Terms
What's another type of service an auditor can provide aside from doing a full-scope audit?
Review, compilation, etc.
What are two reports you need to test AP?
Subsequent disbursement listing, AP Aging, Subsequent AP Aging, etc.
What are two things that affect retained earnings?
What is an example of a non-current asset?
Goodwill, PPE, etc.
What is an example of a prepaid?
Prepaid rent
Minimum number of years you have to keep accounting records for?
7 years
What expense are we testing with PPE testing?
Depreciation expense
What are the three sections of the SOCF?
Operating, investing and financing
What is an example of an accrual? Describe and set the scene for it.
Accrued payroll. Earned prior to year-end but paid after.
What's the term for when financial statements show multiple years?
Comparative
What does AICPA stand for?
American Institute of Certified Public Accountants
What is our main concern with inventory as to why we do testing over it?
What is one sampling technique used in auditing?
Monetary unit sampling; random sample; etc.
What type of account is unearned revenue?
Liability
Name a type of audit opinion and what does it mean.
Unqualified - meaning clean opinion... reasonable assurance that there are no material misstatements
Bill of Lading
What is the term for what we use to determine if we need to look into an account or not (dollar value wise)?
Materiality
Describe two things we do in auditing cash
Confirm (material) balances; obtain bank reconciliations; tie book to bank balances; etc.
Property or items of value owned by a business
What is assets?
What's an example of an analytic we could use in audit testing and what does it tell us?
Inventory turnover - how fast inventory is turning and how quickly a company is able to cycle through their products on hand
What does PCAOB stand for?
Public Company Accounting Oversight Board
How do we test for purchased versus manufactured inventory?
Obtain invoices for purchased inventory versus BOM testing for manufactured
Name two assertions in auditing and a place where we would test for each of them (what area of the audit)
Cutoff - revenue; accuracy - inventory; etc.
What is the private company alternative for amortizing goodwill?
PCC alternative is amortizing goodwill over 10 years or less if you an demonstrate another useful life is more appropriate