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20 Cards in this Set

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Analytical Procedures
Use of comparisons and relationships to assess whether account balances or other data appear reasonable.
Balance-related audit objectives
8 objectives that have to be met before the auditor can conclude that any given account balance is fairly stated.
8 Balance Related Audit Objectives
Existence, Completeness, Accuracy, Classification, Cut off, Detail, Tie-in, Realizable value, rights and obligations
Cycle Approach
A method of dividing an audit by keeping closely related types of transactions and account balances in the same segment.
Error
An unintentional misstatement of the financial statements.
Management Assertions
Implied or expressed representations by management about classes of transactions, related account balances, and presentation and disclosures of the financial statements.
Misappropriation of Assets
A fraud involving the theft of an entity's assets.
4 Phases of the Audit Plan
Plan and Design and Audit Approach

Perform tests of controls and substantive tests of transactions.

Perform analytical procedures and tests of details of balances

Complete the audit and issue an audit report.
Presentation and Disclosure Related Audit Objectives
Occurrence and rights and obligations , completeness, accuracy, and valuation, and classification and understandability.
Relevant Assertions
Whether an account is fairly stated and used to assess the risk of material misstatement
Analytical Procedures
Understand the clients industry and environment

Assess the entity's ability to continue as a going concern.

Indicate the presence of possible misstatements in the financial statements.

Reduce detailed audit tests.
Reperformance
Independent test of accounting procedures or controls that were originally done.
Types of Evidence
Examine - Documentation
Scan- Analytical Procedures
Read- Documentation
Compute- Analytical procedures
Recompute- Recalculation
Foot- Documentation / Reperformance
Trace- Documentation / Reperformance
Compare- Documenation
Count- Physical Examination
Vouch- Documentation
Cost of Types of Evidence
Most Expensive - Confirm and Examine

Moderate Cost- Documentation, Analytical procedures, and reperformance

Least Expensive- Observation, inquiries, and recalculation.
Audit Documentation
The principal record of auditing procedures applied, evidence obtained, and conclusions reached by the auditor in the engagement.
Audit Documentation Facts
3 Parts: Purposes of audit documentation, ownership of audi files, and confidentiality of audit files.

Must keep papers for public company for 7 years. Private - 5 years
Permanent Files
Files intended to contain data of a historical or continuing nature pertinent to the current audit.
Audit Program
List of audit procedures for an audit area or an entire audit. Always includes audit procedures and may include sample sizes, items to select, and timing of the tests.
Acceptable Audit Risk
How willing the auditor is to accept that the financial statements are materially misstated after the audit is completed and an unqualified opinion has been issues.
Inherent Risk
A measure of the auditors assessment of the likihood that there are material misstatement in an account balance before considering the effectiveness of internal control.