CPA Assurance Elective - independent subject foundations cheat sheet
CPA Assurance Elective - independent subject foundations · Keep the key ideas within reach.
Audit purposes, risk, ethics and engagement planning
Identify the engagement purpose, criteria and responsibilities.
An audit opinion is not an absolute guarantee.
Objectivity and ethics require analysis of actual threats and responsibilities.
Risk assessment links procedures to reasons a material error could arise.
Local legal powers and professional adoption are not inferred from international labels.
Audit evidence, assertions, sampling and transaction cycles
Link each procedure to an assertion or criterion.
Tracing and vouching direction can change the question answered.
Existence, ownership, completeness and valuation need distinct evidence.
Sample size does not cure an incomplete or biased population.
A count or walkthrough alone does not prove every reporting assertion.
Completion, quality, documentation and supported reporting
Documentation connects objective, evidence, judgment and conclusion.
A promised correction does not automatically erase an existing reporting issue.
Misstatement and inability to obtain evidence have different implications.
Key audit matters and opinion modifications are not interchangeable.
Communicate actual scope and limitations without implying unperformed assurance.
Financial statements, assets, inventory and cash-flow models
Cost of sales includes carriage inwards and excludes carriage outwards
Closing inventory affects both the trading account and the balance sheet
Drawings reduce capital and are never an expense
An increase in the doubtful debts provision is charged to profit and loss
Capital = opening capital + net profit − drawings
Issued capital and actual cash received are different concepts.
Share premium in the supplied par-value model is not sales revenue.
Distinguish equity distributions from interest on liabilities.
Prime cost includes direct materials consumed, direct labour and direct expenses
Cost of production adds production overheads and adjusts for work in progress
Selling and administration costs are not production costs
Inventory is valued at the lower of cost and net realisable value
Financial appraisal, financing and conditional valuation models
Define incremental cash flows and the valuation date.
Discount rate, cash-flow timing and risk assumptions must be consistent.
NPV, IRR, payback and accounting return measure different things.
Expected value does not eliminate downside or estimation uncertainty.
Supplied model rates are not current market or tax facts.