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Ch06 modern auditing boynton
1. Modern Auditing:
Modern Auditing:
Assurance Services and the Integrity
Assurance Services and the Integrity
of Financial Reporting, 8th Edition
of Financial Reporting, 8th Edition
William C. Boynton
California Polytechnic State
University at San Luis Obispo
Raymond N. Johnson
Portland State University
Chapter 6 – Audit Evidence
3. Audit Evidence Defined
Audit Evidence Defined
• Audit Evidence
– Accounting records
– Corroborating information
• Accounting Records
• Other Information
4. Assertions and Specific Audit
Assertions and Specific Audit
Objectives
Objectives
• Five Management Assertions (GAAS)
– Existence and Occurrence
– Completeness
– Rights and Obligations
– Valuation or Allocation
– Presentation and Disclosure
5. Assertions and Specific Audit
Assertions and Specific Audit
Objectives
Objectives
• Transaction Class Audit Objectives
– Occurrence
– Completeness
– Accuracy
– Cutoff
– Classification
6. Assertions and Specific Audit
Assertions and Specific Audit
Objectives
Objectives
• Account Balance Audit Objectives
– Existence
– Completeness
– Rights and Obligations
– Valuation and Allocation
7. Assertions and Specific Audit
Assertions and Specific Audit
Objectives
Objectives
• Disclosure Audit Objectives
– Occurrence and Rights and Obligations
– Completeness
– Understandability
– Accuracy and Valuation
8. Sufficiency of Audit Evidence
Sufficiency of Audit Evidence
• Materiality
• Risk of Material Misstatement
• Size of Population
• Characteristics of Population
13. Study Break
Study Break
1. Which of the following is not a
transaction class audit objective?
A. Existence
B. Occurrence
C. Accuracy
D. Cutoff
A. Existence
14. Study Break
Study Break
2. Which of the following is not an
account balance audit objective?
A. Existence
B. Completeness
C. Classification
D. Rights and Obligations
C. Classification
15. Study Break
Study Break
3. All of the following affect the sufficiency
of audit evidence except:
A. Materiality
B. Risk of Material Misstatement
C. Relevance of Audit Evidence
D. Size and Characteristics of the
Population
C. Relevance of Audit Evidence
16. Objectives of Audit Procedures
Objectives of Audit Procedures
• Obtain an understanding of the
entity and its environment
• Test operating effectiveness of
controls
• Support assertion or detect material
misstatements
17. Types of Audit Procedures
Types of Audit Procedures
• Inspection of Documents or Records
– Vouching
– Tracing
18. Types of Audit Procedures
Types of Audit Procedures
• Inspection of Tangible Assets
• Observation
• Inquiry
• Confirmation
19. Types of Audit Procedures
Types of Audit Procedures
• Recalculation
• Reperformance
• Analytical Procedures
• Computer-Assisted Audit Techniques
20. Four Decisions About Audit
Four Decisions About Audit
Procedures
Procedures
• Staffing and Supervising the Audit
• Nature of Audit Procedures
• Timing of Audit Procedures
• Extent of Audit Procedures
21.
22. Documenting Audit Decisions
Documenting Audit Decisions
and Audit Evidence
and Audit Evidence
• Audit Program
– Recommended by GAAS
– Documents decisions
• Working Papers
– Documents audit decisions
– Documents audit evidence obtained
23. Types of Working Papers
Types of Working Papers
• Working Trial Balance
• Schedules and Analyses
• Audit Memoranda and Corroborating
Information
• Adjusting and Reclassifying Entries
26. Reviewing Working Papers
Reviewing Working Papers
• Scope of Work Performed
• Evidence and Findings Obtained
• Audit Judgment Exercised
• Conclusions Reached by the Auditor
28. Study Break
Study Break
4. ________ involves selecting entries in the
accounting records and inspecting the
documentation that served as the basis
for the entries.
A. Vouching
B. Tracing
C. Observation
D. Inquiry
A. Vouching
29. Study Break
Study Break
5. These decisions involve determining
whether the procedures will be
performed at an interim date or at
fiscal year-end.
A. Staffing and Supervision
B. Nature of Audit Tests
C. Timing of Audit Tests
D. Extent of Audit Tests
C. Timing of Audit Tests
30. Study Break
Study Break
6. This working paper file contains data
that are expected to be useful to the
auditor in future engagements with the
client.
A. Permanent file
B. Current file
C. Daily file
D. Annual file
A. Permanent file