Auditing and Internal Controls Flashcards

Which assertion tested during a financial statement audit addresses whether all transactions and accounts that should be recorded have actually been recorded?

Answer: Completeness

The completeness assertion ensures that all transactions and balances that should be included in the financial statements are not omitted.

Under DoD's audit readiness initiatives, which framework is used to assess the maturity of financial management business processes?

Answer: Financial Improvement and Audit Readiness (FIAR) Methodology

The FIAR Methodology provides DoD components with a structured approach to improve financial management processes and achieve audit readiness.

When assessing control risk in a DoD audit, what does a higher assessed control risk indicate?

Answer: Internal controls are less effective at preventing or detecting misstatements

Higher control risk means controls are less reliable, requiring the auditor to perform more extensive substantive procedures to obtain sufficient audit evidence.

Which type of audit sampling approach allows every item in the population an equal chance of selection, without using any structured interval or stratification?

Answer: Simple random sampling

Simple random sampling gives every item in the population an equal probability of selection, making it a statistically valid method for projecting results.

A DoD component finds that its accounting system cannot produce reliable data for year-end closing. This represents a weakness in which COSO component?

Answer: Information and Communication

The Information and Communication component addresses whether relevant, quality information is captured and communicated to support financial reporting and decision-making.

The Federal Financial Management Improvement Act (FFMIA) of 1996 requires federal agencies to implement financial management systems that comply with which standards?

Answer: Federal financial management system requirements, applicable federal accounting standards, and the U.S. Government Standard General Ledger

FFMIA requires agencies to comply with federal financial management system requirements, applicable federal accounting standards, and the U.S. Government Standard General Ledger at the transaction level.

An auditor performing a walk-through of a DoD payroll process would primarily accomplish which audit objective?

Answer: Obtain an understanding of the flow of transactions and identify key controls

Walk-throughs trace transactions from initiation through recording to help auditors understand the process flow and identify where key controls exist and operate.