Chapter 1 Flashcards
The lending of credibility to information
Assurance
The risk that an entity will fail to meet its objective
Business Risk
A professional service resulting in a report on an assertion (or assertions) about subject matter that is the responsibility of another party
Attestation
The systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between the assertions and established criteria and communicating the results to interested users
Auditing
What conditions increase demand for reliable information?
- Complexity
- Remoteness
- Time Sensitivity
- Consequences
What is an auditor’s reponsibility?
*Design audit procedures that provide reasonable assurance of detecting material misstatements whether caused by error, fraud or direct effect illegal acts (non compliance)
the risk (probability) that the information circulated by a company will be false or misleading
Information Risk
Presentation and disclosure
existence (asset) or occurrence (transactions)
Rights and obligations - owning/owing
Completeness/Cutoff
Valuation or allocation
Five Assertation
Used to check if numbers in f/s were faithfully represent actual transactions, assets and liabilities of the co.
e: b/s & i/s bal actually exist
-relates to acct bals
o: i/s events & transaction occur in proper period
-relates to events, transactions, presentations, and footnote disclosures
existence or occurrence assertion
Com: transactions, events, assets, liabilities, and equities that should have been recorded have been recorded.
-disclosures that should have been included in footnotes have been presented
Cut: revenue, expenses, and other transactions have been recorded in proper period
-Cutoff date refers to client’s year-end bal sheet date
completeness/cutoff assertion
