ACCT 440: CH5-6

Characteristics that may signal important information to the auditor about management's ____________ and ___________ values include management's approach to taking and monitoring business risks and their attitudes and actions toward financial reporting

integrity and ethical

Auditors may test controls at an ___________ date because the assertion being tested may not be significant, the control has been effective in prior audits, or it may be more efficient to conduct the tests at that time

interim

duplicate copies of invoices and shipping remittances are examples of ___________ documents

internal

An important role in how management meets its stewardship or agency responsibilities is played by _____________ ____________

internal control

the working papers document the

correspondence of the financial statements with GAAP basis for the audit report decision scope of the audit was adequate

data or documents from the accounting records and other documentary information such as contracts represents ___________ evidence

corroborating

important information on the ability of the entity to continue as a going concern are provided by _______ ratios

coverage

an auditor examining shipping documents to ensure that no prior period sales have been recorded in the current year is testing which assumption

cutoff

The level of ___________ risk is used to determine the nature, timing, and extent of substantive testing

detection

monitoring is done to

determine if internal control components are present and functioning

procedures manuals, organization charts, internal control questionnaires, flowcharts and narrative descriptions are all tools for ____________ the auditor's understanding of internal controls

documenting

For a control system to be considered ___________, each of the five components and relevant principles must be present and functioning, and the five components must operate together in an integrated manner.

effective

Knowledge of the information system is important to understand the related accounting records when they are

electronic or manual

the PCAOB requires the auditor to identify all significant findings or issues in a(n) __________ _______________ ______________

engagement completion memorandum

Information the is complete, neutral and free from error has the characteristic of __________ ________

faithful representation

T/F: auditing standards dictate how audit documentation should be organized

false

T/F: based on the nature of electronic audit evidence, auditors should only do sampling at year-end

false

T/F: how the components of internal control are implemented is not impacted by the size of the entity

false

from the auditor's perspective, a(n) _________ is a diagrammatic representation of the entity's accounting system

flowchart

the auditor's understanding of an entity's internal control over financial reporting are documented using a(n) ____________

flowchart

____________ controls relate to the overall information processing environment and have a pervasive effect on the entity's computer operation and are sometimes referred to as supervisory, management or information technology controls

general

controls over network operations are included as part of _______ _________ which relate to the overall information processing environment

general controls

the accuracy assertion is based on

GAAP

when an entity's system of ___________ ____________ is considered effective, evidence generated by the accounting system is viewed as reliable

internal control

the auditor's understanding of __________ is used to identify the controls that are likely to prevent, or detect and correct, material misstatement in specific assertions

internal controls

what type of relationship exists between the sufficient and appropriateness of audit evidence

inverse relationship

Identify the fraud risk factors that organizations must consider in assessing risks to the achievement of objectives

opportunities rationalization incentives

A rule or guideline that calls for certain activities to take place in certain circumstances is known as a(n) _____________

policy

two types of confirmations:

positive and negative

the quality of an expectation is referred to as the __________ of the expectation

precision

significant fluctuations in this ratio may indicate that selling, general and administrative expenses are misstated

profit margin

modeling the association between certain elements of the balance sheet and related income statement accounts is typically done using ___________ analysis

reasonableness

footing, crossfooting, reconciling subsidiary ledgers and testing postings are all examples of ____________

recalculation

to properly present information on the financial statements a(n) __________ entry that affects either the income statement or the balance sheet must be made

reclassification

assertions related to account balances at period end (RECV)

rights and obligations existence completeness valuation and allocation

the focal pint for reviewing the work of subordinates and for quality control reviewers are the ______________ ______________

working papers

given the following, calculate the return on equity net sales: 679,600 gross profit: 297,000 interest expense: 1,320 net income: 27,865 total assets: 357,250 total debt: 123,090 total stockholders' equity: 234,160

11.90% 27,865/234,160 = 11.90%

the most commonly used analytical procedure is most likely

comparison of current-year financial information with comparable prior periods

given the following, calculate the return on assets net sales: 679,600 gross profit: 297,000 interest expense: 1,320 net income: 27,865 total assets: 357,250 total debt: 123,090 total stockholders' equity: 234,160

27,865/357,250 = 7.80%

given the following, calculate the operating cash flow ratio cash flow from operations: 32,760 cash flow from investing activities: (196,000) cash flow from financing activities: 200,000 cash: 52,540 a/r: 28,625 inventory: 138,900 prepaid insurance: 26,000 current liabilities: 114,450

32,760/114,450 = .29

given the following, calculate the profit margin net sales: 679,600 gross profit: 297,000 interest expense: 1,320 net income: 27,865 total assets: 357,250 total debt: 123,090 total stockholders' equity: 234,160

4.10% 27,865/679,600 = 4.10%

a company generated total sales of 1,500,000 and has a/r of 14,550. if 85% of sales are made on credit, the days outstanding in a/r is

4.17 days 1,500,000x85%=1,275,000/14,550=87.6 receivables turnover 365/87.6= 4.17 days

These provide a diagrammatic representation of the entity's accounting system

Flowcharts

requests that customers respond only when they disagree with the amount due to the client.

A negative confirmation

requests that customers indicate whether they agree with the amount due to the client stated in the confirmation.

A positive accounts receivable confirmation

under current auditing standards, management assertions fall into which of the following categories?

Assertions about classes of transactions and events for the period audited Assertions about account balances at the period end Assertions about presentation and disclosure

Which of the following statements about internal control is correct? A. A properly maintained internal control system reasonably ensures that collusion among employees cannot occur. B. The cost-benefit relationship is a primary criterion that should be considered in designing an internal control system. C. An exceptionally strong internal control system is enough for the auditor to eliminate substantive procedures on a significant account balance. D. The establishment and maintenance of internal control is an important responsibility of the internal auditor.

B. The cost-benefit relationship is a primary criterion that should be considered in designing an internal control system.

After obtaining an understanding of an entity's internal control system, an auditor may set control risk at high for some assertions because he or she

Believes the internal controls are unlikely to be effective.

according to _______ the purpose of its framework is to help management better control the organization and to provide boards of directors an added ability to oversee internal control

COSO

Internal control is a process designed to provide reasonable assurance regarding the achievement of which objective? A. Effectiveness and efficiency of operations. B. Reliability of financial reporting. C. Compliance with applicable laws and regulations. D. All of these are correct

D. All of these are correct

an effective accounting system established methods and records that will

Determine the proper time period in which transactions occurred Describe transactions in sufficient detail to permit proper classification Identify and record all valid transaction

The auditor may decide to follow a substantive strategy for some or all assertions because

Implemented controls are assessed as ineffective Testing the operating effectiveness of the controls would be inefficient Implemented controls do not pertain to the assertion under consideration

Made up of two broad categories referred to as general and application controls

Information processing controls

Managers should periodically check the quality of subordinates' work

Performance reviews

The auditor should consider each of the following factors when using confirmations to test accounts receivable:

The type of confirmation request. Prior experience with the client or similar engagements. The intended respondent.

T/F: An entity's mix of manual and automated controls varies with the nature and complexity of the entity's use of IT

True

T/F: An entity's risk assessment process should consider the possibility of events that threaten the achievement of objectives

True

T/F: auditors need to understand how management considers risks because many types of risk can impact financial statements

True

T/F: lack of management review is one of the primary sources of internal control weakness

True

the activity in a particular account for the period is generally included in the _________ ____________ working papers

account analysis

when management discloses the fair value of stock or bond investments, it is asserting which of the following

accuracy valuation

this assertion address whether all assets, liabilities and equity interests that should have been included as ending balances on the financial statements have been included

completeness

when management asserts that no material disclosures have been omitted from the footnotes and other disclosures accompanying the financial statements, it is making an assertion about

completeness

failure to meet the __________ assertion results in an understatement in the related account, while failure to meet the _________ assertion results in an overstatement in the account

completeness occurrence

in deciding on the nature and extent of the understanding of internal control needed for the audit, the auditor should consider the entity's operations and systems

complexity sophistication

auditors use __________ _______ procedures to obtain an understanding of the entity's internal controls which help the auditor to identify key controls, recognize types of potential misstatements and design test of controls and substantive procedures

risk assessment

T/F: proper segregation of duties is important in preventing errors from processing

True

T/F: the cost of internal controls should not exceed the benefits derived

True

Examinig ________ ___________ and their related accounts allows the auditor to gather evidence by understanding the processing of related transactions through the information system from their origin to their ultimate disposition in the accounting journals and ledgers

business processes

the assertion related to these address whether financial information is appropriately presented and described, and disclosures are clearly expresses

classification understandability

Within an entity, there is always a risk of the fraud of _________ between individuals will destroy the effectiveness of segregation of duties

collusion

when an employee who receives cash receipts from customers conspires with another employee who records those receipts in the customers' records to steal cash from the entity, this is known as?

collusion

explanations for significant differences observed for substantive analytical procedures must be followed up and resolved through

evaluation quantification corroboration

the working papers document the auditor's compliance with auditing standards and particularly compliance with the standards of ______________

fieldwork

output documents from the application that are used as source documents in later processing are called ________ documents

turnaround

this type of report provides assurance on the operating effectiveness of the service organization's controls based on the auditor's test of those controls

type 2 report

assertions about ___________ or __________ address whether assets, liabilities and equity interests in the financial statements are at appropriate amounts and any resulting adjustments are appropriately recorded

valuation allocation

first selecting a source document and then following it into the journal or ledger is referred to as ________________

tracing

data capture controls must ensure that

transactions are only recorded once all transactions are recorded in the application system rejected transactions are identified, controlled, corrected and reentered

comparing current year financial statements with budgeted amounts is usually performed using ________ analysis

trend

in general, _________ analysis is the least precise method to form an expectation while ______ analysis is the most precise

trend reasonableness

the working __________ ___________ links the amounts if the financial statements to the audit working papers

trial balance

T/F: auditors are mainly concerned that program changes are properly authorized, tested and implemented

true

T/F: errors can be identified at any point in the system

true

T/F: errors must be corrected and resubmitted at the correct point in processing

true

T/F: good documentation is an important component of managing controls

true

Monitoring is a major component of the COSO Internal Control—Integrated Framework. Which of the following is not correct in how the company can implement the monitoring component? A. The independent auditor can serve as part of the entity's control environment and continuous monitoring. B. Monitoring and other audit work conducted by internal audit staff can reduce external audit costs. C. Monitoring can be conducted as a separate evaluation. D. Monitoring can be an ongoing process.

A. The independent auditor can serve as part of the entity's control environment and continuous monitoring.

Which of the following audit techniques would most likely provide an auditor with the most assurance about the effectiveness of the operation of a control? A. Walkthrough. B. Inquiry of entity personnel. C. Reperformance of the control by the auditor. D. Observation of entity personnel.

C. Reperformance of the control by the auditor.

According to COSO, a system of internal controls is designed to provide reasonable assurance about the achievement of entity objectives in which of the following categories?

Compliance with applicable laws and regulations Reliability, timeliness and transparency of internal and external financial and non-financial reporting Effectiveness and efficiency of operations

Assessing control risk below high involves all of the following except A. analyzing the achieved level of control risk after performing tests of controls. B. performing tests of controls. C. identifying specific controls to rely on. D. concluding that controls are ineffective.

D. concluding that controls are ineffective.

T/F: Monitoring is an effective component of internal control, whether or not deficiencies are communicated to those with oversight responsibilities in a timely manner

False

What should be used when it is necessary to show the movement of a document or report back to a previous function?

On-page connector

An effective system of internal controls allows management to focus on which of the following while maintaining compliance with relevant laws and minimizing surprises?

Operations Financial performance goals

In order to set control risk below a high level, the auditor must:

Perform test of the identified controls Identify specific controls that will be relied upon Conclude on the achieved level of control risk

Periodic counting and comparison with amounts shown on control records

Physical controls

This strategy means that the auditor intends to depend on the entity's controls and that the auditor may need a more detailed understanding of internal controls to develop a preliminary or "planned" assessment of control risk

Reliance strategy

Separating the custody of assets, authorization of transactions and recording of transactions

Segregation of duties

these controls are concerned with the physical protection of computer equipment, software and data as well as loss of assets and information through theft or unauthorized use

access and security controls

An auditor's primary consideration regarding an entity's internal controls is whether they

affect the financial statement assertions

PCAOB standards require that audit documentation contain

all documents that form the basis of the audit

this consists of evaluations of financial information through the examination of plausible relationships among both financial and non-financial data

analytical procedures

___________ controls are part of the computer programs used in the accounting system

application

data capture, data validation, processing, output and errors controls are all categories of ________

application

ensuring the completeness and accuracy of transaction processing, authorization, and validity is the goal of ________ controls

application

These apply to the processing of individual applications and help ensure the occurrence, completeness and accuracy of transaction processing

application controls

these apply to the processing of individual applications and help ensure the occurrence, completeness and accuracy of transaction processing

application controls

this return on equity ratio is similar to return on ________ ratio except that is shows only the return provided by the resources contributed by the _______

assets stockholders

confirmation

audit evidence that is a direct written response from a third party (the confirming party) to the auditor, in paper form or by electronic or other medium

the document that outlines the auditor's understanding of the entity and potential risks as well as the strategy to be followed by the auditor is the ____________ ______________

audit plan

the audit procedures that will be conducted by the auditor are contained in the __________ _________

audit programs

the _________ assertion relates to whether all transactions have been properly approved

auhtorization

If properly designed, these type of controls should operate more consistently and are not typically subject to human errors or mistakes in its application

automated controls

using industry information as a basis of comparison can serve as a(n) __________ for assessing how well the entity's financial position and performance compare with others in the industry

benchmark

increase control risk and lower detection risks we might

change the nature of the substantive test from less effective to more effective procedure change the timing of substantive test from interim to year-end change the extent of substantive test by examining more items

management assertion that ordinary maintenance costs to repair tangible assets are charged to the repairs and maintenance expense account rather than being capitalized, is an example of the ________ assertion

classification

The ___________ assertion relates to whether all transactions and events that occurred during the period have been recorded

completeness

components of internal control (CRIME)

control risk information monitoring environment

these are the policies and procedures that help ensure that management's directives are carried out and implemented to address risks identified in the risk assessment process

control activities

This exists in internal controls when the design or operation of a control does not allow management or employees to prevent, detect or correct misstatements on a timely basis

control deficiency

The ___________ ___________ sets the tone of an organization and establishes the foundation for implementing the entity's system of internal control

control environment

This principle includes assignment of authority and responsibility for operating activities and establishment of reporting relationships and authorization hierarchies

control environment

starting with tests of ________ is generally more effective and efficient than starting with tests of ____________

controls details

examination of supporting evidence, inquiries of independent persons and evaluating evidence obtained from other auditing procedures are all common _____________ procedures

corroborating

these controls include rotation of duties and mandatory vacations and control computer operations, data preparation and work flow control

data center and network controls

these controls can be applied at various stages and are mainly concerned with the accuracy assertion

data validation controls

An effective accounting system establishes methods and records that will

describe transactions in sufficient detail to permit proper classification determine the proper time period in which transactions occurred identify and record all valid transaction

The __________ of testing between the accounting records and source documents is important when testing the occurrence and completeness assertions

direction

Identify the components of internal controls as defined by the COSO Framework

entity's risk assessment information and communication monitoring activities control environment

a management statement that the inventory shown on the balance sheet was available for sale at the balance sheet date is an example of the ________ assertion

existence

inbound receipt of relevant information and providing internal control related information to parties outside the organization in response to requirements and expectation is enabled by ___________ communication

external

how management identifies risks relevant to the preparation of financial statements, estimates their significance, assesses the likelihood of their occurrence and decides on how to manage them is most directly relevant to the

external auditors

T/F: if the amount of difference between the auditor's expectation and the recorded amount exceeds the auditor's tolerable difference, the auditor accepts the account

false

T/F: inspecting tangible assets provides assurance for the rights and obligations assertion

false

T/F: the auditor is required to obtain corroborative evidence for planned analytical procedures

false

audit documentation is the property of the

independent auditors

five factors that affect the reliability of evidence

independent source outside the entity effectiveness of internal controls auditor's direct personal knowledge documentary evidence original documents

the process of ________ and _________________-_____________ provides a trail from the financial statements to the individual audit documents that a reviewer can easily follow

indexing cross-referencing

in order to evaluate profitability ratios, each should be interpreted by comparison to ___________ data

industry

Identify factors that can impact the effectiveness of the board of directors or audit committee

information availability experience of members nature and extent of interactions with auditors

The infrastructure, software, people, procedures and data used to support the functioning of internal control is known as a(n) ___________ __________

information system

in many entity;s, this produces much of the knowledge used in monitoring

information system

symbols used in flowcharts are divided into

input/output symbols processing symbols data flow and storage symbols

seeking information or knowledgeable persons within the entity or outside the entity is the basis of _____________

inquiry

this is an important audit procedure that is used extensively throughout the audit and is often complementary to performing other audit procedures

inquiry

auditors usually use the term _________ to refer to unwritten questions asked of the entity's personnel or of a third party, and the term __________ to refer to written requests for a written response from a third party

inquiry confirmation

types of evidence that might be gathered during the application of risk assessment procedures, tests of controls or substantive procedures?

inquiry observation scanning confirmation

examining internal or external records or documents that are in paper form, electronic form or other media is known as ______________

inspection

counting cash on hand and examining inventory are examples of ______ of ________ assets

inspection tangible

on most audit engagements, this makes up the bulk of the evidence gathered by the auditor

inspection of records or documents

processes that are generally considered highly reliable because the auditor has direct knowledge about them

inspection of tangible assets reperformance of tangible assets recalculation of tangible assets

when audit risk is low and the risk of material misstatement is high, detection risk will be set at

low

If the auditor determines that internal controls are properly designed and implemented and the auditor intends to rely on those controls, the auditor will

make an assessment of control risk based on the result of tests of controls perform tests of controls to obtain audit evidence that controls are operating effectively

Who should specify the competence level for a particular job and translate it into a job description that details the specific knowledge and skills required

management

who has the responsibility to design and maintain a system of internal control that provides reasonable assurance that assets and records are properly safeguarded, and that the entity's information system generates information that is reliable for decision making

management

Which of the following are responsible for establishing mechanisms to communicate and hold individuals accountable for performance of internal control responsibilities across the organization

management board of directors

the auditor should gain sufficient knowledge about the control environment to understand the attitudes, awareness, and actions concerning the control environment of

management board of directors

the understanding of internal control may be documented in a(n) ____________ which is most appropriate when the entity has a simple internal control system

memorandum

the auditor should obtain an understanding of the major types of activities the entity uses to __________ internal controls, including the sources of information related to activities

monitor

intended to assess the quality of internal control performance over time

monitoring of controls

the __________ precise the expectation, the __________ the likelihood that the difference is actually a misstatement

more greater

the heading of all audit documentation should include the

name of the entity title of the working paper entity's year-end date

If an entity's accounting system has control weaknesses that result in a high level of assessed control risk, substantive procedures will probably

not be conducted at interim dates

The highest-quality and most reliable audit evidence that segregation of duties is properly implemented is obtained by

observation by the auditor of the employees performing control activities.

To obtain an understanding of an entity's internal controls auditors may use

observation of entity activities and operations inspection of entity documents and reports inquiry of appropriate personnel

The _________ assertion is relevant for revenue transactions because the entity's personnel might have incentives to record fictitious transactions

occurrence

data capture controls are concerned primarily with which of the following assertions

occurrence accuracy completeness

assertions about classes of transactions and events during the period under audit (OAC)

occurrence authorization accuracy completeness cutoff classification

when management presents capitalized lease transactions on the balance sheet as leased assets, the related liabilities as long-term debt and the related footnote, it is asserting

occurrence, rights and obligations

Test of controls directed toward ____________ _____________ are concerned with assessing how the control was applied, the consistency with which it was applied during the audit period and by whom it was applied

operating effectiveness

the main concern of these controls is that computer reports, checks, documents or other printed or displayed information may be distributed or displayed to unauthorized users

output controls

most public accounting firms maintain ____ files containing historical data about the entity that are of continuing relevant to the audit and ___________ files that include information and data specifically related to the year's audit

permanent current

Authorization requirements for access to computer programs and periodic counting and comparison with amounts shown on control records are examples of

physical controls

the primary concern of __________ is simply whether the relationship used to test the assertion makes sense

plausibility

Many organizations prepare ___________ which include documentation of the accounting system and related control activities

procedures manuals

these controls ensure proper execution of transactions

processing controls

the entity;s success or failure for a given period is measured by ________ ratios

profitability

the functions of audit documentation are to

provide the basis for the review of the quality of work aid in the planning, performance and supervision of the audit provide principle support that the audit was conducted in accordance with GAAS

internal control ____________ provides a systematic way for the auditor to investigate the area and is generally used for entities with a relatively complex internal control structure

questionnaires

this ratio includes only assets that are most readily convertible to cash and provides a picture of the entity's liquidity position

quick ratio

Information that is capable of making a difference in user decisions has the characteristic of _____________

relevance

information that is capable of making a difference in user decisions has the characteristic of _____________

relevance

the ________ of audit evidence refers to its relationship to the assertion being tested

relevance

the two fundamental qualitative characteristics for external financial reporting are

relevance faithful representation

appropriateness depends on

relevance reliableness

evidence is considered appropriate when it provides information that is

relevant reliable

the ability to develop precise expectations is influenced by the ___________ of the available data

reliability

whether a particular type of evidence can be depended upon to signal the true state of an assertion is the __________ of evidence

reliability

The controls that are of most direct relevance to a financial statement audit are those that contribute to financial statement

reliability transparency timeliness

When an auditor decides to follow a(n) ______________ strategy, that auditor has to understand the control activities that relate to assertions for which a lower level of control risk is expected

reliance

this involves the independent execution by the auditor of procedures or controls that were originally performed by company personnel

reperformance

a system of internal controls consists of the policies and procedures designed to provide reasonable assurance regarding the achievement of the company's objectives in the following categories:

reporting operations compliance

Which of the following communicate policies and procedures to the entity's personnel

reporting manuals accounting manuals policy manuals

setting and audit strategy

requires a detailed understanding of the entity's internal controls

this ratio indicated the return earned on the resources invested by both the stockholders and the creditors

return on assets

assertions about ________ and _________ address whether the entity owns or controls the assets included on the financial statements, and that liabilities are debt of the entity

rights obligations

As it relates to the external financial reporting objective, the entity's ____________ ____________ process should consider internal and external events and circumstances that may arise and adversely affect the entity's ability to initiate, authorize, record, process and report financial data consistent with management's financial statement assertions

risk assessment

used to obtain an understanding of the entity and its environment, including its internal control, to assess the risks of material misstatement at the financial statement and relevant assertion levels

risk assessment procedures

this process includes consideration of possible changes in the internal or external environment because changes can introduce or change risks to the entity's objectives

risk identification process

searching for large and unusual items in the accounting records and reviewing transactions for errors are examples of _____________

scanning

the auditor's exercise of professional judgment to review accounting data to identify significant or unusual items to test is referred to as ____________

scanning

allowing the individual who opens mail and receives cash payments to have access to the accounts receivable subsidiary ledger is a violation of the _____________ ______________ ____________ principles

segregation of duties

If the auditor determines that internal controls are not properly designed or not implemented the auditor will

set the level of control risk at high use substantive procedures to reduce the risk of material misstatement to an acceptable level

Significant deficiencies are matters that come to an auditor's attention that should be communicated to an entity's audit committee because they represent

significant deficiencies in the design or operation of the internal control.

a(n) ________ ______ in internal control is less severe than a material weakness yet important enough to merit attention by those charged with governance

significant deficiency

coverage ratios provide information on the long-term ___________ of the entity

solvency

assume an entity has 2,500 customers. If the audit mails confirmation to the 25 of the largest customers and only 20 respond the auditor must

still gather sufficient evidence on each of the 25 accounts

The last step in the decision process if performing ___________ procedures

substantive

When an auditor decides to follow a(n) _______________ strategy, little work is done on understanding specific control activities

substantive

used to detect material misstatements at the relevant assertion level

substantive procedures

Regardless of the assessed level of control risk, an auditor would perform some

substantive procedures to restrict detection risk for significant transaction classes.

to be persuasive evidence must be both

sufficient and appropriate

This type of flowchart includes processing steps and computer processing

systems flowchart

used to test the operating effectiveness of controls in preventing, or detecting and correcting, material misstatements at the relevant assertion level

test of controls

the overall decision approach used to gather evidence is referred to as the audit _____ ______

testing hierarchy

the overall decision approach used to gather evidence is referred to as the audit __________ __________

testing hierarchy

when a reliance strategy is chosen

tests of controls are used to assess the achieved level of control risk

these people significantly influence the control consciousness of the entity and they must take their fiduciary responsibilities seriously and actively oversee the entity's accounting and reporting policies and procedures

the board of directors the audit committee

when a substantive analytical procedure is used as the principal substantive procedure for a significant financial statement assertion, the auditor should document

the expectation and hot it was developed results of the comparison of the expectation to the recorded amounts any additional auditing procedures performed in response to significant differences identified

notations that are made by the auditor near, or next to, an item or amount on an audit document that are used to document work performed are called ___________ __________

tick marks

the amount of difference that can be accepted will generally always be lower than __________ ___________

tolerable misstatement