Accounting Procedures and Techniques - Module 03

This set of flashcards covers key vocabulary related to accounting procedures and techniques outlined in Module 03, focusing on vouching, verification, types of vouchers, audit evidence, and various auditing techniques.

Vouching

The process of examining documentary evidence to verify the authenticity, accuracy, and validity of transactions recorded in the books of accounts.

Verification

The examination of assets and liabilities to confirm existence, ownership, valuation, and proper disclosure.

Primary Vouchers

Original documentary evidence issued by third parties that provide strong proof of transactions.

Secondary Vouchers

Copies of original vouchers used when primary vouchers are not available, providing secondary evidence.

Audit Evidence

All information used by the auditor to arrive at conclusions on which the audit opinion is based.

Sufficiency of Evidence

Determined by the quantity of evidence obtained during an audit.

Appropriateness of Evidence

Determined by the relevance and reliability of the evidence obtained.

Audit Sampling

The application of audit procedures to less than 100% of items within a population to draw conclusions about the entire population.

Test Check

An auditing technique that involves examining selected transactions instead of checking all transactions.

Surprise Check

An unannounced verification of cash, stock, or records to detect fraud and prevent manipulation.

Physical Evidence

Type of audit evidence that includes the actual inspection of physical items.

Documentary Evidence

Evidence obtained in written form, such as invoices or receipts.

Analytical Evidence

Evidence that involves analysis and comparisons of financial information.

Confirmatory Evidence

Evidence obtained from external parties confirming the accuracy of transactions.

Oral Evidence

Testimony or statements obtained from individuals, used as evidence in audits.

Electronic Evidence

Evidence obtained from electronic sources, including emails and financial software.

Reperformance Evidence

Evidence obtained by reperforming controls or procedures to verify their effectiveness.

Factors Influencing Sufficiency

Factors such as the risk of material misstatement and auditor's experience that affect the quantity of evidence needed.

Factors Affecting Reliability

Factors including the source of evidence (internal vs external) and nature of evidence that impact its trustworthiness.

Inventory Audit

The process of verifying the existence, valuation, and ownership of inventory items.

Audit of Cash

Objectives include verifying existence of cash, checking accuracy of cash books, and detecting misappropriations.

Audit of Sales

Objectives include ensuring sales are genuine, verifying correct recording, and checking cut-off procedures.

Audit of Purchases

Objectives include confirming purchases are authorized, ensuring correct recording, and preventing fictitious purchases.

Audit of Fixed Assets

Objectives include verifying existence, checking ownership, ensuring correct depreciation, and confirming proper disclosure.