ACC 931 Recap Summary for the final exam

The key to studying for this exam is to:

understand the learning objective from each unit - see below
review questions and feedback from the assignments
stay on top of the material in each unit - do not cram for this exam
attempt self assessments for each unit

Unit 1

Discuss the objectives and purpose of an audit of financial statements

Explain the importance of auditing and the role of the external auditor

Explain how information risk arises and how auditors can reduce information risk

Distinguish auditing from accounting

Explain how professional judgment is performed in an audit

Describe the applicable financial reporting framework as being the criteria auditors
use to render an opinion on the financial statements.

Three party accountability relationship

Provide an overview of international auditing and its impact on Canadian Auditing

Standards (CAS)

Discuss the different types of auditors

Understand the current regulatory environment of auditing

Identify and apply Generally Accepted Auditing Standards (GAAS), (Elements of the
Relevant Ethical Requirements - CAS 220/CSQC 1) and the Canadian Auditing
Standards

Determine auditor independence - threats to independence

Explain concept of professional skepticism

Identify the Other Canadian Auditing Standards and discuss other types of
engagements.

Identify and apply the Canadian Quality Control Standards (elements of CSQC 1, CAS
220) to a practical question

ACC 931 Recap Summary for the final exam

Describe the association framework.

Determine whether a PA is associated with financial statements.

Describe the three levels of assurance.

Compare and contrast the scope and opinion paragraphs in a standard unmodified
audit report.

For a given set of accounting facts and audit circumstances, analyze qualified,
adverse and disclaimer audit reports - determine how the standard audit report
would change for a scope limitation and a GAAP departure (including change in
wording in the opinion paragraph).

Write an unmodified audit report, containing additional explanation or modified

wording for specific issues allowed by GAAS.(e.g. emphasis of the matter paragraph,
comparative vs. corresponding figures)

Explain why auditors have standards for reporting on the application of accounting
principles.

Determine the effects of materiality on audit report choices.

Unit 2

Describe the activities auditors undertake before starting a financial statement audit
engagement.

Explain why auditors need to understand the auditee organizations business, its
environment, and risks at the start of a financial statement audit.

Explain why auditors need to communicate with the predecessor auditor for new
engagements.

Define engagement letters and understand why engagement letters are prepared,
including the various components of an engagement letter.

Explain the purpose of preliminary analytical procedures and business risk analysis in
the audit planning process.

ACC 931 Recap Summary for the final exam

Explain the materiality concept, the materiality levels used for planning the audit,
and how these amounts are determined for purposes of recommending planning and
performance materiality.

Describe the principal assertions in managements financial statements and their

application in establishing audit objectives.

Explain how the preliminary planning activities are integrated in the overall audit
strategy.

Describe the conceptual audit risk model and its components, and explain its
usefulness and limitations in conducting the audit.

Explain how auditors assess the auditees business risk through strategic analysis
and business process analysis.

Outline the relationships among business processes, accounting processes/cycles,

and managements general purpose financial statements.

Illustrate how business risk analysis is used in a preliminary assessment of the risk
that fraud or error has led to material misstatement at the overall financial statement
level.

Describe the basic components of internal control: control environment,

managements risk assessment process, information systems and communication,
control activities, and monitoring.

Define fraud.

Outline the auditors and management responsibility for fraud.

Discuss the fraud risk factors also referred to as the fraud triangle.

Explain how the auditors understanding of an organizations internal control helps to

assess the risk that its financial statements are misstated.

Discuss the risk assessment procedures used to understand internal controls.

Define seven internal control objectives, relating them to the management assertions
in financial account balances.

Discuss the three phases of internal control.

Describe general and application control activities, document accounting systems,

identify key controls and weaknesses, and write key controls for an audit program.

ACC 931 Recap Summary for the final exam

Outline the auditors responsibility when internal control evaluation work detects or
indicates a high risk of fraudulent misstatement.

Explain reasonable assurance and cost-benefit in the context of control risk

assessment and development of the audit approach.

Understand how the auditor documents internal controls.

Identify strengths and weaknesses in internal controls.

Understand the auditors and management responsibilities for internal control

Unit 3

Outline six general audit techniques for gathering evidence

Identify the procedures and sources of information auditors can use to obtain
evidence for

Understanding an auditors business and industry, assessing risk, and responding to

assessed risk

Explain audit evidence in terms of its appropriateness and relative strength of

persuasiveness

Describe the content and purpose of the audit plan as well as the specific audit
programs and detailed procedures it contains

Discuss working papers, types and purpose of working papers

Explain the role of professional judgment in audit sampling decisions.

Distinguish audit sampling work from non-sampling work.

Compare and contrast statistical and non-statistical sampling.

Differentiate between sampling and non-sampling risk.

Develop a simple audit program for a test of a clients internal control procedures.

o Specify objectives, deviation conditions, populations, and sampling units.

o Demonstrate some basic audit sampling calculations.

ACC 931 Recap Summary for the final exam

o Evaluate evidence from control testing.

Develop a simple audit program for an account balance, considering the influence of
risk and tolerable misstatement.

o Specify objectives and a population of data.

o Determine sample size and select sample units.
o Evaluate monetary error evidence from a balance audit sample.
Unit 4

Describe the balance sheet account groups that the major revenue and expense
accounts are associated with, as well as the substantive analytical procedures applied
to audit revenue and expenses.

Outline the overall analytical procedures to be performed at the final stage of a

financial statement audit, including analysis of the income statement, cash flow
statement, financial statement presentation, and disclosures.

Explain why written management representations are obtained, and what items are
generally included in the representation letter, including identification of related
parties Explain the purpose and content of lawyers letters (letters of enquiry) and
how they are used at the completion stage of an audit to identify any contingencies.

Given a set of facts and circumstances, classify a subsequent event by type and
proper treatment in the financial statements, and outline the implications of the
timing of discovery of the event for the auditors report.

Outlines procedures for subsequent events, contingencies and related party

transactions.

Explain the final evaluation and conclusion stage of the audit: adjustments resulting
from the audit, evaluation of evidence and misstatements to form the audit opinion,
and reviews of working paper files.

Explain matters that must be communicated to Management and the Audit

Committee - see summary in chapter 16

Understand professional rules of conduct

Explain independence and objectivity

Understand concept of Common Law liability

ACC 931 Recap Summary for the final exam

Understand concept of Statutory liability

Apply rules of conduct

Discuss the components of negligence

Discuss who the auditor owes a duty of care to

Discuss how auditors can respond to legal liability.

Unit 5

Discuss the other types of assurance and non assurance engagements and the
auditor's involvement in each of these engagements

Understand the auditors requirements and ethical requirements to accept other types
of assurance and non assurance engagements

Understand the level of assurance provided in each of these engagements

Identify and assess the appropriate framework or set criteria to apply to an

engagement

Discuss operational audits, continuous audits, forensic audits, environmental audits

and auditing in the public sector

Discuss the nature of the reports for other types of assurance and non assurance
engagements

There is no key chapters from the text assigned to unit V because it

does not exist.
The key to each section is to understand the general purpose of each
section, auditor's responsibilities and the level of assurance
provided (like the question asked in assignment 5)