The weighted average of the negotiated federal fund lending rate among banks.
The target federal funds effective rate set by the Federal Open Market Committee.
Claim: 成熟经济体虽然高度开放，但制造业占比很小，基本上可以看作封闭经济体来处理， why ?
(1) Independence of provider
(2) Effectiveness of client's internal control
(3) Auditor's direct knowledge
(4) Qualification of individuals providing the information
(5) Degree of objectivity
Inspection is the auditor's examination of the client's documents and records to substantiate the information that is, or should be, included in the financial statements.
Analytical procedures are defined by auditing standards as evaluations of financial information through analysis of plausible relationships among financial and nonfinancial data.
Inquiry is the obtaining of written or oral information from the client in response to questions from the auditor.
Recalculation involves rechecking a sample of calculations made by the client.
Reperformance is the auditor's independent tests of client accounting procedures or controls that were originally done as part of the entity's accounting and internal control system.
Observation consists of looking at a process or procedure being performed by others.
Three Risk Terms in Audit Planning
1) Client Business Risk
2) Acceptable Audit Risk
Audit Risk is the risk taken of giving audit opinion that doesnot reflect the financial position of client based on certain amount of audit evidence.
Audit risk is only correlated with the sufficiency of audit evidence.
More audit evidence results in a lower audit risk
3) The Risk of Material Misstatement
Considerations on Accepting a New Client
1) The new auditor is required by auditing standards to communicate with the predecessor auditor.
Materiality in Financial Audit
The magnitude of misstatement that individually, or when aggregated with other misstatements, could reasonably be expected to influence the economic decision made by users of the financial statements.
The need for the allocation of preliminary judgement of materiality
This is also call the determination of performance materiality.
Some accounts are likely to be overstated, whereas others are likely to be understated, resulting in a net amount that is likely to be less than the prelimary judgement.
The aim of determine performance materiality is to minimize audit costs without sacrificing audit quality.
1). Inquiries of Management and Others Within the Entity
2). Analytical Procedures
3). Observation and Inspection
4). Discussion among engagement team members
5). Other Risk Assessment Procedures
1) PDR: Planed detection risk (planned detection probability)
2) AAR: Acceptable audit risk
3) IR: Inherent Risk
4) CR: Control Risk
PDR = AAR/(IR*CR)
2. Improvements and Replacements
3. Rearrangement and Reinstallation
Decreasing charge method
1. Depreciation charge is based on the asset account balance.
A company should classify as current any liability that is due on demand (callable by the creditor) or will be due on demand within a year (or operating cycle, if longer)
1. It must intend to refinance the obligation on a long-term basis
2. It must demonstrate an ability to consummate the refinancing.
Recognition for Accural:
1. The employer's obligation relating to employees' rights to receive compensation for future absenses is attributable to the employees' services already rendered.
2. The obligation relates to the rights that vest or accumulate
3. Payment of the compensation is probable
4. The amount can be reasonably estimated.
A contingency is "an existing codition, situation, or set of circumstances involving uncertainty as to possible gain (gain contingency) or loss (loss contingency) to an enterprise that will ultimately be resolved when one or more future events occur or fail to occur.