Term
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Definition
1.responsibilities
2. public trust
3. integrity
4. objectivity and independence
5. due care
6. Scope and Nature of services |
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Term
| If after unqualified report has been issued, auditor discovers material misstatement... |
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Definition
1) Inform CEO
2) Issue revised audit report |
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Term
| ______ requires Lead Audit Partner and Concurring review partner to cycle off an engagement every __ years |
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Definition
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Term
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Definition
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Term
| To emphasize independence, many corps have auditors report to--- |
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Definition
| Audit Committee (made up of BOD) |
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Term
| ___ requires audit team member to have __ yr(s) cooling off per before taking on client key mgmt position |
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Definition
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Term
| Rule 505 of AICPA Code of Prof Conduct allows CPA firms to organize as |
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Definition
| sole proprietors, gen pships, gen corps, professional corps, LLPs, and LLCs, if allowed by state law |
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Term
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Definition
| member in public practice shall be independent in the performance of professional services as required by standards promulgated by bodies designated by Council. - applies to audit of fin statements |
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Term
| Professional (definition) |
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Definition
| person who is expected to conduct themselves at higher level than the requirements of society's laws or regulations |
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Term
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Definition
| CPAs ability to maintain impartial attitude on all matters that come under CPAs review |
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Term
| Interpretations of Rules of Conduct not enforceable but must justify departure |
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Definition
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Term
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Definition
1. adopting sound acct policies
2. adequate internal control
3. making fair representations in fin statements |
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Term
| ___ requires that CEo and CFO certify fin statements |
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Definition
| SOX - penalties and jail result if false info given |
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Term
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Definition
| Illegal acts: violations of laws or govt regulations other than fraud |
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Term
| Auditor resposibility under SAS54 for direct effect illegal acts is same as for errors and fraud |
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Definition
| evaluate evidence available to indicate material violations |
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Term
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Definition
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Term
| Audit should be planned and performed with "attitude of professional skepticism" |
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Definition
| "questioning mind and critical assessment of audit evidence" to find error and fraud - partic mgmt fraud |
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Term
| If illegal act is identified |
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Definition
1. consider effect on fin statement, including adequate disclosure
2. communicate w/ audit committee or equiv authority
3. if client is public and doesnt fix act, report to SEC |
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Term
| If illegal act has no material effect |
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Definition
| inform personnel w.in org - no obligation to inform outside parties |
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Term
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Definition
| more diff to detect fraud; mgmt attempts to conceal fraud |
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Term
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Definition
| auditor has a responsibility to plan and perform the audit to obtain reasonable assurance about whether the fin statements are free of matl misstatement |
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Term
| sas1 auditor responsibilty is to provide reasonable assurance that material misstatement will be detected |
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Definition
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Term
| When examination indicates fraud may exists |
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Definition
| must extend auditing procedure to actively search for evidence of fraud |
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Term
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Definition
| all gen ledger accts and journals are included at least once - some accts and journals are in more than one cycle (Cash) |
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Term
| Acquisition and Payment and payroll/personnel cycle are related |
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Definition
| results lead to inventory/warehousing |
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Term
| Why treat Captl acquisition/repayment cycle sep for Acquisition/payment cycle |
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Definition
1. transactions are related to financing a company rather than operations
2. most cptl acq/repayment accounts involve few transactions, ecah highly material and shoulc be audited extensively |
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Term
| To assess overall reasonableness of fin statements auditor uses ______ |
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Definition
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Term
| most effeicient way to conduct audit is to obtain combination of assurance for each______ and ____ |
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Definition
| class of transaction and for ending balance in the related account |
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Term
| Balance-related audit objectives |
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Definition
1. Existence - amounts included exist
2. Completeness - existing amounts are included
3. accuracy - amounts included are stated at correct amounts
4. classification - amts included are correctly classified
5. cutoff - transactions are recorded in proper period
6. Detail Tie-in - details in acct balance agree w/ related mastre-file amts, foot to total in acct balance, and agree with total in gen ledger |
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Term
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Definition
1. plan and design
2. Perform test of controls - test of controls and substantive tests of transactions
3. Perform analytical procedures - and tests of details of balances
4. complete audit and issue report |
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Term
| if material misstatement not uncovered in audit, auditors best defense is ___ |
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Definition
| audit was performed in accordance w GAAS |
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Term
Audit Procedure
Scan
Foot
Compute
Recompute
Count |
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Definition
Scan - Analytical Procedure
Foot - Recalculation
Compute - Analytical Procedure (Turnover Ratios
Recompute - Recalculation
Count - Physical examination |
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Term
| sufficient, competent evidence must be accum to meet auditor's professional resposibility - more impt than min costs |
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Definition
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Term
| Physical exminations and confirmations are ___-cost procedures |
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Definition
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Term
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Definition
| inquiries, and reperformance (recompute, foot, trace) |
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Term
| signif unexpected diffd in curr yr unadited fin data and comparison data called |
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Definition
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Term
| unusual fluctuations occur when signif diffs are expected but dont exist or exist and are not expected |
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Definition
| accounting misstatement may have occured |
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Term
| kf no unusu fluctuations - possibility of ___ and ___ is lessened |
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Definition
| material error; irregularity |
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Term
| analytical procedures use ____ and ____ to asses _______ of _____ and _____ |
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Definition
| comparisons and relationships to assess reasonableness of transactions and balances |
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Term
| analytical transactions are required on |
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Definition
1. all audits
2. all review engagements
3. sufficient testing for certain small balances |
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Term
| confirmations should be done whenever ____ and ____ |
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Definition
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Term
| persuasiveness of evidence (def and 1 determinants) |
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Definition
degree to which auditor is convinced that evidence supports audit opinion
1 and 2 : appropriateness (relevance, reliability) and sufficiency |
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Term
| SOX has ______ the amount of audit documentation that must be retained for audits |
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Definition
| significantly increased - no less than 7 years (AICPA - min 5 yrs) |
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Term
| permanent files include historical info (4) |
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Definition
1. incorporation
2. bylaws
3. prior yr analytical calcs
4. info on companys internal control |
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Term
| audit documentation provides reasonable assurance that audit was conducted in accordance w/ GAAS |
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Definition
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