1. Analytical Procedures
    Reasonableness tests used to gain an understanding of financial statement accounts and relationships
  2. Audit documentation
    the written basis for the auditor's conclusions
  3. Audit plan
    a list of the audit procedures the auditors need to perform to gather sufficient appropriate evidence on which to base their opinion on the financial statements
  4. audit trail
    the chain of evidence provided through coding, cross-references, and documentation connecting account balances and other summary results with the original transaction source documents
  5. concurring partner
    second audit partner on the audit team, required for audits of financial statements filed with the SEC, who reviews the audit teams's work on critical audit areas (those areas with the highest potential audit risk)
  6. Continuing audit files (permanent files)
    Audit documentation containing information of continuing audit significance for current and past audits of the same client
  7. Engagement letter
    Letter from the public accounting firm on the management of an engagement client setting forth the terms of the engagement
  8. Enterprise Risk Management (ERM)
    "A process, effected by an entity's board of directors, management and other personnel, applied in strategy setting and across the enterprise, designed to identify potential events that may affect the entity, and manage risks to be within its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives"
  9. Form 8-K
    the "special events report" filed with the SEC whenever certain significant corporate events occur such as changes in control, legal proceedings, and changes of auditor
  10. Horizontal Analysis
    Comparative analysis of year-to-year changes in balance-sheet and income-statement accounts
  11. Interim audit work
    procedures performed several weeks or months before the balance-sheet date
  12. Lead schedule
    a summary of the accounts in or components of an account group
  13. Planning memorandum
    Document summarizing the preliminary analytical procedures and the materiality assessment with specific directions about hte effect on the audit
  14. Predecessor auditor
    the public accounting firm that has been terminated or has voluntarily withdrawn from an audit engagement (whether the audit has been completed or not)
  15. related parties
    those individuals or organizations that are closely tied to the auditee, possibly through family ties or investment relationships
  16. specialists
    persons skilled in fields other than accounting and auditing - actuaries, appraisers, attorneys, engineers, and geologists - who are not members of the public accounting firm
  17. Termination letter
    Documentation provided to former clients dealing with the subject of future services, in particular: (1) access to audit documentation by new auditors, (2) reissuance of the auditor's report when required for SEC reporting or comparative financial reporting, and (3) fee arrangements for such future services. The termination letter also can contain a report of the auditor's understanding of the circumstances of termination (e.g., diagreements about accounting principles and audit procedures, fees, or other conflicts)
  18. Vertical Analysis
    Common-size analysis of financial statement amounts created by expressing amounts as proportions of a common base such as sales for the income-statement accounts or total assets for the balance-sheet accounts
  19. year-end audit work
    procedures performed shortly before and after the balance-sheet date
Card Set
Auditing Chapter 4 Terms