Term
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Definition
| detailed instructions that explains the audit evidence to be collected |
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Term
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Definition
| containa s lost of the audit procedures and usually includes sample sizes and items to collect and timing. |
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Term
| Appropriateness of Evidence |
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Definition
| the quality of the evidence meaning its relevance and reliability. (not affected by sample size) |
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Term
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Definition
| must be able to tell somthing about the object in question. |
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Definition
| the degree to which evidence is believable |
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Term
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Definition
- independence of provider
- internal control
- auditors knowledge of company
- qualifications of those providing info
- degree of objectivity
- timeliness. |
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Term
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Definition
| the quantity of evidence determines its sufficiency. |
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Term
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Definition
| Large samples of relevant info provided by a competent independent party |
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Term
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Definition
| want to have the most persuasive evidence a the best price. |
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Term
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Definition
1) physical Examination
2) recalculation
3) reperformance
4) observation
5) documentation
6) question client
7) analytical procedures
8) confirmation |
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Term
| Purposes of Audit Evidence |
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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 |
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Term
| "obtain reasonable assurance" |
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Definition
| auditors do not guarantee fair presentation of financial statements. still some risk |
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Term
| "free of material misstatement" |
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Definition
| auditors responsible for material misstatements only |
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Term
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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. |
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Term
| Preliminary Judgement of Materiality |
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Definition
-relative
-Need to choose a base
-qualitative factors (type of house) |
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Term
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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. |
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Term
| Planned Detection Risk (formula) |
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Definition
| (Acceptable Audit Risk)/ (inherent risk X Control Risk) |
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Term
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Definition
| risk that audit evidence will fail to detect misstatements. |
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Term
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Definition
| likelihood of misstatement without any controls |
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Term
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Definition
| likelihood that misstatement/errors will get passed internal controls. |
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Term
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Definition
| the risk the auditor is willing to take that there are no misstatements. |
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Term
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Definition
-degree to which statements used by external users
- likelihood of financial difficulties after audit
- assessment of management integrity |
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Term
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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 |
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Term
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Definition
Public Company Accounting Oversight Board
investigates Audit firms compliance with PCAOB AND SEC rules. |
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Term
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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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