Ch. 2 - Fundamental Concepts Flashcards
1
Q
Statutory audits - meaning
A
those required by law
2
Q
voluntary audits - meaning
A
those not required by law
3
Q
Agency Risk - Meaning
A
the risk that managers are not acting in the best interest of the shareholders
4
Q
Agency Costs
A
the costs of techniques used to reduce agency risk
5
Q
Information Risk
A
the risk that financial information presented is not reliable
6
Q
Information Costs
A
The costs to ensure the financial information presented is accurate
7
Q
Expectation Gap - Definition
A
The difference between what the public expects and audit to do, and what it actually does