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Auditing 1 > Test 2 > Flashcards

Test 2 Flashcards

0
Q

What is Risk of Material Misstatement (RMM)?

A

Inherent Risk x Control Risk

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1
Q

What are the management assertions?

A 
Existence & Occurrence
Completeness
Rights & Obligations
Valuation
Presentation
Cut-Off
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2
Q

What is Audit Risk?

A

Inherent Risk x Control Risk x Detection Risk

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3
Q

What are the steps of an Audit?

A 
Planning the Audit
Understanding the Client
Assessing the Risk
Performing the Audit
Completing the Audit
Forming an Opinion
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4
Q

What are the Internal Control Transaction Cycles?

A 
Revenue
Acquisitions
Conversions
Payroll
Investing
Financing
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5
Q

What are the 2 types of Fraud?

A

Fraudulent Financial Reporting

Misappropriation of Assets

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6
Q

What type of Audit Report is required for Public and Non-Public Companies?

A

Public - Must report on internal controls AND financial statements
Non-Public - Must report on financial statements

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7
Q

What are the 2 sections of an Audit Program?

A

Internal Control

Substantive Testing

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8
Q

What are the Components of Internal Control?

A 
Control Environment
Risk Assessment Process
Information System
Control Activities
Monitoring Controls
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9
Q

Types of Internal Controls

A 
Preventative
Detective
Corrective
Complementary
Redundant
Compensating
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10
Q

What are the 3 Audit Procedures?

A

Risk Assessment Procedures
Tests of Controls
Substantive Procedures

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11
Q

What are 3 Types of Substantive Procedures?

A

Tests of Balances
Tests of Transactions
Tests of Disclosures

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12
Q

What is Sufficiency?

A

Measure of quantity of audit evidence that must be obtained

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13
Q

What is Appropriate?

A

Measure of the quality of audit evidence that must be obtained

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14
Q

What are 3 types of transactions and which has the highest level of inherent risk?

A

Routine Transactions
Non-Routine Transactions
Estimation Transactions - Highest Level of Inherent Risk

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15
Q

What are 3 factors that affect the sample size of a control risk?

A

Risk of Assessing Control Risk Too Low
Tolerable Deviation Rate
Estimate of Population Deviation Rate

16
Q

What is the difference in negative and positive confirmation?

A

Positive confirmation means you must get a response from the customer you sent a balance confirmation letter to and if not, you must follow up.
Negative confirmation means no response is confirming it is correct.

17
Q

What are the steps of substantive testing?

A 
Determine objective
Define population and sampling unit
Choose an audit sampling technique
Determine the sample size
Select the sample
Test the sample items
Evaluate the sample results
Document the sampling procedure

Auditing 1 (2 decks)

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