ACCT 3222 Exam 2 With 100% Correct Answers 2024, Exams of Advanced Education

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ACCT 3222 Exam 2 With 100% Correct Answers 2024 Assertion - Correct Answer-Statement or representation, explicit or implicit, made by management regarding the recognition, measurement, presentation, and disclosure of items included in the financial statements and notes Relevant assertion - Correct Answer-An assertion that has a reasonable possibility of containing a material misstatement or misstatements that would cause the financial statements to be materially misstated and, therefore, has a meaningful impact on whether the account is fairly stated Audit program - Correct Answer-A listing of details of the audit procedures to be used when testing controls, conducting detailed substantive audit procedures, and completing the audit Audit evidence - Correct Answer-Information gathered by the auditor that is used when forming an opinion on the fair presentation of a client's financial statements pg. 1 professoraxe l Sufficient - Correct Answer-Refers to the quantity of audit evidence gathered Appropriate - Correct Answer-Refers to the quality of audit evidence gathered Relevance - Correct Answer-Refers to the logical connection with the assertion being tested Reliability - Correct Answer-Refers to the source, form, or nature of the audit evidence Accounting records - Correct Answer-Client's records of the initial accounting entry and supporting documents Inspection - Correct Answer-An evidence-gathering procedure that involves examining documents and physical assets Vouching - Correct Answer-A type of inspection in which auditors select transactions from a journal or ledger and work backward to examine the underlying source documents pg. 2 professoraxe l Analytical procedures - Correct Answer-Evaluations of financial information through analysis of plausible relationships among both financial and non-financial data Scanning - Correct Answer-A type of analytical procedure in which auditors use their professional judgement to review accounting data to identify unusual or significant items to examine futher Audit data analytics - Correct Answer-Using software to discover and analyze patterns, identify anomalies, and extract other useful information in data underlying the subject matter of an audit through analysis, modeling and visualization for the purpose of planning or performing an audit Visualization - Correct Answer-Using graphics to explain and communicate findings Specialist - Correct Answer-An individual or organization with expertise in a field other than accounting or auditing whose work in that field is used by the auditors to assist in obtaining sufficient appropriate evidence pg. 5 professoraxe l Internal auditors - Correct Answer-Employees of the client who perform assurance and consulting activities designed to evaluate and improve the effectiveness of the entity's governance, risk management, and internal control processes Group financial statements - Correct Answer-Financial statements that include the financial information or more than one entity Component - Correct Answer-An entity or business activity whose financial information is required by an applicable financial reporting framework to be included in group financial statements Group audit - Correct Answer-An audit of group financial statements Group engagement team - Correct Answer-Partners and staff who establish the overall group audit strategy, communicate with component auditors, perform work on the consolidation process, and evaluate audit evidence to form an opinion on the group financial statements pg. 6 professoraxe l Component auditor - Correct Answer-An audit firm that performs work on the financial information of a component that will be used as audit evidence for the group audit Group engagement partner - Correct Answer-The partner who is responsible for the group audit engagement and its performance and for the auditor's report on the group financial statements that is issued on behalf of the firm Working papers - Correct Answer-Paper or electronic documentation of the audit created by the audit team as evidence of the work completed Permanent file - Correct Answer-Contains client information that is relevant for more than one audit Current file - Correct Answer-Contains audit information that is relevant for the duration of one audit Lead schedule - Correct Answer-Summarizes the detail included in a specific account on the financial statements pg. 7 professoraxe l and reporting of data by IT are properly performed for specific applications IT-dependent manual controls - Correct Answer-Controls that involve manual review of the completeness and accuracy of computer generated information Control deficiency - Correct Answer-Exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis Material weakness - Correct Answer-A deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected, on a timely basis Significant deficiency - Correct Answer-A deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness yet important enough to merit attention by those charged with governance pg. 10 professoraxe l Management letter - Correct Answer-A document prepared by the audit team and provided to the client that discusses internal control weaknesses and other matters discovered during the course of the audit Notable item - Correct Answer-An item identified from the population being analyzed that has one or more characteristics that, for a relevant assertion, may do the following: be indicative or a risk of material misstatement or provide information useful in tailoring or designing procedures to address risks of material misstatement False positives - Correct Answer-Items incorrectly identified as notable items Cluster analysis - Correct Answer-The process of discovering groups of similar items in a set of data; items in the same group are similar, while items in different groups are not similar Matching information in key data fields - Correct Answer-The process whereby the auditor uses audit data analytics to search for key characteristics that may exist in several different databases pg. 11 professoraxe l Regression analysis - Correct Answer-A statistical process that involves estimating a prediction equation that expresses an item of interest in terms of other data fields visualization - Correct Answer-The representation of a data set, or key information, as a chart or other image WCGW - Correct Answer-Describes where material misstatements due to fraud or error could occur in a flow of transactions or source and preparation of information that affects a relevant financial statement assertion Preventative controls - Correct Answer-Controls applied to each transaction that stop fraud or errors from occurring Detective controls - Correct Answer-Controls applied after transactions have been processed to identify whether fraud or errors have occurred, and to rectify the fraud or errors on a timely basis Tests of controls - Correct Answer-The audit procedures designed to evaluate the operating effectiveness of controls in pg. 12 professoraxe l Estimation uncertainty - Correct Answer-The susceptibility of an accounting estimate and related disclosures to an inherent lack of precision in its measurement Management bias - Correct Answer-A lack of neutrality by management in the preparation and fair presentation of information Misstatement - Correct Answer-A difference between the amount, classification, presentation, or disclosure that is required for the item to be in accordance with the applicable financial reporting framework Relevant assertions - Correct Answer-Assertions that have a reasonable probability of containing a material misstatement that would cause the financial statements to be materially misstated and, therefore, have a meaningful impact on whether the account is fairly stated Roll-forward procedures - Correct Answer-Procedures performed at year-end on transactions occurring between an interim date and year-end to provide sufficient appropriate audit evidence on which to base conclusions and year-end pg. 15 professoraxe l when substantive procedures are performed at an interim date Significant risk - Correct Answer-An identified and assessed risk of material misstatement that, in the auditor's judgement, requires special audit consideration Substantive procedures - Correct Answer-Audit procedures designed to detect material misstatements at the assertion level and to gather evidence to support management assertions pg. 16 professoraxe l