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25 Cards in this Set
- Front
- Back
- 3rd side (hint)
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What are analytical proc's?
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Evaluations of financial info. Determined based upon relationships. Auditor performs as a planning tool, sub test and overall review.
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Purpose of AP during planning.
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Determine NTE that will be employed to obtain audit evidence. They help identify and design auditing proc's.
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Purpose of AP performed as a substantive test.
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To obtain evidential matter.
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What sources may an auditor use to develop expectations of account balances when performing AP?
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1. Prior yr balances
2. Client prepared budgets and forecasts 3. Industry statistics 4. Relationship among acct balances within the same period 5. Relevant nonfinancial info |
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What disclosures are req'd concering related parties?
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1. Nature of relationship and description of transactions.
2. Quantification of transactions and effects of any change in method of establishing terms from preceding period. 3. Balances to or from related parties at date of each balance sheet presented and terms and manner of settlement. |
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Define ICS? What are the auditor's general responsibility in relation to the ICS?
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ICS - policies and proc's established to provide reasonable assurance that specific entity objectives will be acheived.
The auditor is req'd by the 2nd std of FW to obtain a sufficient understanding of I/c in order to plan the audit and determine the NTE of substantive tests. |
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Auditor's specific responsibilities pertaining to understanding an entity's ICS?
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An auditor is responsible for understanding each ICS element and determining if they are in place. In addition the auditor must document their understanding through flowcharts, memo, questionnaires, etc.
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Five elements that comprise ICS?
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Control Environment, Risk Assessment, Control Activities, Info & Communication, Monitoring
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CRIME
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Control Environment?
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Primarily mnagmnts attitude towards the importance of controls. Managements philosophy and style.
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Risk Assessment?
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Process of identifying, analyzing & controlling risks that affect f/s.
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ICA
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What can cause risks?
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A risk can be created by new personnel, accelerated growth, foreign operations, new tech new info systems and/or new accounting pronouncements.
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Control Activities?
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Control Activities are policies and proc's established by managemnt to reasonably assure control objectives are accomplished.
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What are some examples of control activities?
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1. Segregation of duties
2. Proper Authorization of transactions. 3. Safeguards over access to assets and records. 4. Recording of transactions 5. Test on recorded amts |
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Monitoring element of an ICS?
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Process that assesses the effectiveness of the I/C on an ongoing basis.
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Five F/S assertions?
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1. Existence or occurrence
2. Completeness 3. Valuation or allocation 4. Rights and obligations 5. Presentation and disclosure |
PERVC
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What is Existence or occurence assertion?
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did the assets and liab exist at the balance sheet date and did the recorded transactions occur during the income statement period.
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What is the Completeness assertion?
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have all appropriate transactions and balances been included.
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What is the Valuation or allocation assertion?
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have all accts been included at appropriate amts.
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Rights and Obligations?
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Are assets owned by the entity.
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Presentation and disclosure?
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Have all accts been properly classified and disclosed.
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Define a compensation control?
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A compensation control is a control employed when incompatible functions exist within the EDP environment.
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Examples of compensation controls?
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Req'd vaca's, restricted access to EDP equipment, rotation of operator duties and independent document counts and log books.
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Define application controls.
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Application contorls are controls that relate to specific computerized accting tasks.
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What are the main types of application controls.
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1. Input Controls
2. Processing Controls 3. Output Controls 4. Effect of inadequate application controls |
IPO
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Why must the auditor consider the competence of its clients personnel.
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Suffient competent personnel must be employed in order to sustain adequate control environment.
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