Chapter 6
The component of Internal Control that centers around ..."information that is necessary to carry out internal control objectives".
What is INFORMATION AND COMMUNICATION?
The term used to refer to the probability that a misstatement will not be prevented or detected
What is LIKELIHOOD?
This type of confirmation requests that the customer indicate whether or not it is in agreement with the amount due to the entity stated in the confirmation.
What is POSITIVE CONFIRMATION?
A purchase requisition, purchase order, receiving report, and invoice...together they are called this.
What is a VOUCHER PACKET?
An existing condition, situation, or set of circumstances involving uncertainty as to possible loss to an entity that ultimately will be resolved when some future event occurs or fails to occur.
What is a contingent liability?
The component of internal control that sets the standards, processes, and structures, that provide the basis for carrying out internal controls across the organization.
What is CONTROL ENVIRONMENT?
The term that refers to the amount of a potential misstatement that could result from the control deficiency according to the judgment of a prudent official who considers the possibility of further, undetected, misstatements.
What is MAGNITUDE?
Step 5 in the Revenue Recognition model says that you should recognize revenue when the entity satisfies this.
What is a performance obligation?
Depreciation is an example of this type of expense.
What is SYSTEMATIC ALLOCATION?
an event or transaction that occurs after the balance sheet date but prior to the issuance of the financial statements and the auditor’s reports that may materially affect the financial statement.
What is a subsequent event?
The component of internal control that includes actions established by policies and procedures that are used to ensure management's directives are being carried out.
What are CONTROL ACTIVITIES?
This is an audit procedure that involves tracing a transaction through the information system to its final posting in the financial statements.
What is a WALKTHROUGH?
What is a RELIANCE strategy?
A confirmation request where the recipient fills in the amount or supplies the information requested.
What is a BLANK or ZERO-BALANCE confirmation?
These types of events existed at the balance sheet date and require adjustment.
What is Type 1?
The component of Internal Control that includes the ongoing evaluation or combination of evaluations used to ascertain whether internal controls are present and functioning.
What is MONITORING?
If the scope of the auditor’s work is limited and of more than a minor effect, the auditor may issue this type of report.
What is a DISCLAIMER?
The process of covering a cash shortage by applying cash from one customer's accounts receivable to another customer's accounts receivable.
What is LAPPING?
Test transactions around year-end to ensure they are included in the correct period would primarily test which assertion.
What is CUT-OFF?
The purpose of this letter is to document, in writing, significant oral representations made to the auditor by management.
What is a management representation letter?
The component of internal control that includes a dynamic process used to identify possible problems that could exist and keep the organization from meeting its objectives
What is the RISK ASSESSMENT PROCESS?
A control deviation caused by an employee performing a control procedure that he or she is not authorized to perform.
What is a DEFICIENCY IN OPERATIONS?
In evaluating the adequacy of the allowance for doubtful accounts, an auditor most likely reviews the entity’s aging of receivables to support this assertion.
What is VALUATION?
This expenditure cycle auditing procedures is least likely to be performed before the balance sheet date.
What is the SEARCH FOR UNRECORDED LIABILITIES?
The maximum number of days before audit working papers are required to be archived.
What is 45?