Auditing Chapter 6

Réussis tes devoirs et examens dès maintenant avec Quizwiz!

Three fundamental conditions outlined by the fraud risk triangle for the commission of fraud

1. some type of incentive or pressure 2. an opportunity to commit the fraud 3. an attitude that allows the individual to rationalize the act

Many firms have developed a(n) ______ _______ that uses a combination of financial and nonfinancial performance measures to assess the organization

balanced scorecard

The auditor's consideration of _______ risk involved analyzing the design and implementation of internal control to decide if the system appears adequate to detect and correct material misstatements

control

Analytical procedures provide _____ evidence as to the reasonableness of various revenues and expenses

direct

If the auditors' objective is to test _____, they follow the stream of evidence back to its source

existence

The time interval from the beginning of audit work to the balance sheet date is called the ____ period

interim

The concept ______ recognizes that some matters are important to the fair presentation of financial statements while others are not

materiality

When materiality is allocated to a particular account, it is referred to _____ materiality

performance

Inherent risk

risk of material misstatement of an assertion about an account without considering internal controls

The three fundamental conditions of the fraud _____ ______ are (1) incentive or pressure (2) opportunity or (3) attitude to rationalize the act

risk triangle

The ______ portion of the audit program is aimed at confirming financial statement amounts, and is usually organized around the balance sheet accounts

substantive procedures

substantive portion of the audit

tests of financial statement account balances

A basis for estimating fees, communicating areas of high risk and measuring the efficiency of staff is provided by the ____ _____

time budget

The application of performance materiality to a particular audit procedures is _____ ______

tolerable misstatement

The planning materiality amount that will require the auditors to gather the most audit evidence is:

10,000

Fraudulent Financial Reporting

Material misstatement of financial statements by management with the intent to mislead financial statement users

Misappropriation of Assets

Theft of client assets by an employee or officer of the organization

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

inherent

The audit ______ is a description of the nature, timing, and extent of the audit procedures to be performed

plan

Systems portion of the audit

procedures to assess the effectiveness of the internal controls

If auditors identify fraud risks, the auditors may modify their overall approach to the audit by:

-professional skepticism and audit evidence -assigning personnel and supervision -accounting principles -predictability of auditing procedures

overall audit strategy

defines audit scope, reporting objectives, timing, etc.

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

transaction

Auditors indirectly verify revenue, cost of goods sold and expenses by substantiating changes in the ______ and _______ accounts

asset;liability

An audit procedure that serves as a test of controls and a substantive test of the details of the transactions that occurred during the year is known as a(n) ____ procedure

dual-purpose

Direct evidence as to the reasonableness of various revenues and expenses is provided by the auditor's _____ procedures

analytical

Significant risks often relate to transaction that are

-nonroutine -estimation

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

completeness

Auditors should document several elements of risk assessment including:

-the discussion of the audit team concerning the risk of material misstatements due to error or fraud -The key elements of the understanding of the entity and its environment -the assessment of the risk of material misstatement at both the financial statement level and the relevant assertion level -the risks identified

Many inherent risks arise because of _____ risks faced by management, such as the possibility of material misstatement due to fraud

business

The auditor's selection of ______ audit procedures is based on the materiality of the account balances, transactions, and disclosures being audited and the assessed risk of material misstatement

further


Ensembles d'études connexes

Anatomy and Physiology Chp. 13 (Pt. 1 and Pt. 2)

View Set

Chapter 6: Proteins and Amino Acids

View Set

EASA Part 66 : Electronics Question4

View Set

Ch. 12 nursing mgmt during pregnancy

View Set

AP Government: Chapter 8-9 President and Bureaucracy

View Set

CH. 4: Human digestion and absorption

View Set

SBM2000 Chapter 11 Quiz: Supply Chain Management

View Set