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Sampling
Testing Sales/AR
Testing Inventory
Completing the Audit
Audit Reports
100
Testing less than 100 percent of a population for the purpose of making inferences about that population
What is audit sampling
100
Listing of the balances in the accounts receivable master file at the balance sheet date, broken down according to the amount of time passed between the date of sale and the balance sheet date.
What is an Aged Trial Balance
100

A continuously updated record of inventory items purchased, used, sold and one hand for raw materials and finished goods inventory

What is a (Perpetual) Inventory Master File

100
A potential future obligation to an outside party for an (un)known amount resulting from activities that have already taken place
What is Contingent Liability
100
The report a CPA issues when all auditing conditions have been met, no significant misstatements have been discovered and left uncorrected, and it is the auditor's opinion that the financial statements are fairly stated in accordance with GAAP (or with an ICFR framework).
What is a Standard Unmodified Opinion
200
A sample with characteristics the same as those of the population
What is a Representative Sample
200

A letter, addressed to a recipient, requesting a response only if the recipient disagrees with the amount of the stated account balance

What is a Negative Confirmation

200

Auditors are required by auditing standards to do this in order to determine whether recorded inventory actually exists at the balance sheet data and is correctly counted by the client.

What is Physically Observe Inventory Count

200
Review of transactions and events that occurred after the balance sheet date to determine whether any of these transactions or events affect the presentation or disclosure of the current period statements
What is Review of Subsequent Events
200
An unmodified opinion in which the financial statements are fairly presented but the auditor believes it is important to provide additional information in a new paragraph, or wording in other paragraphs require revision
What is Unmodified Opinion with Emphasis-of-Matter Paragraph (or Non-standard wording)
300
Risk of reaching an incorrect conclusion inherent in sampling because the sample is not representative of the population
What is Sampling Risk
300
A letter, addressed to a recipient, requesting that the recipient indicate whether the stated balance is correct or incorrect and, if incorrect, by what amount and why
What is a Positive Confirmation (Note: A BLANK Confirmation asks the recipient to fill in the amount of the balance)
300

When auditors compare gross margin or inventory turnover at the balance sheet date with previous years, they are performing what type of audit procedures

What are Substantive Analytical Procedures of Inventory

300
An auditor's evaluation of whether there is a substantial doubt about a client's ability to continue operating for at least one year beyond the balance sheet date.
What is Going Concern Evaluation
300
A report issued when the auditor believes that the overall financial statements are fairly stated but that either the scope of the audit was limited or the financial data indicated a failure to follow GAAP
What is a Qualified Opinion
400
A sample in which every possible combination of elements in the population has an equal chance of being in the sample
What is a Random Sample
400
A reported difference in a confirmation that is determined to be related to differences in when the client and the recipient record and receive transactions
What is a Timing Difference Example: Client shipped goods that customer hasn't yet received (in transit), Customer sent a check that client hasn't yet been received, etc.
400

Procedures performed when auditors verify that perpetual record quantities (RM and FG) are accurately compiled they are performing what kind of test

What is Inventory Price Testing

400
Audit team and audit firm review of the audit documentation for the entire audit to determine whether all material classes of transactions, accounts and disclosures have been adequately tested
What is Audit Documentation Review
400
A report issued when the auditor is not able to be satisfied that the overall financial statements are fairly presented or the auditor is not independent
What is a Disclaimer of Opinion
500
Percent of items in that deviate from prescribed controls or represent errors in monetary correctness
What is an exception rate (estimated population exception rate versus tolerable exception rate versus sample exception rate)
500
Follow-up procedures performed when a positive confirmation is either not returned by the recipient or when the amount confirmed does not agree to the AR balance (i.e., review of subsequent cash receipts, shipping documents, etc)
What are Alternative Procedures
500

In performing inventory price testing, auditors are meeting which audit objective when they consider whether inventory is recorded at net realizable value (e.g. the lower of cost or market).

What is Valuation

500
Written representations from management that document management's responsibility for financial statement assertions, their knowledge of potential misstatements or omissions, and their responses to various inquiries of the auditor.
What is a Management Representation Letter
500
A report issued when then auditor believes the financial statements are so materially misstated or misleading as a whole that they do not present fairly the entity's financial statements in conformity with GAAP
What is an Adverse Opinion