ACC 821 Midterm: MIDTERM REVIEW

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emeralddonkey304

19 Apr 2016

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Document Summary

Midterm: planning memo + something else (i. e. assignment internal control) Re. planning for the year ended xxxxxx of [company name] Discussion of key users and their reliance upon the f/s. Who are the key users and are they placing special reliance upon the f/s [ i. e. investment decision, lending decision] Conclusion: high or low, why; [ if this was a new client, this analysis would be more in-depth; if it is a continuing client, you will highlight those new issues that would heighten engagement risk] What accounts are impacted? identify significant risks, make a conclusion on risk of material misstatement. Rapid change: a business whose inventory becomes obsolete quickly experience high inherent risk. Control risk management integrity; chance that won"t be detected by the client: management override. Detection risk chance that won"t be detected by the auditor; decrease in dr, decrease in ar, more work o. Financial statement level: users of the f/s and purpose manager incentives.

Related Questions

Which of the following statements is most correct regarding the independent auditor's reliance on the tests of controls performed by the internal auditors to reduce their substantive testing?

1-The independent auditor must obtain assurance of the independence of the internal auditors but need not test their work.

2-It is not acceptable for the independent auditor to rely upon the work of the internal auditors.

3-There are no restrictions in relying upon the work of internal auditors.

4-The independent auditor must evaluate the competency and objectivity of the internal auditors and must test a sample of the work of the internal auditors in order to rely upon their work.

The term "materiality" as used in auditing is best described as the

1-substance of the auditing procedures.

2-amount of misstatement on the financial statements that would influence a decision maker.

3-underlying evidence upon which the audit opinion is based.

4-amount of material the auditor gathers as evidence to support the audit opinion.

Prior to accepting an audit client an auditor has a professional obligation to

1-contact the predecessor auditor.

2-perform preliminary analytical review procedures.