CPA Audit Review module 2-3

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Joens1313
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294759
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CPA Audit Review module 2-3
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2015-02-03 14:41:30
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CPA Audit Review module
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CPA Audit Review module 2-3
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  1. Do attestation standards apply to historical financial statements?
    no

    AT 101 states that the attestation standards do not apply to historical financial statements
  2. What is meant by the general requirement of due care in the performance of an audit
    due care requires critical review at every level of supervision of the work done and the judgment exercised by those assisting in the audit
  3. what is the likely reaction to a decreased acceptable level of detection risk
    postponement of interim substantive tests to year end decreases detection risk by reducing the risk for the period subsequent to the performance of those tests,
  4. What is detection risk?
    detection risk is the risk that the auditor will not detect a material misstatement that exists in an assertion
  5. What are the 2 components of detection risk
    1. the risk that analytical procedures and other relevant substantive test would fail to detect misstatements equal to tolerable misstatement.

    2. the allowable risk of incorrect acceptance for the substantive tests of details.
  6. What is the effect of a decrease in the acceptable level of detection
    as the acceptable level of detection risk decreases the assurance provided from substantive tests should increase
  7. As the acceptable level of detection risk decreases, and the substantive test increase, what procedures will an auditor do to increase assurance?
    1. change the nature of substantive tests to more effective procedures

    2. change the timing of substantive procedures

    3. change the extent of substantive procedures.
  8. how do inherent risk and control risk differ from detection risk?
    inherent risk and control risk exist independently of the audit of the financial statements as functions for the client and its environment, whereas detection risk relates to the auditors procedures and can be changed at their discretion.
  9. what is audit risk a function of?
    the risk of material misstatement and detection risk
  10. What is audit risk
    Audit risk the risk that the auditor will express an inappropriate audit opinion when the financial statements are misstated.
  11. auditors often use prior years financial statements when making a preliminary judgment about -----------------------.
    auditors often use prior years financial statements when making a preliminary judgment about materiality.
  12. to decrease the tolerable amount of misstatement, what must an auditor do?
    1. perform auditing procedures closer to the balance sheet date

    2. select a more effective auditing procedure

    3. increase the extent of a particular auditing procedure
  13. what type of fraudulent misstatement is most difficult to detect?
    when transactions have not been recorded because there is no general starting point for the auditor in the consideration of the transaction.
  14. auditing standard require the auditor to ensure that the ----------------------- is aware of any significant deficiencies which come to the CPA's attention.
    auditing standard require the auditor to ensure that the audit committee is aware of any significant deficiencies which come to the CPA's attention.
  15. auditing standard require the auditor to ensure that the audit committee is aware of any ---------------------------- which come to the CPA's attention.
    auditing standard require the auditor to ensure that the audit committee is aware of any significant deficiencies which come to the CPA's attention.
  16. is the consideration of internal control required to finalize an audit program?
    yes - the audit program is not generally finalized prior to the consideration of internal control
  17. FASB establishes accounting standards for both ------------------and ------------------------------
    FASB establishes accounting standards for both public and non public companies
  18. -------------- establishes accounting standards for both public and non public companies
    FASB establishes accounting standards for both public and non public companies
  19. what does subsequent mean?
    happening or coming after something else
  20. what does substantive mean?
    involving matters of major or practical importance to all concerned
  21. what does inherent mean?
    involved in the constitution or essential character of something :  belonging by nature or habit
  22. what does precludes mean?
    to prevent (something) from happening
  23. what is a balance sheet
    a statement that shows the financial condition of a company at a particular time by listing the amount of money and property that the company has and the amount of money it owes
  24. what does assertion mean?
    to state (something) in a strong and definite way

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