quick as lightning Flashcards
impact on the audit when:
control risk is assessed too low
control risk is assessed too high
inefficient
ineffective
difference between SOC Type I vs Type II reports?
design/implementation vs design/implementation/operation
structure of an compilation report
paragraph
+ lack of independence
+ omitted disclosures
+ special purpose framework
relationship with sample size:
risk of assessing CR too low
tolerable deviation rate
expected deviation rate
inverse
inverse
direct
sales cycle departments
sales
credit
warehouse
shipping
billing
AR
sales documents
sales order
bill of lading
sales invoice
expenditure cycle documents
purchase requisition
purchase order
receiving report
purchase invoice
PPS Sampling Interval: $3,000
Account Balance #1: $1,500; overstated by $150
Account Balance #2: $4,000; overstated by $400
what is the projected misstatement?
150/1500 * 3,000 = 300
400
= 700
tolerable deviation rate
sample deviation rate
population deviation rate
control risk is assessed too high
population deviation rate
tolerable deviation rate
sample deviation rate
control risk is assessed too low
calculate sampling interval:
tolerable misstatement: $50,000
reliability factor: 2
$25,000
calculate sample size:
total population amount: $100,000
sampling interval: $10,000
10 sample items
calculate tainting factor:
audited value: $2,000
book value: $1,500
500/2000
mean per unit estimation
avg audited value * total population
ratio estimation
sample audited value: $25,000
sample book value: $30,000
total book value: $500,000
25/30 * 500,000
$416,667
difference estimation
sample audited value: $25,000
sample book value: $30,000
sample size: 100
total population: 2,000 items
total book value: $500,000
adjustment for account balance?
30k-25k = 5k
5000/100 = 50
50*2,000 = 10,000 adjustment
$490,000 audited total book value
reporting objectives, determining the timing of the audit, required communications, using the work of others and a preliminary assessment of materiality determines the
a. audit strategy
b. audit plan
audit strategy
the process of determining the nature, extent and timing of audit procedures is called a:
a. audit strategy
b. audit plan
audit plan
the auditor’s evaluation of sampling results by calculating the possible error in either direction is:
precision
a measure of variability of a frequency distribution about its mean:
standard deviation
how are unrecorded asset retirements detected by the auditor?
fixed assets subledger to physical plant inspection
what is the level of assurance for an audit over:
compliance
internal controls for compliance
reasonable assurance
disclaimer
what is a critical component of the determination of whether providing a non-audit service would create a threat to independence?
management’s ability to effectively oversee the nonaudit service to be performed
the primary purpose of sending a confirmation to banks with which the client has done business with is to:
corroborate information on deposits and loan balances
the following may be evidence for:
compensating balances
loan guarantees
non-monetary exchanges
related party transactions
