Assertions
This assertion requires auditors to assess whether disclosures are clearly described and appropriately classified in the financial statements.
What is Presentation and Disclosure?
This document outlines the auditor’s specific procedures, including tests of controls and substantive tests to be performed.
What is the Audit Plan?
This risk reflects the susceptibility of an account to material misstatement without considering controls.
What is Inherent Risk?
According to the Sarbanes-Oxley Act of 2002, this group is responsible for selecting and overseeing the external auditor.
What is the Audit Committee?
This body sets standards for audits of private companies.
What is the AICPA (ASB)?
Just as the existence assertion relates to the balance sheet, this assertion relates to the income statement.
What is occurence?
This letter, prepared annually, serves as a contract between the auditor and client.
What is an Engagement Letter?
The risk that that the information disseminated by a company will be materially false or misleading.
What is Information risk?
This principle prevents one person from having both custody of assets and the authority to record them.
What is Segregation of Duties?
When considering independence, this type of independence is most important because it helps maintain public confidence in auditors’ ability to remain objective.
What is Independence in Appearance?
When auditing accounts receivable, this assertion is tested by reviewing the adequacy of the allowance for doubtful accounts and ensuring receivables are stated at net realizable value.
What is valuation and allocation?
Financial statements are not in conformity with GAAP.
What is adverse opinion?
This component of detection risk relates to the possibility that the conclusion related to the testing differs from the conclusion that would have been made had the auditor tested 100% of the population.
What is sampling risk?
It’s the responsibility of _______ to maintain ICFR, assess and report on effectiveness of internal controls.
What is Management?
Collectively, pronouncements from AICPA and PCAOB are referred to as this.
What are Generally Accepted Auditing Standards (GAAS)?
This assertion is primarily concerned with whether all transactions have been accounted for in the proper period.
What is completeness?
These What 2 concepts,things relate to the quality of audit evidence and how much assurance the auditor can place on it.
What is relevance and reliability?
Model helps auditors decide how much and what type of evidence to collect for each audit area.
What is Audit risk model?
Even if internal controls are properly designed, they are subject to the limitations of human error, management override, and this.
What is collusion?
The three fundamental principles of GAAS include responsibilities, performance, and ____.
What is Reporting?
This assertion asks whether the client has a legal responsibility for the liabilities and/or expenses.
What is Rights & obligations?
This represents the maximum error in a population that the auditor is willing to accept. It applies when designing a sampling procedure, such as setting a threshold for an individual account based on a percentage of the overall limit.
What is tolerable misstatement?
The formula for the audit risk model is this.
What is AR = IR × CR × DR?
(AR = RMM X DR)
This component of the COSO framework considers the tone at the top and corporate culture.
What is control environment?
PCAOB inspections are required this frequently for firms that audit more than 100 public clients.
What is annually?