Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
20 Cards in this Set
- Front
- Back
|
3 reasons why an auditor should properly plan engagements
|
1. Keep costs reasonable
2. Enable the audior to obtain sufficient appropriate evidence for the circumstances 3. Avoid misunderstandings with client |
|
|
Planning and Audit and Designing an Audit Approach
|
1. Accept client and perform initial audit planning
2. Understand client's business and industry 3. Assess client's business risk 4. Perform preliminary analytical procedures 5. Set materiality and assess acceptable audit risk and inherent risk 6. Understand internal control and assess control risk 7. Gather information to assess fraud risks 8. Develop an overall audit plan and audit program |
|
|
Acceptable audit risk
|
a measure of how willing the auditor is to accept that the financial statements may be materially misstated after the audit is complete and an unqualified opinion is given
- 0 risk is certainty - 100 is complete uncertainty |
|
|
Inherent Risk
|
Measure of the auditor's assessment of the likelihood that there are material misstatements in an account balance before considering the effectiveness of IC
|
|
|
Client Risk
|
the risk the client will fail to meet its objectives
|
|
|
Initial audit planning
4 things the auditor does early in the audit |
1. Whether to accept a new client or serve an exisiting one
2. Auditor idenitifies why the client wants or needs the audit 3. Auditor obtains misunderstandings with the client about the terms of engagements 4. Auditor develops overall strategy for the audit - outside specialists |
|
|
Understand the client's business and industry : what GAAS principal
|
Auditor must obtain sufficient understanding of the entity and its environment, including internal control
|
|
|
3 reasons for obtaining good understanding of client's industry and external environment
|
1. risk associated with specific industries may affect the auditor's assessment of client business risk
2. Many inherent risk common to all clients in certain areas 3. many industries have unique accounting procedures |
|
|
Related party
|
must be disclosed according to GAAP
|
|
|
Preliminary anayltical proceedures
|
to better understand client busines and assess client business risk
|
|
|
3 reasons why an auditor should properly plan engagements
|
1. Keep costs reasonable
2. Enable the audior to obtain sufficient appropriate evidence for the circumstances 3. Avoid misunderstandings with client |
|
|
Planning and Audit and Designing an Audit Approach
|
1. Accept client and perform initial audit planning
2. Understand client's business and industry 3. Assess client's business risk 4. Perform preliminary analytical procedures 5. Set materiality and assess acceptable audit risk and inherent risk 6. Understand internal control and assess control risk 7. Gather information to assess fraud risks 8. Develop an overall audit plan and audit program |
|
|
Acceptable audit risk
|
a measure of how willing the auditor is to accept that the financial statements may be materially misstated after the audit is complete and an unqualified opinion is given
- 0 risk is certainty - 100 is complete uncertainty |
|
|
Inherent Risk
|
Measure of the auditor's assessment of the likelihood that there are material misstatements in an account balance before considering the effectiveness of IC
|
|
|
Client Risk
|
the risk the client will fail to meet its objectives
|
|
|
Initial audit planning
4 things the auditor does early in the audit |
1. Whether to accept a new client or serve an exisiting one
2. Auditor idenitifies why the client wants or needs the audit 3. Auditor obtains misunderstandings with the client about the terms of engagements 4. Auditor develops overall strategy for the audit - outside specialists |
|
|
Understand the client's business and industry : what GAAS principal
|
Auditor must obtain sufficient understanding of the entity and its environment, including internal control
|
|
|
3 reasons for obtaining good understanding of client's industry and external environment
|
1. risk associated with specific industries may affect the auditor's assessment of client business risk
2. Many inherent risk common to all clients in certain areas 3. many industries have unique accounting procedures |
|
|
Related party
|
must be disclosed according to GAAP
|
|
|
Preliminary anayltical proceedures
|
to better understand client busines and assess client business risk
|
