Week 3 Flashcards
Vouching
The use of documentation to support recorded transactions or amounts
Sample item -> source documentation
Tracing
The review of how source documents lead to account balances
Source documentation -> item from account
Sufficiency
Measure of the quantity of audit evidence
Persuasiveness
The power of ability to persuade based on logic or reason
Appropriateness
Measure of audit evidence: its relevance and reliability
Relevance
Appropriateness of the evidence to the audit objective being tested
Reliability
Free from material error and bias and can be dependent upon by users to faithfully represent that which is either purports to represent or could reasonably be expected to represent
Tests of controls
Audit procedures designed to evaluate the operating effectiveness of controls in preventing, or detecting and correcting, material misstatements at the assertion level
Substantive tests of details provide
either reasonable assurance of the validtiy of a general ledger account or identify a misstatement in a class of transactions, balance or disclosure
Direction of testing
Testing for understatement or overstatement
Audit sampling
Application of audit procedures for less than 100% of items within a population of audit relevance
Sampling risk
The risk that the auditor’s conclusion based on the sample may be different from the conclusion if the entire population were subjected to the same audit procedure
Tolerable risk
The maximum rate of deviation an auditor would be willing to accept without altering her planned assessed level of risk
Deviation rate
The auditor’s best estimate of deviation rate in the population
Analytical procedures
Evaluations of financial information through analysis of relationships among data
