Master ACC330: In-Depth Notes for
Midterms & Final Exam
Name the type of audit procedure:
Sending a written request to the entity's customers requesting that they report the
amount owed to the entity. - Confirmation
Name the type of audit procedure:
Examining large sales invoices for a period of two days before and after year-end to
determine if sales are recorded in the proper period - Inspection of records &
documents
Name the type of audit procedure:
Agreeing the total of the accounts receivable subsidiary ledger to the accounts
receivable general ledger account. - Inspection of records & documents
Reperformance
Name the type of audit procedure:
Discussing the adequacy of the allowance for doubtful accounts with the credit
manager - Inquiry
Name the type of audit procedure:
Comparing the current-year gross profit percentage with the gross profit percentage
for the last four years - Analytical Procedures
Name the type of audit procedure:
Examining a new plastic extrusion machine to ensure that this major acquisition was
received. - Inspection of a tangible asset
Name the type of audit procedure:
Watching the entity's warehouse personnel count the raw materials inventory -
Observation
Name the type of audit procedure:
Performing test counts of the warehouse personnel's count of the raw material -
Reperformance
Name the type of audit procedure:
Obtaining a letter from the entity's attorney indicating that there were no lawsuits in
progress against the entity - Confirmation
Name the type of audit procedure:
Tracing the prices used by the entity's billing program for pricing sales invoices to the
entity's approved price list - Inspection of records & documents
Reperformance
Occurrence - Transactions & events that have been recorded or disclosed have
occurred
, Completeness (T&E) - All transactions & events that should have been recorded
have been recorded
Authorization - All transactions & events have been properly authorized
Accuracy (T&E) - Amounts & other data relating to recorded transactions & events
have been measured & recorded appropriately
Cutoff - Transactions & events have been recorded in the correct accounting period
Classification (T&E) - Transactions & events have been recorded in the proper
accounts
Presentation (T&E) - Transactions & events are appropriately aggregated or
disaggregated & clearly described, & related disclosures are relevant &
understandable in the context of the requirements of the applicable financial
reporting framework
Existence - Assets, liabilities, & equity interests exist
Rights & Obligations - The entity holds or controls the rights to assets, and liabilities
are the obligations of the entity
Completeness (AB) - All assets, liabilities, & equity interests that should have been
recorded have been recorded
Accuracy, Valuation, & Allocation - Assets, liabilities, & equity interests have been
included in the financial statements at appropriate amounts, & any resulting valuation
or allocation adjustments have been appropriately recorded
Classification (AB) - Assets, liabilities, & equity interests have been recorded in the
proper accounts
Presentation (AB) - Assets, liabilities, & equity interests are appropriately aggregated
or disaggregated & clearly described, & related disclosures are relevant &
understandable in the context of the requirements of the applicable financial
reporting framework
Information Asymmetry - The manager generally has more information about the true
financial position and results of operations of the entity than the shareholders do
Internal Controls - Processes implemented by management that minimize waste,
fraud, or error
What does an integrated audit consist of? - An audit where the auditor expresses an
opinion on both a company's internal controls & its financial statements
3 fundamental concepts in conducting a financial statement audit - 1. Audit Risk
2. Materiality
3. Evidence
Midterms & Final Exam
Name the type of audit procedure:
Sending a written request to the entity's customers requesting that they report the
amount owed to the entity. - Confirmation
Name the type of audit procedure:
Examining large sales invoices for a period of two days before and after year-end to
determine if sales are recorded in the proper period - Inspection of records &
documents
Name the type of audit procedure:
Agreeing the total of the accounts receivable subsidiary ledger to the accounts
receivable general ledger account. - Inspection of records & documents
Reperformance
Name the type of audit procedure:
Discussing the adequacy of the allowance for doubtful accounts with the credit
manager - Inquiry
Name the type of audit procedure:
Comparing the current-year gross profit percentage with the gross profit percentage
for the last four years - Analytical Procedures
Name the type of audit procedure:
Examining a new plastic extrusion machine to ensure that this major acquisition was
received. - Inspection of a tangible asset
Name the type of audit procedure:
Watching the entity's warehouse personnel count the raw materials inventory -
Observation
Name the type of audit procedure:
Performing test counts of the warehouse personnel's count of the raw material -
Reperformance
Name the type of audit procedure:
Obtaining a letter from the entity's attorney indicating that there were no lawsuits in
progress against the entity - Confirmation
Name the type of audit procedure:
Tracing the prices used by the entity's billing program for pricing sales invoices to the
entity's approved price list - Inspection of records & documents
Reperformance
Occurrence - Transactions & events that have been recorded or disclosed have
occurred
, Completeness (T&E) - All transactions & events that should have been recorded
have been recorded
Authorization - All transactions & events have been properly authorized
Accuracy (T&E) - Amounts & other data relating to recorded transactions & events
have been measured & recorded appropriately
Cutoff - Transactions & events have been recorded in the correct accounting period
Classification (T&E) - Transactions & events have been recorded in the proper
accounts
Presentation (T&E) - Transactions & events are appropriately aggregated or
disaggregated & clearly described, & related disclosures are relevant &
understandable in the context of the requirements of the applicable financial
reporting framework
Existence - Assets, liabilities, & equity interests exist
Rights & Obligations - The entity holds or controls the rights to assets, and liabilities
are the obligations of the entity
Completeness (AB) - All assets, liabilities, & equity interests that should have been
recorded have been recorded
Accuracy, Valuation, & Allocation - Assets, liabilities, & equity interests have been
included in the financial statements at appropriate amounts, & any resulting valuation
or allocation adjustments have been appropriately recorded
Classification (AB) - Assets, liabilities, & equity interests have been recorded in the
proper accounts
Presentation (AB) - Assets, liabilities, & equity interests are appropriately aggregated
or disaggregated & clearly described, & related disclosures are relevant &
understandable in the context of the requirements of the applicable financial
reporting framework
Information Asymmetry - The manager generally has more information about the true
financial position and results of operations of the entity than the shareholders do
Internal Controls - Processes implemented by management that minimize waste,
fraud, or error
What does an integrated audit consist of? - An audit where the auditor expresses an
opinion on both a company's internal controls & its financial statements
3 fundamental concepts in conducting a financial statement audit - 1. Audit Risk
2. Materiality
3. Evidence
