Help
Options
Didn't know it?
click below
click below
Knew it?
click below
click below
Don't Know
Remaining cards (0)
Know
retry
shuffle
restart
0:00
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.
Normal Size Small Size show me how
Normal Size Small Size show me how
Audit uni
| Question | Answer |
|---|---|
| what should firm do if prohibited by ethical standards | refuse |
| different threats | self interest, self review, advocacy, familiarity, management |
| self interest | firm or team mate may benefit from financial interest, may be reluctant to modify report |
| Advocacy threat | perceived to be supporting managements views - es5 prohibits firm from acting as advocate before appeal |
| self review | reluctant to modify report - reflects badly May place to much reliance on their work |
| Familiarity | may be to trusting - lack of professional scepticism - may keep familiar workers together with correct safeguard - keeps knowledge of company |
| safeguards | perform independent audit review,, mandatory partner rotation, separate groups, training |
| gross profit margin | gross profit/revenue x 100 |
| trade payables payment method | trade payables/cost of sales x 365 |
| reasons for changing gross profit | change of supplier/prices, changes in demand, change in sales mix, inaccurate cut off procedure - misstates purchases and trade payable - includes or excludes sales costs |
| reduction in payable days | new supplier - shorter payment term, unrecorded liabilities - received not invoiced - inaccurate cut off, wrong classification |
| increase payable days | increase payment term, delaying payments to increase cash flow, unable to pay |
| Revenue changes | exchange rates, cost of raw materials, sales price, demand |
| control system limitations | Human error, collusion to avoid regulations, unusual transactions |
| types of control | Preventative, detective |
| inventory counts | training, count sheets, separation of responsibilities- non warehouse staff, labelling, post count procedures |
| Accurate data entry | record clearly - verification and sign off by senior team members |
| Inventory sheets | include inventory records - bias to agree with figure |
| Audit committee | sub-committee of board of directors oversee entities internal control structure |
| Types of control activity | Authorisation, segregation of duties, performance reviews, physical controls, info processing |
| revenue overstated | profit targets - inaccurate cut off - invalid sales included - long term contract timing |
| revenue understated | reduce profit avoid tax, fraud to steal cash, cut of sales not recognised - long term contracts |
| Sales documents | sales order form, goods delivery note, sales invoice, sale credit note |
| order risks | customers unable to pay or take long to pay, inaccurate recording loss of customers, sales made with inadequate inventory |
| order control objectives | check credit ratings, encourage fast payment, only take sales when inventory available, correct recording |
| ways to achieve order objectives | segregation of duties, different departments for invoicing credit control etc, authorisation, references to credit, customer data |
| delivery/invoicing risks | poor quality goods despatched, despatched but not recorded, despatched but not invoiced for |
| Dispatch/invoicing controls | Dispatches recorded with GND, GND matched with order form, goods checked before delivery, customers sign GND quality and qty |
| Recording risks | sales not properly recorded, recorded in wrong customer accounts, credit notes not properly recorded |
| Controls recording | safeguarding trade receivable statements so can be altered, check statements, authorisation writing off bad debts |
| Deficiencies | wrong controls, right controls implemented poorly, no controls |
Created by:
TDuck