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36 Cards in this Set
- Front
- Back
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Who is the audit Committee |
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Those charged with governance |
Who are the "Board of Directors' & "Audit Committee" |
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Near of after year-end (TIMING) |
When is the auditor allowed to accept and engagement |
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Determines whether to perform and audit, review or compilation |
What does the auditor of a nonissuer determine |
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Performs intergrated audits |
What is audit of an issuer : Internal control and Financial Statements |
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Part of the Pre-acceptance of an audit |
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What is diclaimer of opinion |
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Required content of an engagement letter |
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Recurring Audit |
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US require that the auditor to review terms of the engagement each year. ISA, assesses the need to remind client |
What is ISA vs US Auditing Standards |
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1. Information on Management integrity 2. Disagreement with management over accounting principals 3. Predecessors understanding for reason for change 4. Communication to management , the audit committee about fraud and illegal acts
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Why communicate with the predecessor auditor before engagement |
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Does not address auditors communication with predecessor in initial and reaudit |
ISA |
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Inability for the auditor to obtain sufficient appropriate evidence regarding opening balances |
QUALIFIED or DISCLAIMER (GAAS) |
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1. Opening balances contain Misstatements that materially affect the current period 2. Current period balance are not consistently applied regarding opening balances 3. A change in accounting policy is not properly applied or presented or disclosed
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QUALIFIED or ADVERSE (GAAP) |
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The engagement partner and other key member should be involved : |
1. Planning the audit 2. Supervising the work of members 3. Compliance with relevant standards |
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Nature Extent and Timing |
Written and well documented overall audit strategy |
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If a substantial likelihood that the fact would have been viewed by the reasonable investor as having significantly altered the total mix of information available |
Materiality per the supreme court |
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use the smallest level of misstatement that could be material |
How the auditor assesses materially |
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1. Classes of Transactions 2. Account Balance 3. Disclosure |
What is the 3 cycle test of testing materiality |
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A written audit plan |
What is the Nature, Extent and Timing (Specific documentation required) |
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Test of controls |
Used to evaluate the operating effectiveness of the internal controls in preventing and detecting material misstatement |
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Six assertions made by Management (Financial Statement) |
1. Competeness 2. Cutoff 3. Valuation, Allocation and Accuracy 4. Existence 5. Rights & Obligations 6. Understandability and Classification
COVERU
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PCAOB Assertions are |
1.Completeness 2. Existence 3. Occurance 4. Allocation 5. Presentation 6. Rights 7. Obligations 8. Valuation 9. E 10. Disclosure
CEO APPROVED |
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Inventories included in the balance physically exist (EXISTENCE)
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What is existence assertion in regards to inventory |
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Inventories quantities included all inventories on Hand (COMPLETENESS) |
What is existence assertion in regards to inventory |
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When external auditor decides to make reference of external auditors work |
Access the education, competency, objectivity, organization level
__________________ The external auditor in this case bears all responsibility |
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1. Used for valued restricted work 2, Determine physical characteristics e.g. minerals , fungible goods 3. Complex estimates 4. Auditor should agree the NET with the auditor 5. Treat them like one of your employees |
Auditor Specialist |
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the risk that the auditor will issue the wrong opinion |
Audit risk model |
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RISK OF MATERIAL MISSTATEMENT (RMM) |
AR=RMM*DR |
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RMM & DM |
Have an inverse Rship. |
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RMM & Substantive procedures |
Have a direct relationship |
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This is susceptibility of relevant assertion to a material misstatement assuming there is no related records e.g. High volume transactions or complex transactions technological developments etc |
INHERENT RISK |
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Is the risk that material mistatement that could could occur in a relevant assertion will not be detected or corrected in a timely basis.. |
CONTROL RISK |
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The risk that the auditor will not detect a MM that exists |
DETECTION RISK |
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Have an inverse relationship |
RMM & DR |
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