Audit Midterm1.txt

The recording, classifying, and summarizing of economic events in a logical manner for the purpose of providing financial information for decision making

An independent professional service that improves the quality of info for decision makers

A type of assurance service in which the CPA firm issues a report about the reliability of an assertion that is the responsibility of another party.

A form of attestation service in which the auditor issues a written report stating whether the financial statements are in material conformity with accounting standards.

The communication of audit findings to users

The accumulation and evaluation of evidence about info to determine and report on the degree of correspondence between the info and the established criteria.

A person who has met state regulatory requirements including passing the Uniform CPA Examination, and has thus been certified.

(1) A review of an organization's financial records preformed to determine whether the organization is following specific procedures, rules, or regulations set by some higher authority; (2) an audit performed to determine whether an entity that receives financial assistance from the federal government has complied with specific laws and regulations

Any information used by the auditor to determine whether the information being audited is stated in accordance with established criteria

An audit conducted to determine whether the overall financial statements of an entity are stated in accordance with specified criteria (usually U.S. or international accouting standards)

An auditor working for the US GAO; the GAO reports to and is responsible solely to congress.

Certified public accountants or accounting firms that perform audits of commercial and non commercial financial entities

The risk that information upon which a business decision is made is inaccurate

Auditors employed by a company to audit for the company's board of directors and management

An engagement in which the auditor reports on the effectiveness of internal control over financial reporting, such as reports are required for public companies under Section 404 of the SOX

Auditors who work for the IRS and conduct examinations of tax payers returns

A review of any part of an organization's operating procedures and methods for the purpose of evaluating efficiency and effectiveness

A form of attestation in which a CPA firm issues a written report that provides less assurance than an audit as to whether the financial statements are in material conformity with GAAP.

A federal securities law that passed in 2002 that provides for additional regulation of public companies and their auditors; the Act established the PCAOB and also requires auditors to audit the effectiveness of internal control over financial reporting.

American Institute of Certified Public Accountants, a voluntary organization of CPAs that sets professional requirements, conducts research, and publishes materials relevant to accounting, auditing, management consulting services, and taxes.

10 auditing standards, developed by the AICPA, consisting of general standards, standards of field work, and standards of reporting, along with interpretations, often called auditing standards

Statements issued by the International Auditing and Assurance Standards Board of the International Federation of Accountants to promote international acceptance of auditing standards.

The review by CPAs of a CPA firm's compliance with its quality control system

Board created by the Sarbanes Oxley Act to oversee auditors of public companies including establishing auditing and quality control standards and performing inspections of registered accounting firms

Methods used by a CPA firm to ensure that the firm meets its professional responsibilities to clients and others

A federal agency that oversees the orderly conduct of the securities markets; the SEC assists in providing investors in public corporations with reliable information upon which to make investment decisions

A report issued when the auditor believes the financial statements are so materially misstated or misleading as a whole that they do not present fairly the entity's financial position or the results of its operations and cash flow in conformity with GAAP.

Audit report on the financial statements and the effectiveness of internal control over financial reporting required for public companies under Section 404 of the Sarbanes Oxley Act

A report issued when the auditor is not able to become satisfied that the overall financial statements are fairly presented or the auditor is not independent

A misstatement in the financial statements, knowledge of which would affect a decision of a reasonable user of the statements

A report issued when the auditor believes that the overall financial statements are fairly stated but that either the scope of the audit was limited or the financial data indicated a failure to follow GAAP.

Audit report on the effectiveness of internal control over financial reporting required for public companies under Section 404 of the SOX that cross references the separate audit report on the financial statements

The report a CPA issues when all auditing conditions have been met, no significant misstatements have been discovered and left uncorrected, and it is the auditor's opinion that the financial statements are fairly stated in accordance with GAAP

An unqualified report in which the financial statements are fairly presented, but the auditor believes it is important or is required to provide additional information.

Use of comparisons and relationships to assess whether account balances or other data appear reasonable

Eight audit objectives that must be met before the auditor can conclude that any given account balance is fairly stated; the general balance related audit objectives are existence, completeness, accuracy, classification, cutoff, detail tie-in, realizable value, and rights and obligation

A method of dividing an audit by keeping closely related types of transaction and account balances in the same segment

An unintentional misstatement of the financial statements

An intentional misstatement of the financial statements

Intentional misstatements or omissions of amounts or disclosures in financial statements to deceive users

Violation of laws or government regulations other than fraud

Implied or expressed representations by management about classes of transactions, related account balances and presentation and disclosures in the financial statements

A fraud involving the theft of an entity’s assets

The four aspects of a complete audit: (1) plan and design an audit approach (2) perform tests of controls and substantive tests of transactions (3) perform analytical procedures and tests of details of balances and (4) complete the audit and issue and audit report

Four audit objectives that must be met before the auditor can conclude that presentation and disclosures are fairly stated the four presentations and disclosure related audit objectives are occurrence and rights and obligations, completeness, accuracy, and valuation, and classification and understandability

Assertions that have a meaningful bearing on whether an account is fairly stated and used to assess the risk of material misstatement and the design and performance of audit procedures

Audit procedures testing for monetary misstatements to determine whether the six transactions related auditor objectives have been satisfied for each class of transactions

Audit procedures to test the effectiveness of controls in support of a reduced assessed control risk

Auditor procedures testing for monetary misstatements to determine whether the eight balance related auditor objectives have been satisfied for each signification accounting balance

Six audit objectives that must be met before the auditor can conclude that the total for any given class of transactions fairly stated; the general transaction related audit objectives are occurrence, completeness, accuracy, classification, timing, and posting and summarization

Use of comparisons and relationships to assess whether account balances or other data appear reasonable

A measure of the quality of evidence; appropriate evidence is relevant and reliable in meeting audit objectives for classes of transactions, account balances and related disclosures

The principal record of auditing procedures applied, evidence obtained, and conclusions reached by the auditor in the engagement

Detailed instruction for the collection of a type of audit evidence

List of audit procedures for an audit area for an entire audit; the audit program always includes audit procedures and may also include sample sizes, items to select and timing of the tests

The auditor’s receipt of a written or oral response from Nan independent third party verifying the accuracy of information requested

All audit files applicable to the year under audit

The auditor’s inspection of the client’s documents and records to substantiate the information that is or should be included in the financial statements

A document, such as a vendor’s invoke that has been used by an outside party to the transaction being documented and that the client now has or can easily obtain

The obtaining of written or oral information from the client in response to specific questions during the audit

A document such as an employee time report that is prepared and used within the client’s organization

AN addict schedule that contains the detailed accounts from the general ledger making up a line item total in the working trial balance

The use of the sense to assess client activities

Auditors files that contain data of a historical or continuing nature pertinent to the current audit such as copies of articles of incarnation, by laws, bond indentures, and contracts

The degree to which the auditor is convinced that he evidence supports the audit opinion; the two determinants of persuasiveness are the appropriateness and sufficient of the evidence

The auditor’s inspection or count of a tangible asset

The rechecking of a sample of the computations made by the client including mathematical accuracy of individual transactions and amounts and the adding journals and subsidiary records

The extent to which evidence is believable or worth of trust evidence is reliable when it is obtains (1) from an independent provider (2) form a client with effective internal control (3) from the auditors direct knowledge (4) from qualified providers such as law firms and banks (5) from object sources and (6) in a timely manner

The quantity of evidence, proper sample size

Detailed schedules prepared by the client or the auditor in support of specific amounts of the financial statements

Symbols used on an audit schedule that provide additional information or details of auditor procedures performed

Significant unexpected differences indicated by analytical procedures between the current year’s unaudited financial data and other data used in comparisons

The use of documentation to support recording transactions or amounts

A listing of the general ledger accounts and their year end balances

A measure of how willing the auditor is to accept that the financial statements may be materially misstated after the audit is completed and an unqualified opinion has been issued

Overall approach to the audit that considers the nature of the client, risk of significant misstatements and other factors such as the number of client locations and past effectiveness of client controls

Written records of the clients expectations for the period; a comparison of budgets with actual results may indicate whether or not misstatements are likely

The risk that the client will fail to achieve its objectives related to (1) reliability of financial reporting (2) effectiveness and efficiency of operations and (3) compliance with laws and regulations

The official record of the meetings of a corporation’s board of directors and stock holders in which corporate issues, such as the deflation of dividends and the approval of contracts are documented

An agreement between the CPA firm and the client as to the terms of the engagement of the conduct of the audit and related services

A measure of the auditor’s assessment of the likelihood that there is material misstatement s in a segment before considering the effectiveness of internal control

Involves deciding whether to accept or continue doing the audit for the client, identifying the client’s reasons for the audit, obtaining an engagement letter, and enveloping an auditor strategy

Affiliated company principal owner of the lien company or any other party with which the client ideals where one of the parties can influence the mangement nor operating policies of the other

Any transaction between the client and related party

The process of assigning to each balance sheet account the misstatement amount considered to be material for that account based on the auditor’s preliminary judgment

A complement to acceptable audit risk; and acceptable audit risk of 2 percent is the same as audit assurance of 98 percent also called overall assurance and level of assurance

A formal model reflecting the relationships between acceptable audit risk (AAR), inherent risk (RI), control risk (CR and planned detection risk (PDR); PDR = AAR / (RI*CR)

• Control Risk
• A measure of the auditor’s assessment of the likelihood that misstatements exceeding a tolerable amount in a segment will not be prevented or detected by the client’s internal controls

Estimate of likely misstating in a population based on a sample excluding sampling risk ,and calculated as net misstatement s instate sample divided by the total sampled, multiplied by the total recorded population value

The risk that the auditor or auditor firm will suffer harm because of a client relationship, even though the auditor report rendered for the client was correct

A measure of hte3 auditors assessment of the likelihood that her are material misstatements in a segment before considering the effectiveness of the internal control

Specific misstatements in a class of transactions or account balance identified during the audit

Misstatements that arise from either differences between managements or the auditor’s judgment about estimates of account balances or from projections of misstatements based on the auditors test of a sample from a population

The magnitude of an omission or misstatement of accounting information that in the light of surrounding circumstances makes it probable that the judgment of a reasonable person relying on the information would be Anne changed or inflicted by the commission or misstatement

A measure of the risk that audit evidence for a segment will fail to detect misstatements exceeding a tolerable amount should such mistreatments exists; PDR = AAR/ (RI*CR)

The maximum m amount by which the auditor believes that the statements could be misstated and still not affect the decision s or reasonable users; used in audit planning

A change in the auditor’s preliminary judgment made when the auditor determines e that the preliminary judgment was too large or too small

The acceptance by auditors that there is some level of uncertain in performing the audit function

The combination of inherent risk and control risk

Results because the auditor has samples only a portion of the population

The materiality allocated to any given account balance used in audit planning