Standard Auditing Procedures

Question 1

What are the standard audit procedures MNEUMONIC

Answer 1

FIVE CARROT CARS

Question 2

Footing, Crossfooting, Recalculation

Answer 2

Verify mathematical accuracy

Question 3

Inquiry

Answer 3

Requesting information from knowledgeable internal (managers, supervisors, accounting personnel) and external (attorney, banks, customers) parties

Question 4

Vouching

Answer 4

Directional testing for support

Existence or Occurance

Revenue/Assets = NOT overstated

Question 5

Examination/Inspection

Answer 5

Generally Provides evidence about the existence assertion

Question 6

Confirmation

Answer 6

Specific inquiry from independent external Third Parties about account balances and transactions or events

Question 7

Analytical Procedures

Answer 7

Evaluation of Financial information made by study of predictable relationships to help highlight unusual changes as a result of possible errors/fraud, omissions or overstatements

Question 8

Reperformance

Answer 8

Re-perform procedures or controls

A/R aging

Question 9

Reconciliation

Answer 9

Substantiates the existence and valuation of accounts

Question 10

Observation

Answer 10

Auditor looks at a process/procedure performed by others

Question 11

Tracing

Answer 11

Directional Testing for coverage

Completeness
Expenses & liabilities are not Understated

Question 12

Cutoff Review

Answer 12

Review Year End Transactions (inventory, cash, purchases, sales, accruals)

Question 13

Auditing related accounts simultaneously

Answer 13

1) L-T Liabilities and interest expense
2) Capital additions to PP&E and repairs and maintenance expense
3) Investments and Dividend and interest income

Question 14

Representation Letter

Answer 14

Must obtain

Question 15

Subsequent Events Reviews

Answer 15

Type 1 vs Type 2