What does nature, timing, and extent mean on the CPA exam?
Nature, timing, and extent. The three dials on any audit procedure: what kind of test, when it is run, and how much of the population it covers. A higher assessed risk turns all three.
Defined against AU-C 330.06.
Which CPA exam sections use nature, timing, and extent?
Nature, timing, and extent appears in the AUD section of the CPA exam.
Other terms defined against AU-C 330
- dual-purpose test: One procedure that tests a control and substantively tests the transaction at the same time, on the same sample.
- further audit procedures: The work done in response to assessed risk: tests of controls and substantive procedures.
- operating effectiveness: Whether a control actually worked across the period, as opposed to whether it was well designed.
- selecting specific items: Choosing particular items to examine because of what they are, such as large or unusual ones, rather than at random.
- substantive procedures: Work aimed directly at detecting misstatement in a balance or disclosure, as opposed to testing whether a control operated.
- tests of controls: Procedures that check whether a control actually operated as described throughout the period.
- tests of details: Substantive procedures aimed at individual transactions, balances or disclosures, rather than at the relationships between numbers that analytical procedures examine.
Related terms
- assessed risk: The auditor's judgment about the risk of material misstatement at the assertion level, combining inherent and control risk.
- analytical procedures: Evaluations of financial information by studying plausible relationships among financial and nonfinancial data.
- tolerable misstatement: A monetary amount set so that the risk of the actual misstatement in the population exceeding it is acceptably low.
- audit sampling: Selecting and evaluating less than 100% of a population of audit relevance so the sample is expected to be representative, giving a reasonable basis for conclusions about the whole population.
- control risk: The risk that the entity's own controls will not prevent, or detect and correct, a material misstatement on a timely basis.
- inherent risk: The susceptibility of an assertion to material misstatement before any control is considered.