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The controller compares the daily deposit slip to the total amount posted to customer accounts. Both amounts must agree.
Which goal must the internal controls accomplish for the business to survive?
How do external auditors differ from internal auditors? How does an external audit differ from an internal audit?
Describe what is meant by an audit procedure. Why is it important for audit procedures to be carefully worded?
Describe what is meant by an audit program for accounts receivable. What four things should be included in an audit program?
What are the characteristics of a confirmation? Distinguish between a confirmation and external documentation.
Distinguish between internal documentation and external documentation as audit evidence and give three examples of each.
In the current year, the client's financial statements show that the ratio has dropped from 2.6 to 2.05 over the past year.
List the purposes of audit documentation and explain why each purpose is important.
Why is it essential that the auditor not leave questions or exceptions in the audit documentation without an adequate explanation?
Define what is meant by a permanent file, and list several types of information typically included.
How does the auditor read and evaluate information that is available only in machine-readable form?
Explain why external evidence is more reliable than internal evidence.
Calculate the ratio of cost of goods sold to sales as a test of overall reasonableness of gross margin relative to the preceding year.
Give three examples of relatively reliable documentation and three examples of less reliable documentation.
Obtain a physical inventory count from the company president versus physically counting the client's inventory.
When are analytical procedures required during an audit? Explain why auditors use analytical procedures extensively in all parts of the audit.
What is the effect on the amount of evidence the auditor must accumulate when inherent risk is increased from medium to high for an audit objective?
What is continuous monitoring? How might a company use ACL to comply with requirements related to internal control over financial reporting?
What is meant by setting a preliminary judgment about materiality? Identify the most important factors affecting the preliminary judgment.
Distinguish between the terms performance materiality and preliminary judgment about materiality.
What qualitative factors should she also consider in deciding whether misstatements may be material?
How will the conduct of an audit of a medium-sized company be affected by the company's being a small part of a large conglomerate as compared.
Define the audit risk model and explain each term in the model. Also describe which two factors of the model when combined reflect the risk of material.
Explain the relationship between acceptable audit risk and the legal liability of auditors