ACCT 341 Chapter 1, 19

  1. Independent professional services that improve the quality of information, or its context, for decision makers.  Encompasses attest services and financial statement audits.
    Assurance Services
  2. Services provided by a practitioner engaged to issue a report on subject matter, or an assertion about subject matter, that is the responsibility of another party. Encompasses financial statement audits.
    Attest Services
  3. All the information used by the auditor in arriving at the conclusions on which the audit opinion is based.  Includes the information contained in the accounting records underlying the financial statements, as well as other information.
    Audit evidence
  4. The risk that the auditor expresses an inappropriate audit opinion when the financial statements are materially misstated.
    Audit risk
  5. A systematic process of (1) objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and (2) communicating the results to interested users.
  6. Expressed or implied representations by management that are reflected in the financial statement components.
    Financial statement assertions
  7. The concept that the manager generally has more information about the true financial position and results of operations of the entity than the absentee owner does.
    Information asymmetry
  8. The maximum amount by which the auditor believes the financial statements could be misstated and still not affect the decisions of users.
  9. An instance where a financial statement assertion is not in accordance with the criteria against which it is audited (e.g., GAAP).  May be classified as fraud (intentional), other illegal acts such as noncompliance with laws and regulations (intentional or unintentional), and errors (unintentional).
  10. The concept that an audit done in accordance with auditing standards may fail to detect a material misstatement in a client's financial statements.  In an auditing context this term has been defined to mean a high but not absolute level of assurance.
    Reasonable assurance
  11. The end product of the auditor's work, indicating the auditing standards followed and expressing an opinion as to whether an entity's financial statements are fairly presented in accordance with agreed-upon criteria (e.g., GAAP).
  12. The preaudit risk that the entity's financial statements contain a material misstatement whether caused by error or fraud.
    Risk of material misstatement
  13. A "clean" audit report, indicating the auditor's opinion that a client's financial statements are fairly presented in accordance with agreed-upon criteria (e.g., GAAP).
    Unqualified/unmodified audit report
  14. An engagement that requires independence as defined in AICPA Professional Standards. Includes financial statement audits, reviews, and examinations of prospective financial information.
    Attest engagement
  15. A parent, sibling, or nondependent child.
    Close relative
  16. A member that is a. An individual on the attest engagement team. b. An individual in a position to influence the attest engagement. c. A partner or manager who provides nonattest services to the attest entity beginning once he or she provides 10 hours of nonattest services to the entity within any fiscal year and ending on the later of the date (i) the firm signs the report on the financial statements for the fiscal year during which those services were provided, or (ii) he or she no longer expects to provide 10 or more hours of nonattest services to the attest entity on a recurring basis. d. A partner in the office in which the lead attest engagement partner primarily practices in connection with the attest engagement. e. The firm, including the firm's employee benefit plans. f. An entity whose financial, operating, or accounting policies can be controlled (as defined by GAAP for consolidation purposes) by any of the individuals or entities described in parts (a) through (e), or by two or more such individuals or entities if they act together.
    Covered member
  17. A system or code of conduct based on moral duties and obligations that indicates how an individual should behave.
  18. An ownership interest in an equity or a debt security issued by an entity, including rights and obligations to acquire such an interest and derivatives directly related to such interest. A direct one is one that is owned directly by an individual or entity, or is under the control of an individual or entity. An indirect one is one that is beneficially owned through an investment vehicle, estate, trust, or other intermediary when the beneficiary does not control the intermediary or have authority to supervise or participate in the intermediary's investment decisions.
    Financial interest
  19. Measures of the quality of the auditor's performance.
    Generally accepted auditing standards
  20. In general, any action initiated by a member that informs others of his or her status as a CPA or AICPA-accredited specialist constitutes (key term) as a CPA. This would include, for example, use of the CPA designation on business cards or letterhead, or listing as a CPA in local telephone directories.
    Holding out
  21. A spouse, spousal equivalent, or dependent (whether or not related).
    Immediate family
  22. A position in which an individual a. Has primary responsibility for significant accounting functions that support material components of the financial statements. b. Has primary responsibility for the preparation of the financial statements. c. Has the ability to exercise influence over the contents of the financial statements, including when the individual is a member of the board of directors or similar governing body, chief executive officer, general counsel, chief accounting officer, controller, director of internal audit, director of financial reporting, treasurer, or any equivalent position. For purposes of attest engagements not involving an entity's financial statements, a (key term) is one in which an individual is primarily responsible for, or able to influence, the subject matter of the attest engagement, as described above.
    Key position
  23. The period for which a member either signs an initial engagement letter or other agreement to perform attest services or begins to perform an attest engagement for an entity, whichever is earlier. The period lasts for the entire duration of the professional relationship and ends with the formal or informal notification, either by the member or the entity, of the termination of the professional relationship or by the issuance of a report, whichever is later. Accordingly, the period does not end with the issuance of a report and recommence with the beginning of the following year's attest engagement.
    Period of the professional engagement
  24. The performance for an entity, by a member or a member's firm, while holding out as CPA(s), of the professional services of accounting, tax, personal finance planning, litigation support services, and those professional services for which standards are promulgated by bodies designated by Council/
    Practice of public accounting
  25. The conduct, aims, or qualities, that characterize or mark a profession or professional person.
Card Set
ACCT 341 Chapter 1, 19
Key Terms found at chapters' end