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Audit
Accounting Audit
25
Accounting
Undergraduate 4
01/22/2012

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Cards

Term
Audit Procedure
Definition
detailed instructions that explains the audit evidence to be collected
Term
Audit Program
Definition
containa s lost of the audit procedures and usually includes sample sizes and items to collect and timing.
Term
Appropriateness of Evidence
Definition
the quality of the evidence meaning its relevance and reliability. (not affected by sample size)
Term
Relevance of Evidence
Definition
must be able to tell somthing about the object in question.
Term
Reliability of Evidence
Definition
the degree to which evidence is believable
Term
Factors of reliability
Definition
- independence of provider
- internal control
- auditors knowledge of company
- qualifications of those providing info
- degree of objectivity
- timeliness.
Term
Sufficiency of Evidence
Definition
the quantity of evidence determines its sufficiency.
Term
Best Evidence
Definition
Large samples of relevant info provided by a competent independent party
Term
Cost
Definition
want to have the most persuasive evidence a the best price.
Term
Types of Audit Evidence
Definition
1) physical Examination
2) recalculation
3) reperformance
4) observation
5) documentation
6) question client
7) analytical procedures
8) confirmation
Term
Purposes of Audit Evidence
Definition
1) good basis for planning the audit
2) record of evidence collected and results
3) info source when writing audit report
4) Basis for review by supervisers
Term
"obtain reasonable assurance"
Definition
auditors do not guarantee fair presentation of financial statements. still some risk
Term
"free of material misstatement"
Definition
auditors responsible for material misstatements only
Term
Materiality
Definition
magnitude of an omission or misstatement of accounting information. Amount that makes it probable that the judgement of a reasonable person would be influenced.
Term
Preliminary Judgement of Materiality
Definition
-relative
-Need to choose a base
-qualitative factors (type of house)
Term
Allocate Materiality
Definition
-Usually to balance sheet since double effect. Accts rec and Equity.
- Tolerable Misstatement allocation
- some accts worse, over/under, relative audit costs affect allocation.
Term
Planned Detection Risk (formula)
Definition
(Acceptable Audit Risk)/ (inherent risk X Control Risk)
Term
Planned Audit Risk
Definition
risk that audit evidence will fail to detect misstatements.
Term
Inherent Risk
Definition
likelihood of misstatement without any controls
Term
Control Risk
Definition
likelihood that misstatement/errors will get passed internal controls.
Term
Acceptable Audit Risk
Definition
the risk the auditor is willing to take that there are no misstatements.
Term
Factors Affecting AAR
Definition
-degree to which statements used by external users
- likelihood of financial difficulties after audit
- assessment of management integrity
Term
Assessing Inherent Risk
Definition
1) nature of business
2) previous audits
3)initial vs repeat audit
4)related party transactions
5)Non-routine transactions
6)make up of population
Term
PCAOB
Definition
Public Company Accounting Oversight Board
investigates Audit firms compliance with PCAOB AND SEC rules.
Term
Audit Report
Definition
1)report title (independent)
2)audit report address (stockholders)
3)introductory paragraph (accts auditd)
4)scope paragraph (reasonable/material)
5)opinion paragraph
6)Name of CPA firm
7)Audit report date
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