Term
| The statement of transactions occurred for the 7 to 14 consequent days from the closing date of financial statement like Dec 31 provided by banks. This is useful to check the accuracy of checks outstanding and deposits in transit in accounting. |
|
Definition
|
|
Term
| Deposit that a bank can use to offset an unpaid loan. No interest is earned, which is stated as a percentage of the loan. It increases the Effective Interest Rate on the loan. |
|
Definition
|
|
Term
| Issue written communication that express a conclusion about the reliability of a written assertion that is the responsibility of another party. |
|
Definition
|
|
Term
| Declaration, or set of related declarations, about whether the subject matter is based on, or in conformity with, the selected criteria. |
|
Definition
|
|
Term
| Risk that CPA may unknowingly fail to appropriately modify the attest report on an assertion that is materially misstated. |
|
Definition
|
|
Term
| Engagements to report on managements written assertion about the entitys compliance with specific requirements |
|
Definition
|
|
Term
| Written request by the external auditor sent to a party having a financial relationship with the client and asking for a reply only in the case of disagreement. For example, a company may mail a form on behalf of the CPA firm to sampled customers requesting them to notify the auditor only if a discrepancy in the account balance exists. |
|
Definition
|
|
Term
| Written or oral request by the auditor of a party having financial dealings with the client about the accuracy of an item. A response is required whether the particular item is correct or incorrect. A positive confirmation can be sent to customers to verify account balances. |
|
Definition
|
|
Term
| A fraud that may be committed by an employee to conceal a misappropriation of funds, usually funds paid by a customer of the employer. |
|
Definition
|
|
Term
| A fraudulent act involving the alteration or issuance of a check or draft with insufficient funds. |
|
Definition
|
|
Term
| Presentation & Disclosure (CS, RE, EPS) |
|
Definition
| Review classification & disclosure |
|
|
Term
|
Definition
|
|
Term
| Completeness (CS, RE, EPS) |
|
Definition
Confirm with stock register: Shares outstanding, Unissued shares, Treasury shares
Review cash/stock dividends, stock splits: Authorization, details, GAAP
Trace to B of D minutes
Review Treasury stock accounting |
|
|
Term
| Existence/Occurrence (CS, RE, EPS) |
|
Definition
| Foot, crossfoot, trace SE to GL |
|
|
Term
| What are the exceptions for personal loans? |
|
Definition
1) Automobile loans
2) Loans fully collateralized by cash deposits at same financial institution
3) Unpaid credit card balances not exceeding $10,000
4) Insurance policy loans fully collateralized by policy surrender value
5) Home mortgages, fully collateralized secured loans, and immaterial loans that are grandfathered in. |
|
|
Term
| What immediate family is covered? |
|
Definition
1) Spouse
2) Spousal equivalent
3)Dependent--whether or not related |
|
|
Term
| Existence/Occurrence (CS, RE, EPS) |
|
Definition
| Foot, crossfoot, trace SE to GL |
|
|
Term
| Presentation & Disclosure (Financing) |
|
Definition
| Review classification & disclosure |
|
|
Term
|
Definition
| Recalculate interest, premium, discount |
|
|
Term
|
Definition
| Confirm balances & interest payments directly with trustees & creditors |
|
|
Term
|
Definition
Obtain bond & long-term agreement
Trace to B of D minutes
Review covenants |
|
|
Term
| Existence/Occurrence (Financing) |
|
Definition
Trace subsidiary to GL
Inspect ones on hand
Confirm balances |
|
|
Term
| Presentation & Disclosure (Inventory) |
|
Definition
| Review Classification & disclosure |
|
|
Term
|
Definition
|
|
Term
|
Definition
Vouch cost, determine market
Review GAAP |
|
|
Term
|
Definition
Inspect & Count ones on hand
Trace subsidiary to general ledger
Trace revenue to cash receipts |
|
|
Term
|
Definition
|
|
Term
| Independence is impaired if close relative: |
|
Definition
1) In a key position with client
2) Has a material financial interest in client and is known to the covered member.
3) Can exercise significant influence over the client. |
|
|
Term
| What is considered close relative? |
|
Definition
| Parent, sibling, and nondependent child |
|
|
Term
| Presentation & Disclosure (PPP) |
|
Definition
| Review classification & disclosure |
|
|
Term
|
Definition
|
|
Term
|
Definition
| Recompute depreciation expense |
|
|
Term
| Existence/Occurrence, Rights (PPP) |
|
Definition
Test additional & Disposals
1. Vouch
2. Observe |
|
|
Term
|
Definition
| Verify accuracy of recorded assets |
|
|
Term
|
Definition
| London Interbank Offer Rate |
|
|
Term
| Presentation & Disclosure (Expenditure & Disbursement) |
|
Definition
| Review classification & disclosure |
|
|
Term
| Valuation (Expenditure & Disbursement) |
|
Definition
| Aging of accounts payable |
|
|
Term
| When does the period of the professional engagement begin? |
|
Definition
Earliest of either
1) Signs initial engagement letter
2) Begins to perform attest engagement |
|
|
Term
| Completeness (Expenditure & Disbursement) |
|
Definition
Test cutoff
Search for unrecorded liabilities*-- look thru cash payments after year-end for items to accrue |
|
|
Term
| Independence not impaired solely if
|
|
Definition
1) If family of covered member is in non-key position of client.
2) If family participates in retirement, savingsm or compensation plan of client if plan is offered to all similar employees |
|
|
Term
| Existence, Obligation (Expenditure & Disbursement) |
|
Definition
Vouch expenditures
Confirm accounts payable |
|
|
Term
| Presentation & Disclosure (Inventory) |
|
Definition
| Review classification & disclosure |
|
|
Term
|
Definition
| Primary responsibility for significant accounting functions and preparation of F/S. |
|
|
Term
|
Definition
Review pricing, extension for (LIFO, FIFO...) and lower cost/market
Determine obsolete inventory |
|
|
Term
| Completeness, Rights (Inventory) |
|
Definition
| Test cutoff (coordinate with sales cutoff) |
|
|
Term
|
Definition
Observe inventory
Take test counts |
|
|
Term
| Presentation & Disclosure (Revenue) |
|
Definition
| Review classification & disclosure |
|
|
Term
| What is the 2-year AICPA rule? |
|
Definition
| In order for report or opinion to be given, client must owe less than 2 years worth of audit payments. |
|
|
Term
|
Definition
|
|
Term
|
Definition
Aging schedule
Review allowance account |
|
|
Term
| Existence, Rights (Revenue) |
|
Definition
| Confirm year-end balances |
|
|
Term
| Independence only applies to
|
|
Definition
1) Covered members and their immediate family
2) Participants on attest team
3) Those who directly supervise/manage attest engagement partner
4) Those who consult with attest team on technical or industry-related issues specific to engagement |
|
|
Term
| What kind of service is bookkeeping? |
|
Definition
|
|
Term
| Entry to adjust books of convenience to F/S basis of accounting and to initially record and accounting transaction or event. |
|
Definition
|
|
Term
| Entry to correct for a mistake made by entities whether caused by error or fraud. |
|
Definition
|
|
Term
| Presentation & Disclosures (Cash) |
|
Definition
| Review classification & disclosure |
|
|
Term
|
Definition
Test cutoff with cutoff bank statement
Schedule of Inter-bank Transfers |
|
|
Term
|
Definition
| Verify mathematical accuracy of bank reconciliation |
|
|
Term
|
Definition
| Confirm year-end balances |
|
|
Term
| Are mutual funds indirect or direct in regards to independence? |
|
Definition
|
|
Term
| You cannot accept a gift over how many dollars? |
|
Definition
|
|
Term
| If during an audit you generate a _______ ________, you are performing a nonattest service. |
|
Definition
|
|
Term
| How much does income have to be reported in order for IRS to assume fraud? |
|
Definition
|
|
Term
| What are the 3 exceptions to keeping confidential information? |
|
Definition
1) Subpoena
2) Peer review
3) Ethics investigation |
|
|
Term
| Is it ethical to charge contingent fees on a nonattest client? |
|
Definition
| Yes, but not if the contingent fees are for a tax return. |
|
|
Term
| This looking for errors in internal control. |
|
Definition
|
|
Term
| Maximum rate of internal control deviation that you can accept without altering planned reliance on internal control. |
|
Definition
|
|
Term
| Accept/Reject: If upper limit is less than or equal to tolerable rate of errors. |
|
Definition
| Reject, increase substantive testing. |
|
|
Term
| Accept/Reject: If upper limit is greater than or equal to tolerable rate of errors. |
|
Definition
| Accept, no change in substantive tests. |
|
|
Term
| What is substantive testing? |
|
Definition
|
|
Term
| What is risk of incorrect acceptance? |
|
Definition
|
|
Term
| What is risk of incorrect rejection? |
|
Definition
|
|
Term
|
Definition
| Tolerable Error (Adjusted) / Reliability Factor |
|
|
Term
|
Definition
| Book value of AR / Sample Interval |
|
|
Term
| How do you compute the upper limit? |
|
Definition
Tolerable Error (Adjusted)
+ Projected Error
+ Incremental Allowance |
|
|
Term
| If book value is less than the sample interval, then compute
|
|
Definition
1) Compute tainting % [(BV - AM) / BV]
2) Ranked projected error
3) Incremental allowance for sampling risk (Ranked projected error * Increment reliability factor) |
|
|
Term
| Uses legal precedent to identify the fault and responsibility of parties where there is no violation of a written law or statute. |
|
Definition
|
|
Term
| Based on laws passed by legislative bodies and comiled in federal, state, and municipal codes. Primary basis for a decision is whether the party's actions have violated the law as written in the code. |
|
Definition
|
|
Term
| Not performing with the degree of knowledge, skill, and judgment used by others in the profession. |
|
Definition
|
|
Term
|
Definition
| Racketeer Influenced & Corrupt Organization |
|
|
