How can we help?

You can also find more resources in our Help Center.

Study sets matching "auditing chapter 9"

Study sets
Classes
Users

Study sets matching "auditing chapter 9"

21 terms
Chapter 9 Auditing
Materiality
Steps in Applying Materiality
Preliminary judgment
Factors affecting judgment
Major consideration in determining the appropriate audit repo…
1) Set preliminary judgment about materiality... 2) Allocate pre…
is the maximum amount by which the auditor believes the state…
- materiality is relative... - bases are needed for evaluating m…
Materiality
Major consideration in determining the appropriate audit repo…
Steps in Applying Materiality
1) Set preliminary judgment about materiality... 2) Allocate pre…
15 terms
Auditing - Chapter 9
Alternative procedures
Bill of lading
Exceptions
Lapping
Procedures used to obtain evidence about the existence and va…
A shipping document that describes items being shipped, the s…
Differences between a customers records and the clients recor…
A technique used to cover up the embezzlement of cash collect…
Alternative procedures
Procedures used to obtain evidence about the existence and va…
Bill of lading
A shipping document that describes items being shipped, the s…
36 terms
Auditing Chapter 9
If it is probable that the judgement o…
The scope paragraph of the standard un…
Auditors are responsible for determini…
Why do auditors establish a preliminar…
material
reasonable
the client's management
To plan the appropriate audit evidence to accumulate and deve…
If it is probable that the judgement o…
material
The scope paragraph of the standard un…
reasonable
11 terms
Auditing Chapter 9
Revenue Cycle
Bill of Lading
Lapping
Sales Cutoff Test
Process of: ... -Receiving a customer's order... -Approving credit…
A shipping document that describes items being shipped, the s…
Technique used to cover up embezzlement of cash... -Stealing cas…
-Additional audit attention given to sales transactions recor…
Revenue Cycle
Process of: ... -Receiving a customer's order... -Approving credit…
Bill of Lading
A shipping document that describes items being shipped, the s…
22 terms
Chapter 9 Auditing
Materiality
Steps in Applying Materiality
Performance Materality
Preliminary Judgment about Materiality
the magnitude of an omission or misstatement of accounting in…
1. Determine materiality for the financial statements as a wh…
materiality for segments of the audit (classes of transaction…
deciding on the combined amount of misstatements in the finan…
Materiality
the magnitude of an omission or misstatement of accounting in…
Steps in Applying Materiality
1. Determine materiality for the financial statements as a wh…
19 terms
Auditing chapter 9
Audit risk
Materiality and audit risk
Risk of material misstatement at the o…
Risk of Material Misstatement at the a…
Auditors accept some level of risk or uncertainty in performi…
Considered together in planning the nature and extent of risk…
Refers to the risks that relate pervasively to the financial…
There are two components to risk at the assertion level. ... 1.…
Audit risk
Auditors accept some level of risk or uncertainty in performi…
Materiality and audit risk
Considered together in planning the nature and extent of risk…
18 terms
Auditing Chapter 9
Acceptable audit risk
Allocation of the preliminary judgment…
Audit assurance
Audit risk model
a measure of how willing the auditor is to accept that the fi…
the process of assigning to each balance sheet account the mi…
a complement to acceptable audit risk; an acceptable audit ri…
a formal model reflecting the relationships between acceptabl…
Acceptable audit risk
a measure of how willing the auditor is to accept that the fi…
Allocation of the preliminary judgment…
the process of assigning to each balance sheet account the mi…
15 terms
Chapter 9 Auditing
Materiality
SFAC 8 Definition of Materiality
AoM: Establishing Preliminary Material…
Establishing Preliminary Materiality:…
The magnitude of omission or misstatement that affects the fi…
Information is material if by omitting or misstating the info…
How much Misstatement should be involved.
If we set too high then we have a higher risk, if we set it t…
Materiality
The magnitude of omission or misstatement that affects the fi…
SFAC 8 Definition of Materiality
Information is material if by omitting or misstating the info…
94 terms
Auditing chapter 9
Allowance for sampling risk
Audit sampling
Classical variables sampling
Confidence Bound
The uncertainty that results from samplin: the difference bet…
The selection and evaluation of less than 100 percent of the…
The use of normal distribution theory to evaluate the charact…
A measure of sampling risk added and subtracted to the projec…
Allowance for sampling risk
The uncertainty that results from samplin: the difference bet…
Audit sampling
The selection and evaluation of less than 100 percent of the…
18 terms
Auditing Chapter 9
Materiality
Preliminary Judgment about Materiality
Revised Judgment about Materiality
Allocation of the Preliminary Judgment…
magnitude of an omission or misstatement of accounting inform…
require auditors to decide on the combined amount of misstate…
auditors often change the preliminary judgment because of cha…
auditors accumulate evidence by segments rather than for the…
Materiality
magnitude of an omission or misstatement of accounting inform…
Preliminary Judgment about Materiality
require auditors to decide on the combined amount of misstate…
42 terms
Auditing & Assurance Chapter 9
Unrecorded receipt of inventory
December sales recorded in January
Impact on December records, when Decem…
Inventory omitted during physical count.
Inventory - Understated... Cost of Sales - No effect
Inventory - No effect... Cost of Sales - No effect
Inventory - Understated... Cost of Sales - No effect
Inventory - Understated... Cost of Sales - Overstated
Unrecorded receipt of inventory
Inventory - Understated... Cost of Sales - No effect
December sales recorded in January
Inventory - No effect... Cost of Sales - No effect
162 terms
Auditing Chapter 9
Revenue cycle involves the process of:
Other Related Accounts in Revenue Cycle:
Most Important Accounts in Revenue Cyc…
Most Important Assertion - Revenue
1. Receiving the customer order... 2. Approving credit for a sal…
1. Accounts Receivable... 2. Inventory... 3. Sales commissions
1. Revenue... 2. Accounts receivable... Auditor gains evidence for…
Existence... Client has motivation to overstate revenue
Revenue cycle involves the process of:
1. Receiving the customer order... 2. Approving credit for a sal…
Other Related Accounts in Revenue Cycle:
1. Accounts Receivable... 2. Inventory... 3. Sales commissions
37 terms
Audit Sampling (Chapter 9 Auditing)
Define, and differentiate between, non…
Describe the difference between sampli…
Explain what is meant by the following…
In selecting items for examination, an…
Non statistical, also known as, judgmental sampling is when t…
Sampling risk is the risk that the auditors conclusion based…
It must determine that the physical list represents those sel…
...
Define, and differentiate between, non…
Non statistical, also known as, judgmental sampling is when t…
Describe the difference between sampli…
Sampling risk is the risk that the auditors conclusion based…
10 terms
Auditing Chapter 9
Control Risk
Accept Aud risk
Audit assurance
Engagement Risk
risk that a material misstatment could occur in an assertion…
how willing the auditor is to accept that the financial state…
states how sure you want to be that the statements have no ma…
risk that the auditor will suffer harm b/c of a client relati…
Control Risk
risk that a material misstatment could occur in an assertion…
Accept Aud risk
how willing the auditor is to accept that the financial state…
23 terms
Auditing Chapter 9
_____ is an easy place to manipulated…
What are the 4 cycles involved in obta…
What is the sales forecast?
What is the production plan?
Inventory
-Acquisition cycle... -Production cycle... -Revenue cycle... -Payroll…
used to prepare the sales budget which effect the production…
Based on all the budgets from above
_____ is an easy place to manipulated…
Inventory
What are the 4 cycles involved in obta…
-Acquisition cycle... -Production cycle... -Revenue cycle... -Payroll…
117 terms
Auditing chapter 9
If it is probable that the judgment of…
The scope paragraph of the standard un…
Auditors are responsible for determini…
Determining materiality requires profe…
A) material.
Answer: C... C) Reasonable
Answer: D... D) the client.
A. true
If it is probable that the judgment of…
A) material.
The scope paragraph of the standard un…
Answer: C... C) Reasonable
9 terms
Chapter 9: Auditing the Revenue Cycle
Alternative Procedures
Bill of lading
Exceptions
Lapping
Procedures used to obtain evidence about the existence and va…
Document that describes items being shipped, terms and addres…
Differences between a customers records and the clients records
Cash collection from one customer is used to pay stolen funds…
Alternative Procedures
Procedures used to obtain evidence about the existence and va…
Bill of lading
Document that describes items being shipped, terms and addres…
10 terms
Auditing Chapter 9 Terms
allowance for sampling risk
attributes sampling
confidence level
deviation rate
also referred to as precision. an interval around the sample…
a sampling plan enabling the auditors to estimate the rate of…
in attributes sampling, the complement of the risk of assessi…
a defined rate of departure from prescribed controls. also re…
allowance for sampling risk
also referred to as precision. an interval around the sample…
attributes sampling
a sampling plan enabling the auditors to estimate the rate of…
30 terms
Auditing Chapter 9 - Materiality
Materiality
What is the point of the scope paragra…
Materiality?
What does materiality tell us?
...
-To obtain reasonable assurance that the f/s are free from ma…
Misstatements large enough to affect user's decisions
1. It is relative to the company (dependent on the type of co…
Materiality
...
What is the point of the scope paragra…
-To obtain reasonable assurance that the f/s are free from ma…
16 terms
Chapter 9 auditing
1 Which of the following statements is…
Which of the following statements is t…
Which of the following would not repre…
Which of the following statements is f…
B
D
D
C
1 Which of the following statements is…
B
Which of the following statements is t…
D
17 terms
Chapter 9: Auditing Sampling
Sampling Risk
Non-Sampling Risk
Non-Statistical Sampling
Advantages of Statistical Sampling
Risk that the auditors' conclusions based on a sample may be…
Risk that the auditors won't detect misstatements or will not…
Using judgement instead of statistical techniques, this is a…
Allows auditors to measure and control sampling risk which he…
Sampling Risk
Risk that the auditors' conclusions based on a sample may be…
Non-Sampling Risk
Risk that the auditors won't detect misstatements or will not…
15 terms
Auditing - Chapter 9
Clean Audit
Validity
Completeness
Authorization
An audit of a client where the accounting records are accurat…
Ensuring that the recorded transactions are ones that should…
Ensuring that valid transactions are not missing from the acc…
Ensuring that transactions are approved before they are recor…
Clean Audit
An audit of a client where the accounting records are accurat…
Validity
Ensuring that the recorded transactions are ones that should…
20 terms
Concepts of Auditing Chapter 9
Entity Risk
External Confirmation
Known Misstatements
Likely Misstatements
Risks that are pervasive throughout the company; typically re…
The client sends a request to an outside party, asking the pa…
Misstatements in account balances and disclosures that are id…
An estimation of the misstatement in an account balance or a…
Entity Risk
Risks that are pervasive throughout the company; typically re…
External Confirmation
The client sends a request to an outside party, asking the pa…
20 terms
Auditing: Chapter 9
Projected Misstatement
Upper Limit Misstatement is dependent…
Monetary Unit Sampling (MUS)
MUS is designed primarily to test for…
Compute by taking the difference between the AV and BV divide…
desired confidence level
uses attribute sampling theory to express a conclusion in dol…
overstatement of errors.
Projected Misstatement
Compute by taking the difference between the AV and BV divide…
Upper Limit Misstatement is dependent…
desired confidence level
9 terms
Auditing - Chapter 9
Alternative procedures
Bill of lading
Exceptions
Lapping
Procedures used to obtain evidence about the existence and va…
A shipping document that describes items being shipped, the s…
Differences between a customer's records and the client's rec…
A technique used to cover up the embezzlement of cash whereby…
Alternative procedures
Procedures used to obtain evidence about the existence and va…
Bill of lading
A shipping document that describes items being shipped, the s…
34 terms
Auditing Chapter 9
Net Realizable Value (NRV)
Sales Forecasts
Production Plan
Bill of Materials
The selling price less costs to sell
A management report, usually prepared by marketing, predictin…
A schedule of goods to be produced for a period based on sale…
A list of raw materials and supplies used to build a product…
Net Realizable Value (NRV)
The selling price less costs to sell
Sales Forecasts
A management report, usually prepared by marketing, predictin…
33 terms
Auditing Chapter 9
Allowance for sampling risk (ASR)
Attributes sampling
Confidence level
Deviation rate
Also referred to as precision, an interval around the sample…
A sampling plan enabling the auditors to estimate the rate of…
In attributes sampling, the complement of the risk of assessi…
A defined rate of departure from prescribed controls. Also ref…
Allowance for sampling risk (ASR)
Also referred to as precision, an interval around the sample…
Attributes sampling
A sampling plan enabling the auditors to estimate the rate of…
18 terms
Auditing Chapter 9
Audit Sampling
Sampling allows
Sampling is generally used in the flie…
Used to estimate some characteristic o…
Applying a procedure to less than 100% of a population for th…
an auditor to draw conclusions about transactions or balances…
it is not efficient to review 100% of the records
Qualitative: attribute sampling... Quantitative: variables sampl…
Audit Sampling
Applying a procedure to less than 100% of a population for th…
Sampling allows
an auditor to draw conclusions about transactions or balances…
25 terms
Auditing Chapter 9
standard cost
finance and investment cycle
production plan
accuracy
which of the following methods for determining inventory cost…
which cycle is not directly linked to the production cycle?
to determine the clients planned amount and timing of product…
an auditor reviews job cost sheets to test which transaction…
standard cost
which of the following methods for determining inventory cost…
finance and investment cycle
which cycle is not directly linked to the production cycle?
33 terms
Auditing Chapter 9
standard cost
finance and investment cycle
production plan
accuracy
Which method for determining inventory is not allowed by GAAP?
Which cycle is not directly linked to the production cycle?
To determine the client's planned amount and timing of produc…
An auditor reviews job cost sheets to test which transaction…
standard cost
Which method for determining inventory is not allowed by GAAP?
finance and investment cycle
Which cycle is not directly linked to the production cycle?
Auditing Chapter 9
Allowance for Sampling Risk
Attributes Sampling
Confidence Level
Deviation Rate
also referred to as precision, an interval around the sample…
A sampling plan enabling the auditors to estimate the rate of…
in attributes sampling, the complement of the risk of assessi…
a defined rate of departure from prescribed controls. Also, r…
Allowance for Sampling Risk
also referred to as precision, an interval around the sample…
Attributes Sampling
A sampling plan enabling the auditors to estimate the rate of…
43 terms
Auditing: Chapter 9
accounting for inventory as it moves t…
sales forecast
production plan, bill of materials, ra…
production order and materials requisi…
the production cycle is mostly concerned with
production activities start with a...?
production planner completes a?
as the time for production nears, these need to be completed
accounting for inventory as it moves t…
the production cycle is mostly concerned with
sales forecast
production activities start with a...?
11 terms
Chapter 9 Auditing
Sales forecast
Production plan
bill of materials
raw materials
a marketing projection of product sales based on past perform…
the goal of a ______________ ________________ is to provide a…
a specification of the type and quantity o component material…
inventory status report to determine whether enough raw mater…
Sales forecast
a marketing projection of product sales based on past perform…
Production plan
the goal of a ______________ ________________ is to provide a…
15 terms
Chapter 9 Auditing Vocabulary
bill of materials
consignment goods
cycle counts
inventory roll-forward
a list of raw materials and supplies used to build a product…
the goods that are given by one party, the consignor, to anot…
a method of physically counting different areas of inventory…
an accounting process from date of physical inventory count t…
bill of materials
a list of raw materials and supplies used to build a product…
consignment goods
the goods that are given by one party, the consignor, to anot…
9 terms
Auditing Chapter 9 Definitions
Allowance for sampling risk
Deviation rate
Discovery Sampling
Projected misstatement
Also referred to as PRECISION, an interval around the sample…
A define rate of departure from prescribed controls. Also ref…
A Sampling plan for locating at least 1 deviation, providing…
An estimate of the most likely amount of monetary misstatemen…
Allowance for sampling risk
Also referred to as PRECISION, an interval around the sample…
Deviation rate
A define rate of departure from prescribed controls. Also ref…
67 terms
Chapter 9 External Auditing
If it is probable that the judgment of…
The scope paragraph of the standard un…
Auditors are responsible for determini…
Audit standards require the auditor to…
material
Reasonable
the client
both I and II
If it is probable that the judgment of…
material
The scope paragraph of the standard un…
Reasonable
36 terms
Auditing Chapter 9
If it is probable that the judgement o…
The scope paragraph of the standard un…
Auditors are responsible for determini…
Why do auditors establish a preliminar…
material
reasonable
the client's management
To plan the appropriate audit evidence to accumulate and deve…
If it is probable that the judgement o…
material
The scope paragraph of the standard un…
reasonable
46 terms
Auditing Chapter 9
An auditor generally tests the segrega…
While observing a client's annual phys…
Which of the following internal contro…
In auditing a manufacturing entity, wh…
personal inquiry and observation.
sales returns
a. Use of time tickets to record actual labor worked on produ…
a. Test the computation of standard overhead rates.
An auditor generally tests the segrega…
personal inquiry and observation.
While observing a client's annual phys…
sales returns
34 terms
Chapter 9 (Auditing)
Materiality
Why is materiality important but diffi…
What is meant by setting a preliminary…
What are the most important factors af…
the threshold above which missing or incorrect information in…
IMPORTANT: if F/S are misstated, user's decisions may be affe…
Maximum amount by which the auditor believes the F/S could be…
1. materiality is relative rather absolute concept... 2. benchma…
Materiality
the threshold above which missing or incorrect information in…
Why is materiality important but diffi…
IMPORTANT: if F/S are misstated, user's decisions may be affe…
12 terms
Chapter 9 Auditing
Which of the following is an element o…
In assessing sampling risk, the risk o…
Which of the following statistical sam…
To auditors primary objective in selec…
Concluding that no material misstatement exists in a material…
Efficiency of the audit
Block section
a representative sample
Which of the following is an element o…
Concluding that no material misstatement exists in a material…
In assessing sampling risk, the risk o…
Efficiency of the audit
11 terms
Auditing & Assurance Chapter 9 T/F
Standard costing of inventory is a gen…
If control risk is assessed very low,…
If inventory located is off the client…
Most businesses try to estimate sales…
False
False
True
True
Standard costing of inventory is a gen…
False
If control risk is assessed very low,…
False
20 terms
Auditing chapter 9
Which of the following methods for det…
To determine the client's planned amou…
An auditor reviews job cost sheets to…
Which of the following is an internal…
C. Although standard costs are commonly used, they must not b…
D. The production plan shows what is planned to be actually p…
B. The job cost sheets indicate the cost used in determining…
A. ... This weakness is an improper combination of inventory cus…
Which of the following methods for det…
C. Although standard costs are commonly used, they must not b…
To determine the client's planned amou…
D. The production plan shows what is planned to be actually p…
57 terms
Auditing and Assurance Chapter 9
If it is probable that the judgment of…
The scope paragraph of the standard un…
Auditors are responsible for determini…
Audit standards require the auditor to…
material
reasonable
the client's management.
both I and II
If it is probable that the judgment of…
material
The scope paragraph of the standard un…
reasonable
16 terms
Chapter 9 auditing
1 Which of the following statements is…
Which of the following statements is t…
Which of the following would not repre…
Which of the following statements is f…
B
D
D
C
1 Which of the following statements is…
B
Which of the following statements is t…
D
37 terms
Audit Sampling (Chapter 9 Auditing)
Define, and differentiate between, non…
Describe the difference between sampli…
Explain what is meant by the following…
In selecting items for examination, an…
Non statistical, also known as, judgmental sampling is when t…
Sampling risk is the risk that the auditors conclusion based…
It must determine that the physical list represents those sel…
...
Define, and differentiate between, non…
Non statistical, also known as, judgmental sampling is when t…
Describe the difference between sampli…
Sampling risk is the risk that the auditors conclusion based…
15 terms
Auditing: Chapter 9
consignment goods
bill of materials
cycle counts
inventory roll-forward
the goods that are given by one party, the consignor, to anot…
a list of raw materials and supplies used to build a product…
a method of physically counting different areas of inventory…
an accounting process from date of physical inventory count t…
consignment goods
the goods that are given by one party, the consignor, to anot…
bill of materials
a list of raw materials and supplies used to build a product…
18 terms
chapter 9 external auditing
acceptable audit risk
Allocation of the preliminary judgemen…
audit assurance
audit risk model
a measure of how willing the auditor is to accept that the fi…
the process of assigning to each balance sheet account the mi…
a complement to acceptable audit risk; an acceptable audit ri…
a formal model reflecting the relationships between acceptabl…
acceptable audit risk
a measure of how willing the auditor is to accept that the fi…
Allocation of the preliminary judgemen…
the process of assigning to each balance sheet account the mi…
37 terms
Audit Sampling (Chapter 9 Auditing)
Define, and differentiate between, non…
Describe the difference between sampli…
Explain what is meant by the following…
In selecting items for examination, an…
Non statistical, also known as, judgmental sampling is when t…
Sampling risk is the risk that the auditors conclusion based…
It must determine that the physical list represents those sel…
...
Define, and differentiate between, non…
Non statistical, also known as, judgmental sampling is when t…
Describe the difference between sampli…
Sampling risk is the risk that the auditors conclusion based…
64 terms
Chapter 9 Audit Sampling
Stratification of the population gener…
Discovery sampling is equivalent to an…
Increases in the number of deviations…
The definition of a "deviation" for a…
True
True
True
False
Stratification of the population gener…
True
Discovery sampling is equivalent to an…
True
24 terms
Auditing Chapter 9 Study Guide
The sample size for a substantive test…
Which of the following sampling method…
A number of factors influence the samp…
The risk of incorrect acceptance relat…
An increase in the amount of tolerable misstatement.
Variable sampling.
Smaller amount of tolerable misstatement.
Effectiveness of the audit.
The sample size for a substantive test…
An increase in the amount of tolerable misstatement.
Which of the following sampling method…
Variable sampling.
1 of 10