Overview of Audit Process Flashcards
The auditor faces a risk that the examination will not detect material misstatements which occur in the accounting process. In regard to minimizing this risk, the auditor primarily relies on:
Substantive tests.
Tests of controls.
Internal control.
Statistical analysis.
Substantive tests.
This answer is correct because the purpose of substantive tests is to obtain evidence as to the validity and the propriety of accounting treatment of transactions and balances or, conversely, of errors or irregularities. Thus, the auditor relies on substantive tests to minimize the risk of failure to detect material misstatements which occur in the accounting process.
The audit work performed by each assistant should be reviewed to determine whether it was adequately performed and to evaluate whether the
Auditor’s system of quality control has been maintained at a high level.
Results are consistent with the conclusions to be presented in the auditor’s report.
Audit procedures performed are approved in the professional standards.
Audit has been performed by persons having adequate technical training and proficiency as auditors.
Results are consistent with the conclusions to be presented in the auditor’s report.
The audit work performed by each assistant should be reviewed for adequacy and to ensure that it supports the conclusions reached.
Principles Underlying an Audit Conducted in Accordance with GAAS state that sufficient appropriate audit evidence is to be obtained through designing and implementing appropriate responses, i.e., by performing audit procedures, to afford a reasonable basis for an opinion regarding the financial statements under audit. The substantive evidential matter required by this standard may be obtained, in part, through
Flowcharting the internal control structure.
Proper planning of the audit engagement.
Analytical procedures.
Audit documentation.
Analytical procedures.
Substantive evidential matter required by the Principles may include evidence obtained through the performance of substantive analytical procedures (as well as that obtained through inspection, observation, inquiries, and confirmation). Analytical procedures performed as substantive tests can be used to provide substantive evidential matter.
