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24 Cards in this Set
- Front
- Back
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Who is the primary source about litigations, claims and assessments?
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Management - their responsibility to establish procedures to identify, evaluate and record them
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A legal letter is basically what?
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Like an A/R confirm for legal issues
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What are the basic elements of a legal letter?
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ILLLC
-Identify client -List of litagation -Legal opinion on outcome -Limitations on response -Contingencies are communicated to client (confirm) |
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How do you locate unrecorded litigation, claims and assessments?
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RRR WILL
-Review attorney bills -Read minutes of meetings and interim F/s -Review attorney correspondences -Written mgmt letter -Internal controls in place? -Lists of litigation -Legal letter |
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Are analytics required in the planning phase?
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YES
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Are analytics required in the review phase?
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YES
- trying to assess the validity of the conclusions that you reached |
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What is the purpose of the engagement letter?
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lay out expectations between CPA and client
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Is an engagement letter required?
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No, not required, but it is standard practice to have one
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What is a mgmt representation letter??
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documents all represents made my mgmt to the auditor throughout the audit
- signed by client mgmt at the end of the audit engagement |
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Is the mgmt rep letter required?
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Yes, required at the end of every audit
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When is the mgmt rep letter dated?
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date of audit report - last day of fieldwork
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What if the client refuses to give/sign a mgmt rep letter?
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That precludes the issuance of an unqualified opinion --- client imposed scope limitation!
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What is substantive testing?
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procedures that are designed to determine the accuracy of the dollar amounts reported in the financial statements. Substantive testing entails analytical procedures and tests of detailseither tests of transactions or tests of balances.
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What are tests of transactions?
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These tests are performed to determine whether the entitys transactions are correctly recorded and summarized in the accounting records. Many of these tests can be performed simultaneously with the tests of controls of internal control (i.e., dual-purpose tests).
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What are tests of balances?
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These tests are primarily concerned with monetary misstatements in the account balances. Tests of balances can be distinguished from tests of transactions because the tests of balances relate to individual accounts, whereas the tests of transactions relate to the different transaction cycles.
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What are the 7 types of Substantive Tests?
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(CORVAIR)
-Confirm -Observe -Retrace -Vouch -Analytics -Inquire -Recompute |
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What is lapping?
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This is one of the most common types of fraud. It involves the delay in the recording of a cash receipt in order to cover up an existing shortage in the actual cash on hand. Lapping is made possible through either bad internal control (i.e., having the same employee handle both the cash and the accounts receivable records) or collusion. In order to detect a lapping scheme, the auditor must compare the name, amounts, and dates shown on the customers remittance advices with entries in the cash receipts journal and the related deposit slips.
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What are the 12 Standardized Audit Procedures?
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TRAFIC CIVICS
Tracing Reconcile Analyze Foot Inspect Confirm Consider Inquire Vouching Investigate Count Subsequent Events |
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What is the primary responsibility of a registrar of capital stock?
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To verify that securities are properly issued, recorded and transferred.
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What are the 5 Mgmt Assertions?
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COVES
Cutoff/Completeness Ownership/Obligation Valuation/Allocation Existence/Occurrence Statement Presentation/Disclosure |
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What are the 4 types of Tests of Controls?
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Observation
Inquiry Inspection Re-perform procedures |
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What are the 7 types of Substantive Tests?
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CORVAIR
Confirmation Observation Retracing Vouching Analytics Inquiry Recompute |
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What 2 tests can both be a test of control and a substantive test?
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Observation and Inquiry
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What are the six ways to find subsequent events?
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(MIRACL)
Mgmt representation letter Inquiry Read minutes and interim FS Asset & liability valuation Cutoff Legal letters |
