Norwegian Auditor Practical Exam (Statsautorisert revisor) flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Audit risk model

Audit risk equals inherent risk multiplied by control risk multiplied by detection risk. The auditor sets detection risk inversely to assessed risks, increasing substantive procedures when inherent or control risk is high.

Performance materiality

An amount less than overall materiality set to reduce to an appropriately low level the probability that uncorrected and undetected misstatements exceed overall materiality. Typically 50 to 75 percent of overall materiality.

Significant risk

An identified risk of material misstatement assessed close to the upper end of the spectrum of inherent risk. The auditor must perform substantive procedures specifically responsive to that risk regardless of controls.

Key Audit Matters

Matters of most significance in the audit of the current period, selected from those communicated to those charged with governance. Required in the audit reports of listed entities under ISA 701.

Modified audit opinion

A qualified opinion, adverse opinion or disclaimer. Qualification applies when misstatement or scope limitation is material but not pervasive; adverse or disclaimer applies when material and pervasive.

Going concern material uncertainty

Conditions indicating the entity may be unable to realise assets or discharge liabilities. When adequately disclosed, the opinion is unmodified but the report includes a separate section drawing attention to the uncertainty.

IFRS 15 revenue model

Five steps: identify the contract with the customer, identify performance obligations, determine the transaction price, allocate it to obligations, and recognise revenue when each obligation is satisfied.

IFRS 16 lease liability

Measured at the present value of lease payments not paid at commencement, discounted using the interest rate implicit in the lease or the lessee's incremental borrowing rate.

Expected credit loss model

IFRS 9 requires a loss allowance equal to 12-month expected credit losses, or lifetime losses when credit risk has increased significantly since initial recognition.

Goodwill impairment

Under IAS 36 goodwill is tested annually for impairment and whenever indicators exist. An impairment loss on goodwill is recognised in profit or loss and cannot be reversed.

Provision recognition criteria

IAS 37 recognises a provision when a present obligation exists from a past event, a probable outflow of economic benefits is expected, and the amount can be reliably estimated.

Deferred tax measurement

Deferred tax is measured at the tax rates expected to apply when the temporary difference reverses, based on enacted or substantively enacted tax law at the reporting date.

Independence of mind

The state of mind that permits the provision of an opinion without being affected by influences that compromise professional judgement, allowing the auditor to act with integrity and objectivity.

Self-review threat

A threat arising when the auditor evaluates the results of previous work performed by the firm, such as preparing the financial statements and then auditing them.

Engagement partner rotation

For public interest entities, the engagement partner rotates after seven years and observes a two-year cooling-off period before returning to the engagement, under the IESBA Code.

Contingent audit fee

A fee calculated on a basis related to the outcome of the audit, such as a percentage of profit. Contingent fees for audit engagements are prohibited because they create a self-interest threat.

General meeting authority

The general meeting is the company's supreme authority. It approves the annual accounts, appoints the auditor, elects the board and decides on other matters reserved to it by law.

Audit committee

A board committee required for public interest entities, responsible for overseeing financial reporting, the auditor's independence and the effectiveness of internal control and risk management.

Board duty of care

The board must ensure proper organisation of the company, establish internal control and risk management systems, and monitor the company's financial position and development on an ongoing basis.

Equity below half share capital

Under Aksjeloven the board must convene a general meeting within a reasonable time and propose measures when equity falls below half of the share capital.

Norwegian corporate tax rate

The general corporate income tax rate in Norway is 22 percent. The audit reconciles current and deferred tax to the statutory rate through an effective tax rate analysis.

Exemption method

The Norwegian fritaksmetoden exempts 97 percent of dividends and capital gains on qualifying share investments for corporate shareholders; the remaining 3 percent is taxable.

Tax depreciation groups

Norwegian tax law uses declining-balance groups (saldogrupper) with prescribed rates. Differences from accounting depreciation create temporary differences and deferred tax.

VAT rates in Norway

The standard VAT rate is 25 percent. Reduced rates apply at 15 percent for food and 12 percent for certain services such as transport and accommodation.

COSO five components

Control environment, risk assessment, control activities, information and communication, and monitoring activities. The auditor evaluates design and implementation before testing operating effectiveness.

IT general controls

Controls over access management, change management, IT operations and program development. Weak IT general controls may prevent reliance on automated application controls.

Segregation of duties

Separation of incompatible functions such as authorisation, custody, recording and reconciliation. Where separation is not practicable, compensating controls and monitoring are applied.

Substantive analytical procedures

Procedures comparing financial data against expectations from budgets, prior periods or industry benchmarks. Significant unexpected fluctuations are investigated and corroborated with further evidence.

ISQM 1

The international standard requiring firms to design, implement and operate a system of quality management covering engagement performance, ethics, acceptance and continuance, resources, and monitoring and remediation.

Engagement quality review

An objective evaluation of the significant judgements and conclusions of the engagement team, performed before the audit report is issued by a reviewer independent of the engagement team.

Audit documentation retention

The audit file must be assembled within 60 days of the audit report date and retained for at least five years. Documentation must enable an experienced auditor to understand the work.

Reporting to Finanstilsynet

The auditor must notify the Norwegian supervisory authority of circumstances relevant to authorisation, withdrawal from an engagement, or matters affecting the firm's compliance with audit regulation.