Chapter 33 Vocabulary

Question 1

The conventions, rules, and procedures developed by the Financial Accounting Standards Board to define accepted accounting practices at a particular time.

Answer 1

Generally Accepted Accounting Principals (GAAP)

Question 2

Standards established by the American institute of Certified Public Accountants to define the professional qualities and judgement that should be exercised by the auditor in performing an audit.

Answer 2

Generally Accepted Auditing Standards (SAAP)

Question 3

Embezzlement or misappropriation of funds.

Answer 3

Defalcation

Question 4

A set of global accounting standards that are being phased in by companies in the United States.

Answer 4

International Financial Reporting Standards (IFRS)

Question 5

An accountant qualified to perform audits (systematic inspections) of a business’s financial records.

Answer 5

Auditor

Question 6

Professional negligence, or failure to exercise reasonable care and professional judgement, that results in injury, loss, or damage to those relying on the professional.

Answer 6

Malpractice

Question 7

Conduct that is treated as fraud under the law even when there is no proof of intent to defraud, usually because of the existence of a special relationship or fiduciary duty.

Answer 7

Constructive Fraud

Question 8

The documents used and developed by an accountant during an audit, such as notes, computations, and memorands.

Answer 8

Working Papers

Question 9

A required standard of care that certain professionals, such as accountants, must meet to avoid liability for securities violations.

Answer 9

Due Diligence