Auditing Vocab
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Auditing Vocab
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1. The use of normal distribution theory to estimate the dollar amount of misstatement for a class of transactions or an account balance.

2. Tests to detect errors or fraud in individual transactions.

3. Sampling that uses the laws of probability to select and evaluate the results of an audit sample - thereby permitting the auditor to quantify the sampling risk for the purpose of reaching a conclusion about the population.

4. Unintentional misstatements or omissions of amounts or disclosures.

5. The probability that the true but unknown measure of the characteristic of interest is within specified limits.

6. Statements issued by the AICPA Auditing Standards Boards - considered as interpretations of the 10 GAAS statements.

7. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.

8. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.

9. The process of obtaining and evaluation a direct communication from a third party in response to a request for information about a particular item affecting financial statement assertions.

10. Examination of internal or external records or documents that are in paper form - electronic form - or other media.

11. A review of audit documentation by an additional person (normally - a partner or equivalent with the firm) who has not been involved with the audit; its purpose is to ensure that quality of the audit work and reporting is consistent with the quality

12. A range of acceptable amounts or a precisely determined point estimate for an estimate (eg. uncollectible receivables) - if that is a better estimate than any other amount

13. A deficiency in internal control exists when the design or operation of a control does not allow management or employees - in the normal course of performing their assigned functions - to prevent - or detect and correct misstatements on a timely basi

14. The amount of misstatement that the auditor believes exists in the population.

15. Intentional misstatements that can be classified as fraudulent financial reporting and/or misappropriation of assets.

16. The risk that material misstatements that could occur will not be prevented - or detected and corrected - by internal controls.

17. Financial statements prepared under regulatory - tax - cash basis - or other definitive criteria having substantial support.

18. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting and correcting - material misstatements at the relevant assertion level.

19. A process that assess the quality of internal control performance over time.

20. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data

21. Specific acts performed as the auditor gathers evidence to determine if specific audit objectives are being met.

22. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.

23. The risk that the sample supports the conclusion that the control is operating effectively when it is not or that the recorded account balance is not materially misstated when it is materially misstated.

24. The total of the projected misstatement plus the allowance for sampling risk.

25. The risk that material misstatements that could occur will not be prevented - or detected and corrected - by internal controls.

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