SAP
are SAPs alone enough evidence for private companies?
alone may be persuasive evidence and may not have to perform additional test of details.
what 4 things must be included for something to be a contract?
be approved by both parties, identify each party's rights, identify pmt terms, have commercial substance collectability is probable.
can you define a level 3 fair value? and give one example
valuation based on mgmts best judgement and involvement mgmt assumptions. real estate, private-equity investments
how do you calculate sampling interval?
population/sample size
what is included in the test of details for cash?
confirmation, bank rec
more precise= _____________level of assurance, _______________ in detection risk, ___________ inherent risk
greater, decrease, higher
list the steps in the revenue recognition model
ISTAR
what is a market approach?
base asset of similar asset in the market
if you have 95% confidence, what does the other 5% stand for?
risk of incorrect acceptance
when are confirms for AR used for private and public?
almost always required
the degree of desired precision will vary based on: name at least 3
audit materiality, desired level of assurance, level of data aggregation, plausibility/predictability, data reliability, type of analytical procedure being used.
what two things have to be met to make a good/service distnict?
customer can benefit from the good/service either on its own or together wi/ other resources that are readily. not highly interrelated to other goods/services in the contract.
what level of fair value is a mortgage?
sampling typically used to test the ________ of assertions about a Financial stmt
reasonableness
what assertions are most relevant for AR
existence or occurence
if the difference btw expected and recorded amounts is more than the tolerable difference what happens?
we investigate. need to corroborate and quantify
what types of industries might have higher inherent risk?
aerospace, automotive, communications, engineering, construction, entertainment, media, Pharma, biotech, tech
what does an auditor employed specialist do?
Extend auditor’s review of the specialist’s work
More carefully communicate requirements to specialist
if UML is over Tm, what should auditor do?
- increase the sample size
-Perform other substantive procedures
- Request the entity adjust/scrub the accounts receivable balance
what is primary assertion being tested for inventory?
existence
analytical procedures are used for a couple of purposes, which ones are required?
planning and overall review
with new processes, control risk______________, detection risk will__________, leading to ________work
increase, decrease, more
to test mgmt process, what should one do?
if no misstatements are found in the sample, the best estimate of the population misstatement would be
zero dollars.
what would be a test for deposits in transit?
cutoff bank stmt, January bank stmt