Internal Controls Risk Assessment
This includes factors, events, and conditions that could prevent the organization from achieving its business objectives.
What is business risk?
What is a client bank statement (usually sent directly to the auditor) that includes all paid checks and deposits made through a certain date, usually a specific date following the financial statement.
What is the cut-off bank statement?
This type of confirmation does not provide the balance to the recipient.
What is a blank confirmation?
This is an internal document used to ask the purchasing department to buy specific goods or services.
What is a purchase requisition?
An auditor is examining this when they determine if controls would be expected to prevent or detect errors or fraud that could result in a material misstatement in the financial statements.
What is design effectiveness?
This document is used to verify the existence of deposits and outstanding loans held with a bank.
What is a standard bank confirmation?
This type of confirmation is only returned if there is a discrepancy.
What is a negative confirmation?
This is the assertion we are most concerned with when auditing Accounts Payable.
What is completeness?
This is an audit documentation that provides a visual display of the accounting system and control activities in an entity's internal control.
What is a flowchart?
This is an unintentional misstatement or omission of amounts or disclosures in financial statements.
What is an error?
This type of confirmation would be the most appropriate when RMM is high, and we think the recipient will verify the accuracy of the information.
What is a positive confirmaiton?
This is a common test completed by comparing cash payments after year end with the accounts payable listing at year-end to verify nothing was missing from the accounts payable listing.
What is search for unrecorded liabilities?
This is the concept that recognize that the costs of control activities should not exceed the benefits that are expected from the control activity.
This is a reconciliation in which the bank balance, the bank report of cash deposited, and the bank report of cash paid are all reconciled to the company's general ledger and cash receipts and disbursements journals.
What is proof of cash?
This is an audit procedure that simultaneously serves the substantive purpose (obtain evidence about the dollar amount in an account balance) and the test of controls purpose (obtain evidence about the company's performance of its own control activities).
What is a dual-purpose procedure?
An auditor will choose a sample from this population to determine whether accounts payable are complete, by verifying that all merchandise received has been recorded.
What is Receiving Reports?
This process traces a transaction through the audit trail from initiation of the transaction to its inclusion in the financial statements.
What is a walkthrough?
This is the theft of a payment and the application of subsequent payments to cover the theft.
This is a fraudulent financial reporting activity by which a company recognizes a sale even though it doesn't ship merchandise to the customer, byt holds it in its own warehouse.
What is bill and hold?
This is a document package that shows approvals, accounts, and amounts recorded, usually containing purchase order, receiving report, and vendor invoices.
What is a voucher or voucher package?