411 Set 4

kyleparkinson184's version from 2015-05-03 03:29


Question Answer
Evaluation Material ProcessSet Materialist and assess AAR and Inherent risk
Evaluation of Risk ProcessAssess clients business risk, set materiality and inherent risk, understand internal control process and assess risk, gather information to assess fraud risk
4 things that increase inherient riskBad previous audits, first audit, industry, related parties
Planned detection Risk = Acceptable Audit Risk/ (Inherent Risk x Control Risk)
Audit Assurance =1 - Acceptable Audit Risk
Control RiskThe effectiveness of internal controls
Engagement RiskRisk of giving client an audit report
5 Types of Control SOD, Proper authorization of transactions, adequate documentation, physical control of asset and records, independent checks on performance
When a new fraud risk is identified you do? (3)Change conduct of audit, design and perform test on management override, design audit procedures that identify fraud risk.
Assessment of Control Riskassessment to determine if internal control functions properly to prevent internal control.
Assessment InquiryInquiry about evidence to corroborate or contradict prior information.
Control EnvironmentThe actions, policies and environment that leadership creates.
entity-level controlcontrols that have a pervasive effect
Earnings ManagementActions taken by management to meet Earnings
Fraud TrianglePressure, Opportunity, and rationalization
Horizantal analysisanalyzing financial statements to previous years
What is purpose of internal controls?Make financial statements reliable, Make operations effective, compliance with laws.
Key Controlscontrols expected to have greatest effect on transactions related audit objectives
MonitoringManagements ongoing of internal controls assessment.
Narritivewritten list of clients internal control including origin, processing, documents, and related controls.
Four aspects of auditPlan and Design Audit, Perform test of controls and test of transactions, perform analytical procedures and test of balances, complete and issue audit report
Substantive testtest that test a dollar amount
5 catagories of audit testtest of controls, test of risk, test of transactions, test of balances, analytical procedures

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