: RESULTS ARE PRESENTED IN AUDIT REPORT
TYPES OF AUDIT REPORT OPINIONS
UNMODIFIED = CLEAN
QUALIFIED “EXCEPT FOR” = FISHY
ADVERSE = SHITTY
DISCLAIMER = NO OPINION
11 ATTESTATION STANDARDS
(GENERAL) TKCID (FIELD) PE (REPORTING) NCRL
T - TECHNICAL TRAINING K - KNOWLEDGE OF SUBJECT MATTER C - CRITERIA TO EVALUATE AGAINST I - INDEPENDENCE D - DUE PRO. CARE
P - PLANNING & SUPERVISION
E - EVIDENCE
N - NATURE OF ENGAGEMENT (EXAM|REVIEW|AUPs)
C - CONCLUSIONS
R - RESERVATIONS, STATE THEM
L - LIMITED USE REPORTS (AUPs)
AUDIT RISK =
AR = IR X CR X DR
WITHIN AR, WHAT CAN AND CANT AN AUDITOR CONTROL?
IR OR CR = CANT CONTROL
DR = CAN CONTROL
Control activities in a strong system of internal control
PAID TIPS
P - Prenumbering Documents
A - authorization of Transactions
I - independent checks to maintain asset accountability
D - documentation
T - Timely and Appropriate Performance Budget vs Act.
I - Info Processing Controls – transactions are valid
P - Physical controls for safeguarding assets
S - Segregation of Duties
Segregation of Duties
A - Authorizing transactions
R - Recording transactions
C - Custody of Assets
Going Concern Mnemonics
ADMITS
A - Analytical Procedures D - Debt Compliance M - Minutes I - Inquiry of client's counsel T - Third parties confirmation S - Subsequent event review
What is not covered under Attest engagements? AND
How is different from GAAS?
ACRAPO
A - Audits
C - Compilations and Reviews
R - Return Prep
A - Advocation ( litigation Services )
P - Providing consulting /Advisory services
O - Operational Audits normally performed by Internal Auditor
No reference to FS No reference to GAAP Assurance below GAAS Audit Limited Use when Agreed upon Procedures Limited Use when subject matter and written assertion not present
What are the three conclusions possible for Attestation services?
ERA
E - Examination – Positive Assurance
R – Review – Negative Assurance
A – Agreed upon Procedures – No assurance
What are the 6 interrelated elements of quality control?
HELP ME
H - Human resources;
E - Engagement/client acceptance and continuance;
L - Leadership responsibilities;
P - Performance of the engagement; Monitoring;
E - Ethical requirements
14 audit procedures used in every audit?
FIVE CARROT CARS
F - Footing;
I - Inquiry;
V - Vouching;
E - Examination;
C - Confirmation; A - Analytical procedures; R - Reperformance; R - Recon; O - Observation; T - Tracing;
C - Cut-off review;
A - Auditing related accounts simultaneously;
R - Representation letter;
S - Subsequent events review
Explain the difference between auditing standards and auditing procedures.
Auditing standards measure the quality of the performance of the audit.
Auditing procedures are the acts to be performed during the audit.
Which standards provide the most authoritative US auditing guidance for nonissuers and issuers and who issues those standards?
Nonissuers: Statements on Auditing Standards (SASs), issued by the AICPA Auditing Standards Board
Issuers: Auditing Standards (ASs), issued by the Public Company Accounting Oversight Board (PCAOB) plus all SAS adopted by the PCAOB
How is a lack of consistency handled in the auditor’s report?
An emphasis of matter paragraph is added (following the opinion paragraph) describing the change and referring the reader to the appropriate note in the financial statements.
If GAAP is followed, the opinion is unmodified. If GAAP is not followed (no reasonable justification, change to a principle not conforming to GAAP, or an unacceptable method of accounting for the change), either a qualified or adverse opinion, depending on materiality, is required. Basis for paragraph is used before the opinion.
Risk of Material Misstatement
risk that the financial statements are materially misstated
IR x CR
Auditor should assess RMM at two levels:
(1) at the financial statement level and (2) at the assertion
