Term
|
Definition
1. Plan the audit
2. Obtain an understanding of the client and its environment, including internal control.
3. Assess the risks of misstatement and further audit procedures.
4. Perform further audit procedures.
5. Complete the audit
6. Form an opinion and issue the audit report. |
|
|
Term
| Assertions about account balances |
|
Definition
Existence (A, L, E intersts exist)
Rights and obligations (the entity holds or controls the rights to assets, and liabilities are the obligations of the entity)
Completeness (all a, l, and e interests have been recorded)
Valuation and allocation (a, l, and e interests are included at appropriate amounts) |
|
|
Term
| Assertions about transactions and events |
|
Definition
Occurrence (things pertaining to the entity have been recorded)
Completeness
Accuracy (recorded appropriately)
Cutoff (transactions have been recorded in the correct accounting period)
Classification (transactions have been recorded in the proper amounts) |
|
|
Term
| Assertions about disclosures |
|
Definition
Occurrence
Rights and obligations (disclosed events pertain to the entity)
Completeness (all included)
Accuracy and valuation (appropriate amounts)
Classification and understandability (info is presented and described clearly) |
|
|
Term
|
Definition
Existence or occurrence
rights and obligations
completeness
cutoff
valuation, allocation, and accuracy
presentation and disclosure |
|
|
Term
|
Definition
| risk of a material misstatement occurring in an assertion assuming no related internal controls |
|
|
Term
|
Definition
| risk that a material misstatement in an assertion will not be detected or prevented on a timely basis by the company's internal control |
|
|
Term
|
Definition
| risk that the auditor's procedures will lead them to conclude that a material misstatement does not exist in an assertion when, in fact, one exists |
|
|
Term
| The segregated three classes of transactions |
|
Definition
Routine (recurring, normal course of business, lower inherent risk)
Nonroutine (periodically occur, high inherent risk)
Estimated transactions (activities that create an accounting estimate, highest inherent risk) |
|
|
Term
| Factors of audit evidence appropriateness |
|
Definition
Relevant (relates to assertion being addressed)
Reliable (dependent on the circumstances obtained, there are situations in which evidence is more reliable than other evidence) |
|
|
Term
|
Definition
| to detect material misstatements at a relevant assertion level, these include a) analytical procedures, and b) tests of details of account balances, transactions and disclosures |
|
|
Term
| Types of audit procedures |
|
Definition
1) inspection of records and documents
2) inquiry of knowledgeable persons within or outside the entity
3) external confirmation
4) inspection of tangible assets
5) observation of processes or procedures being performed by others
6) recalculation of math accuracy
7) reperformance of procedures
8) analytical procedures |
|
|
Term
| Changing the scope of auditing procedures (NET) |
|
Definition
Nature (type and form)
Extent (quantity of evidence obtained)
Timing (when it is performed) |
|
|
Term
| General on Analytical Procedures |
|
Definition
| involves evaluations of financial statement information by a study of relationships among financial and nonfinancial data |
|
|
