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Test Hints ACC 655 Fall 2011 - Define tolerable...

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ACC 655 Test Hints Exam 1 FALL 2011 Overall: Understand inherent risk factors. Understand the risk model and how it affects audit work. Understand materiality and how tolerable misstatement is related. Be able to identify qualitative factors and quantitative factors for materiality. Given planned audit risk and RRM calculate detection risk and explain what it means. Given statements, which statement is not valid concerning audit evidence? Know the assertions and how the failure to meet the assertions will affect the financial statements. Understand how market pressures effect assertions. KNOW THE ASSERTIONS WELL! What procedures would be involved in understanding of the entity and its environment? Understand audit risk and engagement risk and be able to define them. Substantive procedures that would be performed to verify the existence and valuation of recorded accounts payable.
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Unformatted text preview: Define tolerable misstatement? Define audit risk, engagement risk, detection risk, sampling risk, nonsampling risk. What are qualitative factors for materiality judgments? Choose a situation that would heighten and auditor’s concern about the risk of intentional manipulation of financial statements. Know the audit procedures, when to use each of them, and what assertion the auditor is examining. Understand what the appropriateness of audit evidence is. What are the factors that influence the reliability of evidence? Understand the purpose of confirmations and the processes. Understand separation of duties and be able to identify weaknesses. How is revenue recognition important to the audit process. How has SOX changed the audit environment? Understand Arthur Andersen’s involvement in the Enron case....
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