Audit Quiz 3
Quiz yourself by thinking what should be in
each of the black spaces below before clicking
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show | expressed or implied representations by management regarding the recognition, measurement, presentation, and disclosure of information on the financial statements
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show | assets or liabilities of the company exist at a given date and recorded transactions have occurred during a given period
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show | existence or occurrence
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show | completeness
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what is completeness | show 🗑
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what is valuation or allocation | show 🗑
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show | the company holds or controls rights to the assets and liabilities are obligations of the company at a given date
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what is presentation and disclosure | show 🗑
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how would you confirm a company's disclosures for a machine are correct? (presentation and disclosure) | show 🗑
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show | - inspect purchase invoices
- recalculate depreciation expense
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how would you confirm existence for a company's accounts receivable? | show 🗑
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how would you confirm rights and obligations for a company's accounts receivable? | show 🗑
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show | test the allowance for doubtful accounts
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why is completeness not a big risk for accounts receivable? | show 🗑
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show | all the information from whatever source used by the auditor in arriving at the conclusions on which the audit opinion is based
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show | 1. nature of audit evidence
2. sufficiency and appropriateness of audit evidence
3. evaluation of audit evidence
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what are the different natures of audit evidence you can use? | show 🗑
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show | measure of the quantity of audit evidence
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show | greater risk of misstatement requires a higher quantity of audit evidence
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show | higher quality audit evidence results in a lower quantity of audit evidence
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what is appropriateness | show 🗑
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what is relevance | show 🗑
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show | refers to whether a particular type of evidence can be relied upon to signal the true state of an assertion
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how does the source of the evidence relate to reliability? | show 🗑
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how do the effectiveness of internal controls relate to reliability? | show 🗑
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show | direct observation of evidence is better than evidence obtained indirectly
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show | evidence that is tangible in document form is better than oral representation
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how do original documents relate to reliability? | show 🗑
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show | auditor should rely on evidence that is persuasive rather than convincing/conclusive -- auditors can't 100% guarantee their opinion so evidence should point/persuade them in a particular direction
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show | specific acts performed by the auditor to gather evidence about whether specific assertions are being met
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what is an audit program? | show 🗑
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show | 1. risk assessment procedures
2. tests of controls
3. substantive procedures
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what are the 2 parts of substantive procedures? | show 🗑
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why is inspection of records and documents important? | show 🗑
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show | comparing journal/ledger to source documents
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what direction does tracing/completeness go | show 🗑
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what does inspection of tangible assets involve and what assertions does it test | show 🗑
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what does observation involve? | show 🗑
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what does inquiry involve? | show 🗑
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what does confirmation involve? | show 🗑
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show | determining the mathematical accuracy of documents or records
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show | auditor's independent execution of procedures or controls that were originally performed by company personnel
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what are examples of accounts that auditors would test with recalculation | show 🗑
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show | aging of accounts receivable, agreeing total of subsidiary and general ledgers, test counting raw material, tracing billing program price use
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show | evaluations of financial information made by a study of plausible relationships among financial and non financial data
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show | reviewing accounting data to identify significant or unusual items
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show | inspection of tangible assets, reperformanc,e recalculation
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which 2 evidence types have lower reliability? | show 🗑
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show | inspection of documents; completeness
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show | recalculation; valuation
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show | inspection; presentation/disclosure
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show | observation; completeness
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show | inquiry; valuation
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type of audit evidence and assertion: vouch entries in sales journal to sales invoices and related shipping documents | show 🗑
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show | companies are motivated to understate liabilities
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why is existence/occurrence a greater risk for an asset account? | show 🗑
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what are the 3 functions of audit documentation? | show 🗑
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show | used to assist the auditor to better understand the business and to plan the nature, timing, and extent of audit procedures
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show | used to obtain evidential matter about particular assertions related to account balances or classes of transactions
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what is the purpose of final analytical procedures? | show 🗑
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show | look at sources like financial and operating data, budgets and forecasts, industry publications, competitor information, managements' analyses, analysts' reports
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how do auditors define tolerable difference | show 🗑
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show | selecting an item for testing from the accounting records and examining the source documents
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show | selecting a source document and following it into the journal/ledger
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Created by:
graceatnyu