Audit Planning and Methodology Flashcards

What does 'audit scope' define in a government engagement?

Answer: The boundaries of what the audit will cover, including subject matter, time period, and organizational units

Audit scope establishes the boundaries — what will and will not be examined — including the period, programs, locations, and criteria to be applied.

In a performance audit, what are 'criteria' used for?

Answer: The standards, benchmarks, or requirements against which the auditor evaluates the subject matter

Criteria provide the basis for evaluating whether conditions meet expectations; they may come from laws, regulations, best practices, or management's own standards.

Which type of audit procedure involves examining original source documents, records, and assets?

Answer: Inspection

Inspection involves examining documents, records, or tangible assets and provides direct physical evidence about their existence or content.

What is 'control testing' in a financial statement audit?

Answer: Testing the operating effectiveness of internal controls to support a reduced level of substantive testing

Control testing (tests of controls) assesses whether internal controls operated effectively during the period, allowing auditors to reduce the extent of substantive testing if controls are effective.

In government auditing, what is 'due professional care'?

Answer: Applying the diligence, knowledge, and judgment expected of a reasonably prudent auditor in similar circumstances

Due professional care requires auditors to exercise the care and skill of a reasonably prudent professional, including appropriate planning, supervision, and documentation.

What is the purpose of working papers (audit documentation) in a government audit?

Answer: To support the auditor's conclusions, facilitate supervisory review, and provide evidence if the audit is later questioned

Audit documentation supports conclusions, enables supervisory review, and provides a record that demonstrates the audit was conducted in accordance with applicable standards.