Term
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Definition
| Independent professional services that improve the quality of information for decision makers. |
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Definition
| A service where a practitioner is engaged to issue a report on subject matter that is the responsibility of another party. |
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| All information used by the auditor in arriving at the conclusions on which the audit opinion is based. |
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Definition
| The risk that the auditor may unknowingly fail to appropriately modify his or her opinion on materially misstated financial statements. |
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Definition
| A systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the correspondence betwee those assertions and certain established criteria, and communicating the results to users. |
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Term
| Financial Statement Assertions |
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Definition
| Express or implied representations made by management that are reflected in the financial statements. |
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Definition
| Intentional misstatements: fraudulent reporting or misappropriation of assets. |
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| The idea that a manager usually has more information about the entity than the absentee owner. |
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Definition
| The magnitude of an omission or misstatement that would make it likely that the judgment of an informed user would be altered or affected. |
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| An instance in which a financial statement assertion is not in accordance with the criteria against which it is being audited: Fraud, Illegal Acts, or Errors. |
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Definition
| The concept that that an audit done in accordance with GAAS may fail to detect a material misstatement. |
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Definition
| The end product of an auditor's work, that indicates the standards followed and expresses an opinion as to whether or not the financial statements are in accordance with the criteria. |
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| Risk of Material Misstatement |
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Definition
| The risk that the financial statements will contain a material misstatement whether by error or fraud. |
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Definition
| A clean audit report, that gives the auditor's opinion that the financial statements are presented fairly in accordance with GAAP. |
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Definition
| A subset of the board of directors that is charged with overseeing the entity's internal control, internal and external audits, and financial reporting. Independent of management. |
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Definition
| Persons elected by the stockholders to oversee management and direct the affairs of the corporation. |
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Definition
| Processes used by management to achieve objectives. Financing, Revenue, Purchasing, Inventory Management, Human Resources Management. |
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Definition
| The oversight mechanisms in place to help ensure the proper stewardship over an entity's assets. |
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Definition
| A system or code of conduct for how a person should behave. |
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Term
| Generally Accepted Accounting Principles |
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Definition
| Issued by the FASB, overseen by the SEC. Principles for preparing financial statements in the US. |
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| Generally Accepted Auditing Standards |
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Definition
| 10 broad statements guiding the conduct of financial statement auditing. |
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Definition
| Violation of Laws or government regulations. |
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Definition
| Objectivity in fact and appearance. No Conflicts of interest. |
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Definition
| Audit of both internal control over financial reporting and of financial statements, provided by an external auditor. Required for public companies. |
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Term
| Management Advisory Services |
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Definition
| Consulting services that may provide advice and assistance for an entity. |
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Term
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Definition
| Organization created to provide professional accounting services. |
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Definition
| Standards for financial auditing of public companies. |
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Term
| Statements on Auditing Standards |
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Definition
| Issued by the AICPA's Auditing Standards Board. Interpretations of the 10 GAAS. |
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Term
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Definition
| Evaluations of financial info by studying plausible relationships between both financial and non-financial data. |
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Term
| Analytical Procedures Risk |
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Definition
| The risk that substantive analytical procedures will fail to detect material misstatements. |
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Definition
| Specific acts performed as the auditor gathers evidence. |
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Definition
| Risks from conditions, events, circumstances, and actions that could impede management from achieving its objectives. |
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Term
| Closest Reasonable Estimate |
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Definition
| A range or point estimate that is better than any other estimate. |
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Definition
| The risk that material misstatements that could occur will not be prevented or detected by internal controls. |
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Term
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Definition
| The risk that the auditor will not detect a material misstatement. |
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Term
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Definition
| Risk of of exposure to loss or injury to practice from litigation, adverse publicity, or other events arising from an audit of a client. |
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Term
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Definition
| Unintentional misstatements or omissions. |
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Definition
| The amount of misstatement that the auditor believes exists in the population. |
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Definition
| The susceptibility of an assertion to material misstatement assuming no related controls. |
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Definition
| An attitude of a questioning mind and a critical assessment of evidence. Don't assume one way or the other. |
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Definition
| The ID, analysis, and management of risks associated with financial statements. |
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Term
| Risk of material misstatement |
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Definition
| Combination of inherent and control risk. |
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Term
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Definition
| The risk that tests of details will not detect material misstatements that were not already detected by tests of controls or substantive analytical procedures. |
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Term
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Definition
| The amount of planning materiality allocated to a specific account. |
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Term
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Definition
| The records of initial entries and supporting records, such as checks, ledgers, invoices, etc. Including adjustments not reflected in formal journal entries. |
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Term
| Audit Documentation (Working Papers) |
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Definition
| The auditor's principal record of the work performed and the basis for the conclusions in the auditor's report. It also helps in the planning, performance, and review of the audit. |
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Definition
| The process of obtaining and evaluating direct communication from a third party regarding a particular assertion. |
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Term
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Definition
| Seeking financial and non-financial information from knowledgeable persons both inside and outside the company. |
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Term
| Inspection of records and documents |
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Definition
| Self-explanatory. Examination of internal or external records. |
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Term
| Inspection of tangible assets |
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Definition
| Physical examination of tangible assets. |
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Term
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Definition
| Watching a process or procedure peformed by others. |
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Definition
| Audit evidence including minutes of meetings, confirmations, etc. |
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Definition
| Determining the mathematical accuracy of documents or records. |
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Term
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Definition
| Whether the evidence relates to the assertion in question. |
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Term
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Definition
| Whether the type of evidence can be relied on to determine the validity of the assertion in question. |
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Term
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Definition
| The auditor's independent execution of procedures or controls that were originally performed by the client as part of internal control. Manual or CAAT |
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Definition
| Reviewing accounting data to identify significant or unusual items. |
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Term
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Definition
| The auditor's plan for the conduct, organization, and stafing of the audit. |
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Term
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Definition
| Tests that both evaluate the effectiveness of controls, and detect monetary errors (substantive tests). |
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Term
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Definition
| A letter that formalizes the contract between the auditor and the client and gives the responsibilities of each. |
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Term
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Definition
| Audit procedures performed to test material misstatements in an account balance, transaction class, or disclosure component of the financial statements. |
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Term
| Substantive tests of transactions |
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Definition
| Tests to detect errors or fraud in individual transactions. |
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Term
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Definition
| Audit procedure performed to test the operating effectiveness of controls in preventing or detecting material misstatements at the relevant assertion level. |
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Term
| Tests of details of account balances and disclosures |
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Definition
| Substantive tests that concentrate on the details of items contained in the account balance and disclosure. |
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Term
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Definition
General
1. Independence in mental attitude (fact and appearance)
2. Adequate technical training and experience.
3. Due professional care in the audit and the preparation o the report.
Fieldwork
1. Obtain appropriate knowledge and info about the entity and its environment and it's internal control. To assess risk of MM and to design procedures.
2. Gather sufficient evidence to support conclusions by performing procedures.
3. Adequate planning and supervision of the audit.
Reporting
1. State whether or not the FS are in compliance with GAAP.
2. Identify any inconsistencies in application of GAAP, just in the current period or compared to previous periods.
3. Give an opinion or state that an opinion cannot be given. If an opinion is not given, tell why.
4. State if disclosures are inadequate. |
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Term
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Definition
General
1. Independence in mental attitude (fact and appearance)
2. Adequate technical training and experience.
3. Due professional care in the audit and the preparation o the report. |
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Term
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Definition
Fieldwork
1. Obtain appropriate knowledge and info about the entity and its environment and it's internal control. To assess risk of MM and to design procedures.
2. Gather sufficient evidence to support conclusions by performing procedures.
3. Adequate planning and supervision of the audit. |
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Term
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Definition
Reporting
1. State whether or not the FS are in compliance with GAAP.
2. Identify any inconsistencies in application of GAAP, just in the current period or compared to previous periods.
3. Give an opinion or state that an opinion cannot be given. If an opinion is not given, tell why.
4. State if disclosures are inadequate. |
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Term
| Assertions about Transactions |
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Definition
Occurrence
Cutoff
Accuracy
Completeness
Classification
Authorization |
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Term
| Assertions about Account Balances |
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Definition
Existence
Completeness
Valuation/Allocation
Rights and Obligations |
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Term
| Assertions about Presentation and Disclosure |
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Definition
Occurrence and Rights and Obligations
Completeness
Classification and Understandability
Accuracy/Valuation |
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