INTRO TO AUDIT
This risk occurs when there is a possibility that communications produced and handed out by a company will be misleading and/or material.
What is Information Risk?
This governmental act established management’s responsibility in maintaining adequate internal controls over financial reporting and for them to assess and report on its effectiveness.
What is the Sarbanes-Oxley Act of 2002?
During this phase of the audit, the auditors will determine materiality, ensure appropriate staffing for the engagement, and outline audit procedures expected to be used to mitigate and assess risk.
What is the engagement planning phase?
This type of fraud is done by employees and includes acts of embezzlement, larceny, and defalcation.
What is misappropriation of assets?
An auditor reviews the allowance for doubtful accounts to determine whether accounts receivable are properly adjusted for potential uncollectible amounts. This procedure tests this financial statement assertion.
What is valuation & allocation?
While this audit procedure is a valid source of evidence, it provides low reliability and should never be used as the sole basis for conclusions.
What is inquiry?
This is an engagement that exclusively examines the assertions within financial statements and related information.
What is an Audit?
This professional board registers public accounting firms, inspects the quality of audits, and establishes standards for audits of issuers.
What is the PCAOB?
When considering engaging with a new client , this is an essential first step for a new auditor to help assess the client's management integrity and gain insights from prior audits.
What is attempting to communicate with the predecessor auditor?
This required activity during an audit sets the tone for an engagement and discusses how fraud could be carried out and hidden within the company being audited.
What is fraud brainstorming?
This term describes individuals or entities that have the potential to impact, or be impacted by, the company's decisions, often due to familial relationships or financial interests with the company.
What is Related Parties?
When an auditor selects a sample of sales invoices from the financial records and from those selections, obtains and examines supporting shipping documents and customer orders to confirm that recorded sales actually occurred, they are performing this type of audit procedure.
What is vouching?
(Test of details is also acceptable)
This specific type of assurance service involves issuing a report on the reliability of an assertion made by another party, covering areas beyond just financial statement audits, such as compliance with environmental regulations.
What is Attestation?
This type of audit opinion is issued when financial statements are in conformity with GAAP, except for limited items.
What is Qualified?
When relying on the work of internal audit, one must assess their competence and objectivity, as well as these TWO factors, as it relates to the work to be undertaken.
What is judgment required and risk?
This risk, found within the audit risk model, is the product of inherent risk and control risk and cannot be controlled by the auditor.
What is risk of material misstatement?
To test this assertion, an auditor selects receiving reports from the warehouse records filing cabinets and agrees them to recorded inventory purchases in the accounting records.
What is completeness?
This type of audit procedure involves comparing financial data across periods or to industry benchmarks to identify unusual trends or variances.
What is substantive analytics.
This risk represents the possibility that a business will fail to meet its objectives
What is business risk?
This concept refers to the public’s assurance that an auditor’s decisions are free from bias, based on observable conditions rather than actual conflicts of interest.
What is Independence in Appearance?
Work completed during this time of year is done several weeks or months before the balance sheet date and is rolled forward at year-end.
What is interim?
An auditor assessed a company’s inherent risk as high and observed multiple failures in the company’s controls. Accordingly, the auditor should set detection risk at this level.
What is Low?
An auditor selects a sample of transactions and misinterprets the results. As a result, the auditor incorrectly concludes that a material misstatement does not exist when it actually does. This is an example of this type of detection risk.
What is sampling risk?
This audit procedure involves obtaining direct written verification from external parties, such as banks or customers, to confirm account balances.
What is confirmation?
This type of financial statement services, as discussed in class, provides the highest level of assurance.
What is an audit?
Assuring that 1) auditors remain independent and 2) exercise the appropriate due care fall under this fundamental principle of GAAS.
What is responsibilities?
This term refers to the written record of the auditors’ conclusions and is used to improve audit quality and enhance public confidence.
What is audit documentation?
This risk in the audit risk model, is the one risk that auditors have control over and can set as appropriate based on other observeable factors.
What is detection risk?
An auditor increases the number of transactions sampled, shifts testing closer to year-end, and selects more reliable sources of evidence to respond to an increased risk of material misstatement. These adjustments reflect changes to these three key factors.
What is nature, extent, and timing?
This audit procedure involves the auditor independently executing a client’s control process to assess its effectiveness, such as redoing a bank reconciliation.
What is reperformance?