Accounting and Auditing: Terms and Concepts, Quizzes of Auditing

Download Accounting and Auditing: Terms and Concepts and more Quizzes Auditing in PDF only on Docsity! TERM 1 Accounting DEFINITION 1 The process of identifying, recording, processing, summarizing, and reporting information regarding economic states and events. TERM 2 GAAP DEFINITION 2 In U.S. information is recorded in accordance with _______ TERM 3 Auditors don't do recording DEFINITION 3 How is auditing different? TERM 4 Assurance DEFINITION 4 Independent professional service that improves the quality of information for decision makers. TERM 5 Types of assurance services DEFINITION 5 Audits, Reviews, Internal controls over financial information, Attestation services, and management consulting are examples of what? TERM 6 Auditing DEFINITION 6 An investigation performed by professionals to establish whether things are as they are supposed to be. Some other forms are operational, compliance, or IT. TERM 7 Financial Statement Audit DEFINITION 7 an investigation of an organization's financial statements wherein an auditor gathers evidence in order to offer an opinion as towhetherthey are presented fairly and in accordance with GAAP. provides reasonable assurance. TERM 8 protection/regulation and Intrinsic value DEFINITION 8 Theories to why we need auditing. TERM 9 Problems with public companies DEFINITION 9 Owners not involved in day to day operations, Management knows whats going on, and different interests between owner and management are examples of what? TERM 10 Stock options DEFINITION 10 Ways to align the interest between managers and owners. TERM 21 compliance audit DEFINITION 21 what type of audit evaluates whether the auditee follows specific rules, procedures, or regulations set by higher authority? TERM 22 Operational audit DEFINITION 22 What type of audit evaluates effectiveness and efficiency of any part of the organization's operating procedures and tries to cut costs and build efficiency? TERM 23 an audit DEFINITION 23 To issue an opinion on thefinicalstatements of acompany is an objective of what? TERM 24 Mangement DEFINITION 24 the responsibility to make sure the financial statements are presented fairly in accordance with GAAP is whose responsibility? TERM 25 Auditor's DEFINITION 25 the responsibility to plan and perform an audit sufficient to provide reasonable assurance aboutwhetherthe financial statements are free of material misstatement and offer an opinion is whoseresponsibility? TERM 26 Audit risk DEFINITION 26 Reasonable assurance can lead to what? TERM 27 Audit risk DEFINITION 27 Risk of issuing an opinion that the financial statements are OK when in fact they are not OK. TERM 28 Misstatement DEFINITION 28 Deviation from GAAP in the financialstatementscaused by error or fraud. TERM 29 Materiality DEFINITION 29 Something large enough or important enough to affect the behavior or decision of a rational person. has both quantitative and qualitative aspects. TERM 30 Errors, Fraud, and Illegal acts DEFINITION 30 Auditors are responsible foruncoveringmisstatements due to what 3 things? TERM 31 Illegal acts DEFINITION 31 violations of government regulations other than fraud. ex. violation of federal tax laws. TERM 32 Fraud DEFINITION 32 Acceleration of revenues, capitalization of expenses, and cookie jar reserves are examples of what? TERM 33 Management assertions DEFINITION 33 A fact or truth explicitly or implicitly in or through accounting numbers or disclosures in the financial statements. (implied or expressed representations by management about classes of transactions and the related accounts and disclosures in the financialstatements. TERM 34 Evidence DEFINITION 34 anything that supports or refutes, or can cause an auditor to revise her belief regarding a management assertion. TERM 35 Skepticism DEFINITION 35 An attitude that includes a questioning mind and critical assessment of evidence. going in thinkingeverythingis wrong unless proven other wise. TERM 46 Valuation and allocation DEFINITION 46 assets, liabilities, and equity interests are included in the financial statements at appropriate amounts, appropriately classified and in the right period and any resulting valuation or allocation adjustments are appropriatelyrecordedin what management assertion? TERM 47 Obligations and rights DEFINITION 47 the company has the rights and obligations of itemdisclosedin what management assertion? TERM 48 Presentation and Disclosure DEFINITION 48 thecomponentsof the financial statements are properly classified, described, anddisclosedin what management assertion? TERM 49 Completeness, Cutoff, Classification, Accuracy, Occurrence DEFINITION 49 Assertionsinvolvedin transactions? TERM 50 Cutoff DEFINITION 50 Transactions and events have beenrecordedint eh correct accounting period? TERM 51 Classification DEFINITION 51 Transactions and events have beenrecordedin the proper accounts? TERM 52 Occurance DEFINITION 52 Transactions and events that have been recorded have occurred and pertain totheentity. TERM 53 Completeness, Existence, Valuation, Obligations DEFINITION 53 Assertionsinvolvedin balances? TERM 54 Completeness, Classification, Occurrence, Accuracy DEFINITION 54 Assertions involved in presentation and disclosure? TERM 55 an audit DEFINITION 55 Plan, Perform and report are process of what? TERM 56 Planning DEFINITION 56 understanding the client, identifying risks, assess client response to risk are in which process of audit? TERM 57 Perform DEFINITION 57 focusing on management assertions, gather audit evidence, and evaluating and document results are in which process? TERM 58 Unqualified DEFINITION 58 F/S are OK TERM 59 Qualified DEFINITION 59 F/S are mostly OK TERM 60 Adverse DEFINITION 60 F/S are Not Ok - Pervasive misstatement TERM 71 Quality controls DEFINITION 71 methods used to ensure that the firm meets its professional responsibilities to clients and others. (SAS 25) TERM 72 Peer review DEFINITION 72 another accounting firm audits another accounting firm, part of quality controls, administered by state CPA board every 3 years, different from PCAOB reviews. TERM 73 Leadership responsibilities DEFINITION 73 Tone at the top. TERM 74 Independence DEFINITION 74 employees to answerindependencequestionnairefor engagement. TERM 75 Client acceptance DEFINITION 75 client evaluation form with clear thresholds for risks TERM 76 Personnel management DEFINITION 76 establish training procedures for employees HR TERM 77 Engagement performance DEFINITION 77 establishing reviews and designating a consultant TERM 78 Monitoring DEFINITION 78 monitor quality control procedures periodically to make sure they meet thestandards. TERM 79 Preliminary analytical procedures DEFINITION 79 Help understand the client, identify risks, and can be done at every step. TERM 80 Business risk DEFINITION 80 risk related to client; threat to management's ability to achieve its objectives resulting from significant conditions, events, circumstances and actions of the management. TERM 81 Engagement risk DEFINITION 81 auditors risk; risk that the auditor will suffer harm after the audit is finished, even though the audit report was correct; litigations. TERM 82 Going concern risk DEFINITION 82 risk of entity ceasing to be a going concern; can they exist another year. done in the planning and reporting stage of an audit based on performance, cashflows, and events. TERM 83 people, processes, accounting DEFINITION 83 internal risks TERM 84 Inherent risk (IR) DEFINITION 84 the risk of material misstatement occurring in an assertion/account (independent of internal controls); risk of error or fraud TERM 85 Control risk (CR) DEFINITION 85 The risk of material misstatement that could occur in an assertion/account not being prevented or detected by the client's internal controls on a timely basis. design and operating effectiveness