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19 Cards in this Set
- Front
- Back
- 3rd side (hint)
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List the types of Procedures for obtaining Audit Evidence.
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1. INSPECTION OF RECORDS / DOCUMENTS
2. INSPECTION of tangible ASSETS 3. OBSERVATION processes or procedures of others 4. INQUIRY - written or oral, to gain information from others 5. CONFIRMATION - obtaining representation of information from a 3rd party 6. RECALCULATION - checking mathematical accuracy of documents 7. REPERFORMANCE - Auditor takes something that the client created and he then re-creates it. 8. ANALYTICAL PROCEDURES - evaluations of financial information made by study of plausible relationships among financial and nonfinancial data 9. SCANNING - review of accounting data to identify significant or unusual items. |
CH. 4 - AUDIT EVIDENCE
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Describe Inspection of Records and Documents in Procedures for obtaining audit evidence
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Examine INTERNAL and EXTERNAL records or documents that are in paper form, electronic form, etc.
** this makes up the bulk of evidence collected on most audit engagements ** the SOURCE MATTERS (evidence hierarchy) |
CH. 4 - AUDIT EVIDENCE PROCEDURES
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Describe Inspection of Tangible Assets in obtaining audit evidence.
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Physical examination of a tangible asset (i.e., Inventory observation, Physical exam of FIXED ASSETS)
** Assertions: EXISTENCE, VALUATION |
CH. 4
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Describe Observation in obtaining audit evidence.
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The process of watching a process or procedure being performed by others
** Used mostly during Control Testing ** Limitations: Person behaves differently when auditor is around |
CH. 4
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Describe Inquiry in obtaining audit evidence.
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Questions asked, written and oral, of knowledgeable persons (financial and nonfinancial, inside and outside the entity)
** Not performed alone - this generally does NOT provide sufficient audit evidence |
CH. 4
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What is Confirmation in the procedures for obtaining audit evidence?
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The process of obtaining a representation of information or of an existing condition directly from a third party.
** Assertions: Existence, Completeness ** Reliability of evidence obtained this way is affected by factors such as: The form of the confirmation; Prior experience with the entity; Nature of the info being confirmed |
CH. 4 - AUDIT EVIDENCE PROCEDURES
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What is Recalculation in the procedures for obtaining audit evidence?
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Checking the mathematical accuracy of documents or records (Depreciation expense on Fixed Assets; Accrued Interest; Footing)
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CH. 4 - AUDIT EVIDENCE PROCEDURES
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What is Reperformance in the procedures for obtaining audit evidence?
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The auditor's independent execution of procedures or controls that were originally performed as part of the internal control system. (A/R aging)
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CH. 4 - AUDIT EVIDENCE PROCEDURES
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What are Analytical Procedures in the procedures for obtaining audit evidence?
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Evaluations of financial information made by a study of plausible relationships among both financial and non-financial data.
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CH. 4 - AUDIT EVIDENCE PROCEDURES
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What is Scanning in the procedures for obtaining audit evidence?
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Review of accounting data to identify significant or unusual items.
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CH. 4 - AUDIT EVIDENCE PROCEDURES
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What is Audit Documentation?
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The auditor's principal record of the audit Procedures performed, Evidence obtained, and Conclusions reached.
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CH. 4 - AUDIT DOCUMENTATION
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What are the functions of audit documentation?
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1. To PROVIDE SUPPORT for the audit report.
2. To aid in the PLANNING, PERFORMANCE, AND SUPERVISION of the audit. |
CH. 4 - AUDIT DOCUMENTATION
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What are the requirements for audit documentation?
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1. Be prepared in SUFFICIENT DETAIL to enable an EXPERIENCED AUDITOR having no previous connection with the engagement to:
-- Understand the timing, nature, extent and results of procedures, evidence obtained and conclusions reached. -- Determine who performed the work, date of work, reviewer and date of review. 2. Should provide a clear link to SIGNIFICANT FINDINGS or ISSUES and: -- Demonstrate compliance with PCAOB standards -- Support basis for conclusions on every relevant assertion. -- Document that accounting records agree with financial statements. |
CH. 4 - AUDIT DOCUMENTATION
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What types of audit documentation files do accounting firms need to maintain?
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1. Permanent files - Corporate charter; Chart of accounts; Organization chart; Acct manual; Contracts; Internal control documentation; Prior years' analytical procedures
2. Current files - Audit plan, audit report; Audit programs; Working trial balance; minutes of meetings; Reclassification journal entries; Current financial statements. |
CH. 4 - AUDIT DOCUMENTATION
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What specific audit documentation should be included?
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1. Identification of ITEMS INSPECTED, CONFIRMED OR TESTED.
2. Inspected agreements should include ABSTRACTS OR COPIES. 3. CONTRADICTORY INFORMATION found by the auditor (Info that was identified related to significant findings that is INCONSISTENT WITH or CONTRADICTS the auditor's final conclusion; Procedures performed in response; Records documenting consultations; Anything that needs to be kept in the light of day) |
CH. 4 - AUDIT DOCUMENTATION
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How many years does documentation need to be retained?
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7 years from report release date
-- If no report, then from the last day of fieldwork ** THIS IS FOR PUBLIC COMPANIES** |
CH. 4 - DOCUMENTATION RETENTION
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What are the requirements for Adding to or Deleting from documentation?
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1. Additions must indicate the following:
** Date the information was added ** Name of preparer ** Reason 2. Documentation may not be deleted or discarded after report release date. |
CH. 4 - DOCUMENTATION RETENTION
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Who maintains ownership over Audit Documentation?
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Auditors maintain ownership, even after auditor-client relationship ends.
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CH. 4 - DOCUMENTATION
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What is the requirement for Confidentiality of Audit Documentation?
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Workpapers can only be made public
1. with PERMISSION, 2. or IF SUBPOENAED, 3. or as part of a PEER REVIEW OF FIRM PRACTICES, 4. or as part of an ETHICS INVESTIGATION OF FIRM PERSONNEL. |
CH. 4 - DOCUMENTATION
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