A&A Training - DAY 1

Cash

100

This is the definition of cash equivalents.

What are highly liquid investments that are easily convertible to cash (typically 3 months or less)?

200

This is the formula for a bank to book bank reconciliation.

What is:

Bank balance
Plus: Deposits in Transit
Minus: Outstanding Checks
+/- Reconciling Items

300

This is what you should tie confirmations out to when performing confirmation procedures.

What are the bank reconciliations and/or general ledger.

400

These are the items that you should scan the cash receipts and disbursements listing for.  

What are significant or unusual reconciling items?

500

Audit evidence is provided for this assertion when tracing deposits in transit to the subsequent bank register.  

What is the existence assertion?

Fixed Asset

100

This is the formula for net book value.

What is original cost minus accumulated depreciation?

200

With respect to total additions and disposals, this would result in an opening balance of $150k but an ending balance of $100k.

What is a greater amount of fixed asset disposals compared to fixed asset additions?

300

The reconciliation of DSW reports to the TB/fixed asset listings provides support for these 3 assertions.

Completeness, Valuation, and Accuracy/Classification

400

These are the items the DSW (Fixed Asset CS) reports are reconciled to.

PBC Fixed Asset Rollforward and the TB/GL

500

This is the result of the Company receiving less proceeds than net book value upon disposal of an asset.

What is a loss on sale of fixed assets?

Accounts Receivable

100

This is generally considered a required audit procedure for accounts receivable.

What are confirmation procedures?

200

What are the 2 requirements for a valid confirmation?

1. The confirmation needs to be sent/received from a 3rd party.

2. The sending and receiving of a confirmation needs to be controlled by the auditor.

300

This is the follow up after determining an AR confirmation will not be received.

What are alternative procedures?

400

This is the financial ratio obtained when you divide Sales by Average Accounts Receivable.

What is the AR turnover ratio?

500

This is the assertion that relates to testing the treatment of FOB destination and FOB destination sales.

What is the cutoff assertion?

General 101

100

These are the 6 assertions we test.

What are:
1. Existence/Occurrence
2. Completeness
3. Rights or Obligations
4. Valuation or Allocation
5. Accuracy or Classification
6. Cutoff

200

This is one of the first steps in an audit.

What is obtaining an understanding of of the client and their industry?

300

This is the side a tickmark should be placed when tracing the balance from a workpaper to another workpaper.

What is the right side?

400

Verifying bank balances against what is shown on the bank accounts online portal is an example of this procedure.

What are alternative procedures?

500

Fixed Asset Cost Basis divided by Depreciation Expense provides this calculation.

Average useful life of the fixed asset group.

General 102

100

This would be considered one of the highest/strongest forms of audit evidence.

What is a confirmation?

200

Brick and mortar retail companies generally would not have a large balance in this account.

What is accounts receivable?

300

This is the assumed risk for revenues and AR.

What is a fraud risk?

400

Variances/exceptions noted on a sample population should be projected to this balance.

What is the sample population?

500

This is a positive confirmation request.

What is a request that the confirming party respond directly to the auditor by providing the requested information or indicating whether the confirming party agrees or disagrees with the information in the request?