Terms in this set (21)
- 1. Understanding the client's business and industry.
- 2. Assessment of the entity's ability to continue as a going concern.
- 3. Indication of the presence of possible misstatements in the financial statements.
- 4. Reduction of detailed audit tests.
- Which audit procedures to use.
- What sample size to select for a given procedure.
- Which items to select from the population.
- When to perform the procedure.
What are the four major evidence decisions that must be made?
List the four major evidence decisions that must be made on every audit. 1. Sample size: Depends on risk and the level of automation in the program 2. Timing: Depends on scheduling of staff and when audit evidence will be most effective
What evidence does the Auditor gather?
The auditor is gathering evidence to evaluate whether the financial information presented is in line with the criteria presented. The evidence they gather depends on persuasiveness but also on minimizing cost. To be persuaded instead of convinced minimizes the cost of the audit.
What is an audit procedure Quizlet?
An audit procedure is the detailed instruction for the collection of a type of audit evidence that is to be obtained. Because audit procedures are the instructions to be followed in accumulating evidence, they must be worded carefully to make sure the instructions are clear. Nice work! You just studied 19 terms!
What are the four components of an audit program for accounts receivable?
An audit program for accounts receivable consists of all the audit procedures used to test accounts receivable. The four things to be included are audit procedures, sample size, timing of the tests and items to select.
What are the 4 types of audit evidence?
What Are the Types of Audit Evidence?Physical examination. ... Confirmations. ... Documentary evidence. ... Analytical procedures. ... Oral evidence. ... Accounting system. ... Reperformance. ... Observatory evidence.
What are the four principles of auditing?
Integrity which is the foundation of professionalism. Fair presentation or the obligation to report accurately and truthfully. Professional care or the application of diligence and judgment when auditing. Confidentiality which is securing the information of a business.
What is audit evidence decision?
The auditors must gather sufficient competent evidence to provide an adequate basis for their opinion on the financial statements. The audit evidence is intended to assure the users of accounting information that the financial statements are a credible source of information about the organization.
What are the elements of audit evidence?
Sufficient appropriate audit evidence They can include inspection, observation, confirmation, recalculation, reperformance and analytical procedures, in addition to inquiry, as the latter does not normally provide sufficient audit evidence on its own.
What are the main auditing standards?
Generally accepted auditing standards (GAAS) are a set of systematic guidelines used by auditors when conducting audits on companies' financial records. GAAS helps to ensure the accuracy, consistency, and verifiability of auditors' actions and reports.
What are the basic audit standards?
“The basic principles for auditing standards are basic assumptions, consistent premises, logical principles and requirements which help in developing auditing standards and serve the Auditors in forming their opinions and reports, particularly in cases where no specific standards apply.”
What are the 4 characteristics of evidence?
It is, in short, relevant, verifiable, representative, and actionable. It is important to note that evidence per se does not lead to confirmations of value and quality.
What are examples of audit evidence?
Examples of auditing evidence include bank accounts, management accounts, payrolls, bank statements, invoices, and receipts. Good auditing evidence should be sufficient, reliable, provided from an appropriate source, and relevant to the audit at hand.
What is audit evidence and why it is important?
Audit evidence simply put is the documentation support and the information collected that allows your auditor to review your entity's financial transactions, internal controls, and other items necessary to allow your auditors to certify the financial statements.
What are the main procedures for obtaining audit evidence?
Audit procedures to obtain audit evidence can include inspection, observation, confirmation, recalculation, reperformance and analytical procedures, often in some combination, in addition to inquiry.
What are the 5 audit procedures?
What Is the Audit Process Step-by-Step?Inspection. In this phase, the auditor checks the accounts payable or receivable transactions for potential misstatements and other relevant reporting standards.Observation. ... Confirmation. ... Recalculation. ... Reperformance.
Which of the following is a type of audit evidence?
The auditor can obtain different types of audit evidence, including physical examination, documentation, analytical procedure, observations, confirmations, inquiries, etc.
What are the 7 audit principles?
The ISO 19011:2018 Standard includes seven auditing principles:Integrity.Fair presentation.Due professional care.Confidentiality.Independence.Evidence-based approach.Risk-based approach.
What is auditing and explain the principle of auditing?
Auditing is a systematic and scientific procedure of inspection of the financial statements of an organization. And like any scientific procedures, the audit also has certain principles and rules that govern it. These principles are the Standards of Auditing or the Auditing and Assurance Standards (AAS).
What are accounting principles?
What Are Accounting Principles? Accounting principles are the rules and guidelines that companies and other bodies must follow when reporting financial data. These rules make it easier to examine financial data by standardizing the terms and methods that accountants must use.
What are the principles of internal audit?
Core Principles for the Profession of Internal AuditingDemonstrates integrity.Demonstrates competence and due professional care.Is objective and free from undue influence (independent).Aligns with the strategies, objectives, and risks of the organization.Is appropriately positioned and adequately resourced.More items...
What are the four major evidence decisions that must be made on every audit?
The four major evidence decisions are: 1. Sample size: Depends on risk and the level of automation in the program. 2. Timing: Depends on scheduling of staff and when audit evidence will be most effective. 3.
Why do auditors gather evidence?
The auditor is gathering evidence to evaluate whether the financial information presented is in line with the criteria presented. The evidence they gather depends on persuasiveness but also on minimizing cost. To be persuaded instead of convinced minimizes the cost of the audit. Also, evidence is normally not sufficient enough for the auditor to be completely convinced.
What is audit program?
Tap card to see definition 👆. Audit programs are audit procedures for each component of the audit. It is important because the wording will affect what type of testing is done and is guidance for the staff. ---.
What are the factors that affect the appropriateness of a sample?
The timing and audit procedures selected affect the appropriateness criteria. The sufficiency factor is affected by the sample size chosen and items to select. Sufficiency refers to whether enough evidence is gathered (quantitative).
Why is audit program important?
It is important because the wording will affect what type of testing is done and is guidance for the staff. ---. An audit procedure is the detailed instruction for the collection of a type of audit evidence that is to be obtained.
What are the two determinants of persuasiveness?
The two determinants of the persuasiveness of evidence are competency and sufficiency. Competency refers to the degree to which evidence can be considered believable or worthy of trust. Competency relates to the audit procedures selected, including the timing of when those procedures are performed.
Why can an auditor only be persuaded with a reasonable level of assurance?
There are two primary reasons why the auditor can only be persuaded with a reasonable level of assurance, rather than be convinced that the financial statements are correct:1.The cost of accumulating evidence.
