Chapter Six

Comparing a company's inventory turnover to industry standards rates is an example of:

Analysis Procedures

The risk that auditors may unknowingly fail to appropriately modify their opinion on financial statements that are materially misstated is called (Blank) risk

Audit

Many firms have developed a (Blank) (Blank) that uses a combination of financial and non-financial performance measures to assess the organization.

Balanced Scorecard

Achieving management's objectives is always subject to (Blank) risks.

Business

The risk of loss of injury to the auditors' reputation by association with a client that goes bankrupt or one whose management lacks integrity is called (Blank) risk

Engagement

Materially is the:

Idea that some matters are important to the fair presentation of financial statements while others are not

A component of fraud risk triangle:

Incentive or Pressure; Opportunity; Rationalization

The risk of material misstatement of an assertion without considering internal control is called:

Inherent Risk

The time travel from the beginning of audit work to the balance sheet date is called the (Blank) period.

Interim

The final step of the audit is to:

Issue the audit report

When considering fraud, auditors consider misstatement arising from fraudulent financial reporting which is (Blank) fraud, and misstatements arising from misappropriates of assets which is also called (Blank).

Management; Defalcations

Planning materially is commonly based on % of:

Net income; Total assets; Total revenue

Examples of risk assessment procedures include:

Observation and Inspection; Analytical procedures; Inquiries of management

When a new client has been accepted and no satisfactory recent audit has been performed the auditor must:

Perform an extensive analysis of prior years' transactions to establish opening balances

When materially is allocated to a particular account, it is referred to (Blank) materially.

Performance

The audit (Blank) is a description of nature, timing, and extent of the audit procedures to be performed.

Plan

Auditors rest the client's rights to assets to verify that:

Receivables belong to the client

At the planning stage of an audit, auditors consider materially to determine their:

Scope of the audit

A risk that has been identified and assessed that, in the auditor's opinion, requires special audit consideration is considered a (Blank) risk

Significant

Audit fees are composed of:

Staff salaries; Overhead; Payroll taxes; Profit

The (Blank) portion of the audit program includes procedures aimed directly at financial statement account balances.

Substantive

Further audit procedures include:

Tests of controls; Substantive procedures

The application of performance materially to a particular audit procedure is:

Tolerable misstatement

During the audit the client's staff may prepare a(n):

Trail balance; Analysis of accounts written off; Aging of accounts receivable

Following specific transactions from their source documents forward to their inclusion in the financial statement summary figures is a test of the:

Completeness Assertion

Identify the types of further audit procedures performed:

Confirmation; Inspection; Inquiry

Advantages of interim audit work include:

Increased assessment of internal control; More uniform workload for the CPA firm; Timely release of audited financial statements

The sequence of procedures applied by the company (client) in processing a particular type of recurring event is called a (Blank) cycle.

Transaction