Term
| 2 most common methods of committing finc fraud |
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Definition
| 1. overstate rev 2. understate exp and liab |
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Term
| 4 key docs of the acquisition cycle |
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Definition
| 1. purch req 2. po 3. rec report 4. vendor invoice |
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Term
| 2 inherent risks of acquisition |
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Definition
| 1. non-cancelable purchase agreements (cust may forget) 2. capitalizing expenses 3. unrecorded liability (biggest risk) |
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Term
| segregation of duties for the acquisition cycle |
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Definition
| 1. authorization of order 2. custody of goods 3. recording of invoice |
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Term
| facets of completeness assertion as it relates to acquisition cycle |
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Definition
| (search for unrecorded liabs at yearend). 1. check for missing POs or reqs 2. 3rd party invoices 3. cash disbursements journal*** 4. open POs, have goods been received? 5. unmatched invoices 6. confirmations w/ existing payables & previous vendors 7. ask client what their process is to make sure books show complete liabs |
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Term
| primary audit objective of AP, other evidence available, confirmation required by GAAS? |
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Definition
| 1. completion 2. vendor invoices (external) 3. no, because of 3rd party evidence |
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Term
| primary audit objective of AR, other evidence available, confirmation required by GAAS? |
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Definition
| 1. existence/occurrence 2. invoices (internal) 3. yes, because no 3rd party evidence |
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Term
| difference between accrued liabilities and accounts payable |
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Definition
| accrued liabilities occur due to passage of time, thus no invoice has been received. accounts payable arises because invoice has been received |
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Term
| ST As and Ls have _ turnover and are audited at what time? |
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Definition
| high; audit year end balances |
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Term
| LT As and Ls have _ turnover and are audited at what time? |
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Definition
| low, audit changes (depreciation, purchases, sale of) |
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Term
| 3 inherent risks about PP&E, 2 risks we're not concerned about |
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Definition
| 1. disposals that haven't been reflected 2. acquisitions 3. impairments // NOT: 1. cutoff 2. misappropriation |
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Term
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Definition
| 1. use of cap budget 2. maintenance of subsidiary ledger 3. authorization system in place 4. analysis of variances from budgeted expenditures 5. policy distinguishes between capital and revenue expenditures 6. system of retirement authorization and documentation 7. periodic inventory to verify location, condition, and existence of all property |
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Term
| 7 relevant assertions for PP&E |
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Definition
| 1. existence (is it real?) 2. completeness 3. cutoff 4. rights and obligations 5. valuation/allocation (impairment) 6. accuracy 7. presentation and disclosure |
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