26774549
Description
Flashcards by Kayla Harbaugh, updated more than 1 year ago
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Created by Kayla Harbaugh
over 3 years ago
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| Question | Answer |
| The risk that the auditor expresses an inappropriate audit opinion when the financial statements are materially misstated. | Audit Risk |
| The risk that a miss statement could occur in an assertion about a class of transaction, account balance, or disclosure and that could be material, either individually or when aggregated with other missed statements, will not be prevented, or detected and corrected, on a timely basis by the entity’s internal control. | Control Risk |
| The risk that the procedure is performed by the auditor to reduce audit risk to an acceptable low level will not detect a misstatement that exists and that could be material, either individually or when aggregated with other misstatements. | Detection Risk |
| The susceptibility of an assertion about a class of transaction, account balance, or disclosure to a miss statement that could be material, either individually or when aggregated with other missed statements before consideration of any related controls. | Inherent Risk |
| A materiality level that the auditor uses in determining whether the financial statements overall are materially correct. | Overall materiality (planning materiality) |
| A materiality level that the auditor uses for determining significant accounts, significant locations, and audit procedures for those accounts and locations. | Performance materiality (tolerable error) |
| Immateriality level that signifies the miss statements identified throughout the audit that will be considered at the end of the audit in determining whether the financial statements overall are materially correct. | Posting materiality |
| A statistical sampling method used to estimate the rate of control procedure failures based on selecting one sample and performing the appropriate audit procedure. | Attribute sampling |
| The application of an audit procedure to less than 100% of the items within an account balance or class of transactions for the purpose of evaluating some characteristic of the balance or class. | Audit sampling |
| A broad construction referring to both qualitative and quantitative analysis tools that enable a decision maker to extract data, categorize it, identify patterns within it, and use it to enhance efficiency and effectiveness and decision-making. | Data analytics |
| The level of my statement that the auditor expects to detect, and it is based on projected misstatements in prior your audits, results of other substantive tests, professional judgment, and knowledge of changes in personnel in the accounting system. | Expected misstatement |
| An anticipation of the deviation rate in the entire population also referred to as the expected failure rate. | Expected population (deviation rate) |
| A nonstatistical sample selection method that attempts to approximate a random selection by selecting sampling units without any conscious bias, or special reason for including omitting certain items from the sample. | Haphazard sampling |
| The risk that the auditor reaches an erroneous conclusion for any reason not related to sampling risk. | Non-sampling risk |
| The risk that the auditor will conclude that the state of internal controls is affective when internal controls are actually not effective (also referred to as the risk of assessing control risk to low). | Risk of over-reliance (Risk of incorrect acceptance of internal control reliability): |
| 5 Accounts in the Revenue Cycle | Cash Sales Accounts Receivable Sales Discounts Bad Debt Expense |
| Name 5 of the 9 steps of the sales process | 1. Receive a Customer Purchase Order 2. Check Inventory Stock Status 3. Generate Back Order 4. Obtain Credit Approval 5. Prepare Shipping and Packing Documents 6. Ship and Verify Shipment of Goods 7. Prepare and Send the Invoice 8. Send Monthly Statements to Customers 9. Receive Payments |
| 5 controls over cash | 1. Segregation of duties 2. Restrictive endorsements of customer checks 3. Independent bank reconciliations by employees who do not handle cash 4. Computerized control totals and edit checks 5. Authorization of transactions 6. Prenumbered documents and turnaround documents 7. Periodic internal audits 8. Competent and well-trained employees |
| 5 Substantive Tests of Details for cash statements. | 1. Request bank confirmations 2. Inspect and re-perform client’s bank reconciliations 3. Obtain bank cutoff statements 4. Examine bank statements and ensure that reported bank balances are actually owned by the client 5. Determine that any restrictions to cash or appropriately Disclosed in the notes to the financial statements. |
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