random 2 Flashcards
the policies and procedures related to the identification, capture, and exchange of info in a form and time frame that enable people to carry out their responsibilities
information and communication
the policies and procedures involving the ongoing assessment of the quality of internal control effectiveness over time
monitoring
essential aspect of the control environment
tone at the top
objective of tests of controls
ascertain whether internal controls are designed properly or operating effectively
Tests directed toward operating effectiveness are concerned with how the internal control was applied, the consistency with which it was applied, and by whom it was applied.
Define material weakness.
A deficiency (or combination of deficiencies) in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented or detected and corrected on a timely basis
Define “significant deficiency.”
A deficiency (or combination of deficiencies) in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Identify the 2 characteristics of the internal auditor that the auditor should evaluate before relying on the internal auditor’s work.
Competence (certifications) and objectivity (independence)
5 components of internal control
control environment, risk assessment, info and comm, monitoring, and control activities
relevant internal control considerations associated with control activities
SCARE
segregation of duties, controls, authorization, reviews, EDP/IT
Identify the 4 considerations that determine the effectiveness and efficiency of analytical procedures used for substantive purposes.
Nature of the assertion;
Plausibility and predictability of the relationship;
Availability and reliability of data; and
Precision of the expectation
2 categories of substantive tests of details.
Tests of Ending Balances
Tests of Transactions.
What is the only component of the audit risk model that the auditor controls?
detection risk
4 assertions applicable to account balances at the period end:
(1) existence; (2) completeness; (3) rights or obligations; and (4) valuation and allocation.
