ACCT 407 Chapter 1
Auditing and Assurance Services
Terms in this set (22)
The risk that an entity will fail to meet its objectives.
Probability that the information circulated by a company will be false or misleading.
Lending of credibility to information both financial and nonfinancial
When assurance is provided for specific assertions made by management
When the assertions are embodied in a company's financial statements. Systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between the assertions and established criteria and communicating the results to interested users.
All types of influences that ultimately guide auditors' decisions and relates to assertions made by management about economic actions and events
engagement in which a practitioner is engaged to issue a report on subject matter, or an assertion about subject matter that is the responsibility of another party
Provide statements of financial position (balance sheets), results of operations (income statements), changes in cash flow and accompanying disclosures to outside decision makers who do not have access to management's internal sources of information
Accounting for revenue, expense and other transactions in the proper period. Neither postponing some recordings to the next period nor accelerating next-period transactions to the current-year accounts.
Professional auditing standards as having attitude that "includes a questioning mind and a critical assessment of evidence". Auditor has a responsibility to not accept management assertions without corroboration
Independent, objective assurance and consulting activity designed to add value and improve an organization's operations. Helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes.
The study of business operations for the purpose of making recommendations about the efficient and effective use of resources, effective achievement of business objectives, and compliance with company policies.
PCAOB Assertion. Asserts that each of the balance sheet and income statement balances actually exist. Relates to account balances. To test: confirm cash and count physical inventory.
PCAOB Assertion. Asserts that each of the income statement events and transactions actually did occur. Relates to events, transactions, presentations and footnote disclosures. Test to ensure fraudulent transactions weren't made.
Rights and Obligations
PCAOB Assertion. To test: obtain evidence that the asserts are really owned by and the liabilities are really owed by the company. Auditors have obligation to ensure debts are included in footnotes.
Client's year-end balance sheet date
PCAOB Assertion. To test: obtain persuasive evidence that all inventory is included, all accounts payable is included, all notes payable is included and so forth.
PCAOB Assertion. Appropriate % of an asset or liability balance being recorded on the income statement in accordance with GAAP
PCAOB Assertion. Appropriate recording of the transactions involving these items. To test: auditors obtain evidence by comparing vendors' invoices to inventory prices, obtaining lower-of-cost-or-market data, evaluating collectability of receivables
Presentation and Disclosure
PCAOB Assertion. Disclosures must be relevant. reliable. Test to ensure proper disclosures are made in accordance with GAAP. Transactions are made in correct accounts. To test: auditors will analyze repair and maintenance expenses. Information must be understandable.
Non-audit attestation engagement. Consists of preparing financial statements from a client's books and records without performing any evidence-gathering work.
Non-audit attestation engagement. Limited evidence-gathering work is performed but which is narrower in scope than an audit.
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THIS SET IS OFTEN IN FOLDERS WITH...
ACCT 407 Module B
ACCT 407 Chapter 4
Ch. 2: Professional Standards
Ch. 3: Engagement planning