Auditing & Assurance Services, Messier 8e Questions & Answers 100% Correct!

Analytical Procedures - ANSWER-Evaluation of financial information through analysis of plausible relationships among both financial and nonfinancial data. Application Controls - ANSWER-Controls that apply to the processing of specific computer applications and are part of the computer programs in the accounting system. Confirmation - ANSWER-An external confirmation represents audit evidence obtained by the auditor as a direct written response to the auditor from a third party (the confirming party) in paper form or by electronic or other medium. General Controls - ANSWER-Controls that relate to the overall information processing environment and have a pervasive effect on the entity's computer operations. Lapping - ANSWER-The process of covering a cash shortage by applying cash from one customer's account receivable against another customer's accounts receivable. Negative Confirmation - ANSWER-A confirmation request to which the recipient responds only if the amount or information stated is incorrect. Positive Confirmation - ANSWER-A confirmation request to which the recipient responds whether or not he or she agrees with the amount or information stated. Reliance Strategy - ANSWER-The auditor's decision to rely on the entity's controls, test those controls, and reduce the direct test of the financial statement accounts. Substantive tests of transactions - ANSWER-Test to detect errors or fraud in individual transactions. Test of controls - ANSWER-Audit procedures performed to test the operating effectiveness of controls in preventing or detecting material misstatements at the relevant assertion level. Test of details of account balances and disclosures - ANSWER-Tests that concentrate on the details of amounts contained in an account balance and in disclosures Assertions - ANSWER-Expressed of implied representations by management that are reflected in the financial statement components. Which of the following actions would best conceal the theft of cash collections from sales on account? - ANSWER-Understating the sales journal amounts. To determine whether the client's internal control operated effectively to minimize the likelihood of failing to bill a customer for a shipment of goods, the auditor should begin