Auditing ACCT Ch6
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26 terms
Terms | Definitions |
|---|---|
 SAS 316 | Distinguishes between two types of misstatements: error and fraud. |
| AU 317 | illegal acts are defined as violations of laws or government regulations other than fraud. (violation of federal tax, or environmental laws. |
| AU 326 | Classify assertion into three catagories: Classes of transactions events for period under audit, classes of account balances at period end and, classes of presentations and disclosures. |
| ASA 500 | requires that auditors obtain sufficient appropriate evidence to support the opinion issued. |
| Management Assertions | are directly related to the accounting standards that are a part of the criteria that management used to record and disclose accounting information. |
| ASA 240 | Auditors are only responsible for discovering DIRECT illegal acts, since these directly impact the financial statements. |
| Occurrence | The occurrence assertion concerns whether recorded transactions included in the financial statements actually occurred. |
| Completeness (Transaction) | the assertion addresses whether all transactions that should be included in the financial statement are in fact included. |
| Accuracy | the accuracy assertion addresses whether the transaction have been recorded at correct amounts. |
| Classification | The classification assertion addresses whether transactions are recorded in the appropriate accounts. |
| Cutoff | the cutoff assertion addresses whether the transactions are record in the proper accounting period. |
| Existence | the existence assertion deals with whether assets liabilities and equity interest included in the balance sheet actually existed on the balance sheet date. |
| Completeness (Account Balance) | the assertion addresses whether all accounts and amounts that should be presented in the financial statements are in fact included. |
| Valuation and Allocation | The valuation and allocation assertion deal with whether assets, liabilities, and equity interest have been included in the financial statements at the appropriate amounts. |
| Rights and Obligations | this assertion addresses whether assets are the rights of the entity and whether liabilities are the obligations of the entity at a given date. |
| Occurrence and Rights and Obligations (Procedure and Disclosure) | this assertion addresses whether the disclosed events have occurred and are the rights and obligations of the entity. |
| Completeness | this assertion deals with whether all required disclosures have been included in the financial statements. |
| Classification and Understandability | the assertion relates to whether amounts are appropriately classified in the financial statements and footnotes and whether the balance descriptions and related disclosures are understandable. |
| Phase I (Phases of a financial statement audit) | Plan and design approach. |
| Phase II (Phases of a financial statement audit) | perform test of controls and substantive test of transactions. |
| Phase III (Phases of a financial statement audit) | perform analytical procedures and test of details of balances. |
| Phase IV (Phases of a financial statement audit) | Complete the audit and issue an audit report. |
| Test of Controls | test effectiveness of the controls |
| Substantive tests of transactions | valuate clients recording of transactions by verifying the monetary amounts of transactions. |
| Analytical Procedures | use comparisons and relationships to assess whether account balances or other data appear reasonable. |
| Test of details of balances | are specific procedures intended to test for monetary misstatements in the balances in the financial statements. |
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