PERFORMANCE OF AN AUDIT Flashcards
What is Negative Confirmation?
A negative confirmation request asks for a reply from a third party only if they
disagree with the information provided by the auditor
What is Positive Confirmation?
A positive confirmation request asks the confirming party to respond to the
auditor in all cases whether they agree or disagree with the information
provided.
What are Related Parties?
Related parties are individuals or organizations that might have an undue
influence over the company being audited.
What is Sampling?
Sampling is the application of audit procedures to less than 100% of the items
in a population
What are the Sample Selection
Methods?
- Systematic Selection
- Random Selection
- Haphazard Selection
- Block Selection
What is Stratification?
The process of dividing a population into subpopulations, each of which is a
group of sampling units with similar characteristics
What is Sampling Risk?
Sampling risk is the risk that auditor’s conclusion based on the sample might
be different from the conclusion if the entire population was tested.
What is Tolerable Misstatement?
It is the amount by which a financial statement line item can differ from its true
amount without impacting the fair presentation of the entire financial
statements
What is Tolerable Rate of
Deviation?
A rate of deviation from prescribed internal control procedures set by the
auditor in respect of which the auditor seeks to obtain an appropriate level of
assurance that the rate set is not exceeded by the actual rate of deviation in
the population
What is an Internal Audit?
Internal audit is a part of the entity that is appointed by TCWG to assist them
in ensuring good governance of the entity
What is an Auditor’s Expert?
An expert is a person who has expertise in a field other than accounting or
auditing and is used by the auditor to obtain evidence.
When does an auditor use an
Expert?
An auditor uses an expert for the following:
1. Actuarial Calculations
2. Engineering Data
3. Legal Opinions
4. IT Expertise
5. Valuations
What is an Error?
An error is an unintentional misstatement.
What is Fraud?
Fraud is a deliberate act by one or more individuals by use of deception to gain
an unfair personal or financial advantage.
What is Management Override of
Controls?
Management override of controls refers to the ability of management to
overrule the prescribed policies and procedures to prepare fraudulent
financial statements
