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16 Cards in this Set
- Front
- Back
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Primary objective of the audit |
To express an opinion on the financial statements (other objectives are secondary) |
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Management responsibilities |
-Accounting policies -Internal controls -Financial statements |
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Auditor responsibilities |
-Obtain reasonable assurance whether f/s are free from material error -Report findings in accordance with GAAS |
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Management Assertions/Three Categories |
-Class of Transaction -Account Balances -Presentation & Disclosure |
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Occurence/Existence |
-Concerned with recorded amounts -Primarily concerned with overstatements |
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Completeness |
-Concerned with omitted amounts or transactions -Primarily concerned with understatements |
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Transaction objectives |
Apply to classes of transactions recorded throughout the year |
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Balance objectives |
Apply to ending balances in accounts |
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Relation of Transaction and Balance Objectives |
-Objectives are complementary -Quantities are inversely related -Both types of tests are usually performed -As more transaction tests are performed, related balance tests can be decreased |
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Timing |
Examine date of recording transactions |
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Cutoff |
Examine date of recording transactions before and after year-end |
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Posting & Summarization |
Foot journal and trace to posting in ledger. Trace individual transactions to posting in master file |
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Detail Tie-In |
Foot A/R trial balance and agree to general ledger |
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Net realizable value |
-No corresponding transaction objective (some transaction tests may address) -Concerned with declines in assets below recorded value (Ex. Inquire as to any obsolete inventory) |
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Control Tests |
-Performed to verify whether internal controls are working |
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Substantive tests |
Checks of detail to verify different assertions in the financial statements |
