audit midterm 2

inherent risk

chance of misstatement before controls

control risk

chance client controls fail to catch misstatement

detection risk

chance audit procedures miss misstatement

fraud triangle

incentive, pressure and opportunity for fraud

occurrence assertion

the recorded transactions actually happened

completeness assertion

everything that should be recorded is

authorization assertion

transactions were properly approved

accuracy assertion

amounts are right

cutoff assertion

in right period

classification assertion

in right accounts

presentation assertion

aggregated and described properly

existence assertion

assets and liabilities are real

rights and obligations

the entity owns the assets and owes the liabilities

completeness assertion

nothing left out

accuracy, valuation and allocation assertion

accounted for correctly

vouching

starting in ledger going to source docs (occurance)

Tracing

starting at the source docs and going to ledger (completeness)

COSO

control environment, risk assessment, information and communication, control activities, monitoring

segregation of duties

authorization, recording, custody