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AUD > Chapter 4: Auditing and Attestation - Evaluating Audit Findings, Communications, and Reporting > Flashcards

Chapter 4: Auditing and Attestation - Evaluating Audit Findings, Communications, and Reporting Flashcards

1
Q

the principal laws and regulations used by management and those charged with governance in the preparation of the financial statements of an entity

A

Applicable Financial Reporting Framework (AFRF)

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2
Q

a dollar amount appearing on financial statements. An account balance is a control account composed of many constituent items (e.g., accounts receivable control account represents the sum of all individual accounts receivable, sales represents the sum of hundreds of sales invoices)

A

Account Balance

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3
Q

the methods or procedures implemented by an entity to help ensure the validity and accuracy of its financial statements

A

Accounting Controls

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4
Q

an attempt to quantify the effects of future events that cannot be known with certainty, based on assumptions and projections

A

Accounting Estimate

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5
Q

a set of prescribed guidelines for recording and reporting the economic effects (substance) of financial events and transactions. It exists on three levels: basic and pervasive concepts; broad operating standards and practices; and specific conventions, rules, and regulations that define accepted accounting practice at a particular time by incorporation of consensus and substantial authoritative support (and the methods of applying them)

A

Accounting Principle

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6
Q

The information system relevant to financial reporting objectives, which includes the accounting system, consists of the procedures and records designed and established to:

initiate, authorize, record, process, and report entity transactions (as well as events and conditions) and maintain accountability for the related assets, liabilities, and equity;
resolve incorrect processing of transactions…;
process and account for system overrides or bypasses to controls;
transfer information from transaction processing systems to the general ledger;
capture information relevant to financial reporting for events and conditions other than transactions, such as the depreciation and amortization of assets and changes in the recoverability of accounts receivables; and
ensure information required to be disclosed by the applicable financial reporting framework is accumulated, recorded, processed, summarized, and appropriately reported in the financial statements.

A

Accounting System

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7
Q

amounts the entity is entitled to receive that arise in the normal course of business (e.g., from the credit sales of goods or services)

A

Accounts Receivable

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8
Q

a journal entry that is recorded at the end of an accounting period to achieve accrual basis values in all the ledger accounts

A

Adjusting Entry

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9
Q

an “overall” audit opinion which states that the financial statements do not present fairly the financial position or the results of operations or cash flows in conformity with an applicable financial reporting framework (AU-C 705.09)

A

Adverse Opinion

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10
Q

An accountant may accept an engagement that is less than the scope of an audit but may apply limited procedures to specified elements, accounts, or items of a financial statement.

A

Agreed-Upon Procedures

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11
Q

required to correctly summarize the financial operations for a designated period and to report on the financial position at the end of a period

A

Adjusting Journal Entry (AJE)

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12
Q

a set of audit procedures that examine the relationships between financial and nonfinancial data

A

Analytical Procedures

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13
Q

the measure of the quality of audit evidence, that is, its relevance and its reliability in providing support for the conclusions on which the auditor’s opinion is based

A

Appropriate

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14
Q

declarations or a set of declarations about whether subject matter is based on or conforms to selected criteria (AT 101.08)

A

Assertions

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15
Q

when an auditor is associated with financial information when the auditor has applied procedures sufficient to permit the auditor to report in accordance with GAAS (generally accepted auditing standards)

A

Association with Financial Statements

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16
Q

the practitioner’s satisfaction about the reliability of an assertion being made by one party for use by other parties

A

Assurance

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17
Q

to issue a written communication expressing a conclusion (opinion) on subject matter, or an assertion about the subject matter that is the responsibility of another party (AT 101.01)

A

Attest Engagement

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18
Q

a set of standards that provides guidance and a broad framework for a variety of attest services performed by a certified public accountant

A

Attestation Standards

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19
Q

a body formed by a company’s board of directors to oversee audit operations and circumstances

A

Audit Committee

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20
Q

Another name for the goal of the audit procedures used to obtain evidence about the dollar amounts and disclosures presented in the financial statements

A

Audit Objective

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21
Q

a statement about the correspondence between assertions by others (usually quantifiable information) and established criteria

A

Audit Opinion

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22
Q

a series of specific and specialized steps or actions auditors take to meet audit objectives

A

Audit Procedure

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23
Q

a written outline of work to be done during an audit

A

Audit Program

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24
Q

the risk that the auditor expresses an inappropriate audit opinion when the financial statements are materially misstated

A

Audit Risk

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25
Q

the process of conducting formal, often periodic, examinations and checks of accounts of financial records to verify their correctness, which may also include the issuance of a final statement of account by the auditors

A

Auditing

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26
Q

a person (or firm) possessing knowledge in a particular field other than accounting or auditing

A

Auditor’s Specialist

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27
Q

a detailed record of all checks cleared and deposits made, plus the ending balance of an account with a bank

A

Bank Statement

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28
Q

the condition of being judged insolvent by the court and having property distributed to creditors when a debtor is unable to meet debts

A

Bankruptcy

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29
Q

the amount used by the taxpayer to compute the amount of depreciation, amortization, depletion, casualty losses, and the gain or loss upon sale, exchange, or other disposition of an asset

A

Basis

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30
Q

a policy-setting committee, elected by and accountable to the shareholders in a business

A

Board of Directors

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31
Q

the formal written statement specifying the conditions (terms) under which a bond is issued, including any restrictions or covenants

A

Bond Indenture

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32
Q

a person who acts as an intermediary between a buyer and a seller but does not take title to the goods in the transaction

A

Broker

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33
Q

he annual report of the governmental entity, and is composed of the following:

Introductory section
Financial section, including the following:
Auditor’s report
Management’s discussion and analysis (MD & A)
Basic Financial Statements and Notes to the statements
Required supplementary information other than MD & A
Combining financial statements and individual fund statements and schedules
Statistical section

A

Comprehensive Annual Financial Reports (CAFR)

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34
Q

an ownership interest in an incorporated business enterprise, represented by stock certificates that may be bought and sold or otherwise transferred

A

Capital Stock

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35
Q

the process of recording a cost as an asset and deferring its recognition as an expense to future periods

A

Capitalization

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36
Q

the adoption of a generally accepted accounting principle different from the one used previously

A

Change in Accounting Principle

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37
Q

the right to receive payment or to sue; it can be used in bankruptcy to identify and categorize creditors

A

Claim

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38
Q

the property that a person can give and in which another can take a security interest or property subject to a security interest

A

Collateral

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39
Q

the qualitative characteristic that enables users to identify and understand similarities in, and differences among, items

A

Comparability

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40
Q

financial statements presented together for one or more prior periods as well as the current period

A

Comparative Financial Statements

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41
Q

a service, the objective of which is to assist management in presenting financial information in the form of financial statements without undertaking to obtain or provide any assurance that there are no material modifications that should be made to the financial statements in order for the statements to be in conformity with the applicable financial reporting framework

A

Compilation

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42
Q

a management assertion that all transactions and events that should be presented in the financial statements are included (AU-C 315.A114)

A

Completeness Assertion

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43
Q

required to fulfill the Single Audit Act, which requires the auditor of the entity to determine whether it has complied with laws and regulations that have a material effect on each major federal assistance program

A

Compliance Audit

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44
Q

A basis of accounting that the entity used to comply with the requirements or financial reporting provisions of a governmental regulatory agency to whose jurisdiction the entity is subject (e.g., pursuant to the rules of a state insurance commission)
A basis of accounting used to file income tax returns for the period covered by the financial statements
The cash receipts and disbursements basis of accounting, and modifications of the cash basis when such modifications are substantially supported, such as recording depreciation on fixed assets or accruing income taxes
A definite set of criteria having substantial support that is applied to all items appearing in financial statements, such as the price level basis of accounting

A

Comprehensive Basis of Accounting (Other Than Generally Accepted Accounting Principles)

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45
Q

direct communication with external independent parties to prove that balances (e.g., cash balances, accounts receivable, accounts payable, notes payable) are correct

A

Confirmation

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46
Q

the use of the same accounting principles over time

A

Consistency

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47
Q

a reporting procedure in which the financial statements of the parent and the subsidiary are combined

A

Consolidation

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48
Q

minimize the risk of being associated with a client whose management lacks integrity

A

Continuance of Client

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49
Q

the entity is assumed to have an indefinite (“ongoing”) life—a life that is sufficiently indefinite and long for the entity to accomplish its objectives and fulfill its legal obligations and that provides the basis for the current/noncurrent balance sheet classification

A

Continuity

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50
Q

sets the tone of an organization, influencing the control consciousness of its people.

A

Control Environment

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51
Q

the risk that a material misstatement that could occur in an assertion about a class of transaction, account balance, or disclosure will not be prevented or detected and corrected on a timely basis by the entity’s internal control

A

Control Risk

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52
Q

evidence, other than the books of original entry (i.e., the accounting records), which allows the auditor to reach conclusions

A

Corroborating Evidence

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53
Q

all costs that were included in the value of the units of finished product sold during the period

A

Cost of Goods Sold

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54
Q

cash and other assets that can be expected to be used, sold, or converted to cash during the current business cycle, generally one year

A

Current Assets

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55
Q

a person or firm that regularly buys and sells property

A

Dealer

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56
Q

the process of systematic, rational allocation of the cost of operational assets to the accounting periods benefited

A

Depreciation

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57
Q

the risk that the procedures performed by the auditor to reduce audit risk to an acceptably low level will not detect a misstatement that exists and that could be material, either individually or when aggregated with other misstatements

A

Detection Risk

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58
Q

an expression of no opinion

A

Disclaimer of Opinion

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59
Q

stating additional facts or explanations in a financial statement or auditor’s report

A

Disclosure

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60
Q

indicating clearly in the audit report, in the introductory and opinion paragraphs, the portion of the audit covered by the other independent auditor(s)

A

Division of Responsibility

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61
Q

The use of two dates on the auditor’s report to indicate to the user that the auditor’s responsibility for events occurring subsequent to the original report date (the first date) is limited to the specific event referred to by the second date

A

Dual Dating

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62
Q

an additional paragraph(s) added to the standard auditor’s report to fulfill the need to add explanatory language to the report

A

Emphasis-of-Matter (Other-Matter) Paragraph

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63
Q

a situation wherein the practitioner renders professional services

A

Engagement

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64
Q

letter written by the CPA to the client that represents the contractual understanding between the CPA and the client of the work to be performed, signed by both the CPA and the client

A

Engagement Letter

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65
Q

an unintentional misstatement or omission of amounts or disclosures in financial statements

A

Error

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66
Q

the requirement of the auditor to obtain sufficient appropriate audit evidence to provide a reasonable basis for an opinion on financial statements

A

Evidence

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67
Q

a management assertion that assets and liabilities are real and exist at a specific date

A

Existence

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68
Q

he amount of audit work performed when the procedures are executed

A

Extent

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69
Q

it consists of documents or representations (e.g., confirmations) obtained by the auditor directly from independent parties external to the client entity (e.g., banks, customers, vendors, lenders, lessors, trustees, registrars)

A

External Evidence

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70
Q

an independent authoritative body, created in 1973 to replace the AICPA Accounting Principles Board, and authorized by the AICPA Code of Professional Conduct as a promulgator of generally accepted accounting principles (GAAP)

A

Financial Accounting Standards Board (FASB)

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71
Q

a cost flow assumption that matches the oldest costs to current sales revenues

A

First In, First Out (FIFO)

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72
Q

the principal means of communicating financial information to those users external to the entity

A

Financial Statements

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73
Q

a graphic depiction, using uniform symbols to show the control flow, primary actions, and interrelationships of a task or a set of tasks

A

Flowchart

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74
Q

an explanatory note or comment at the end of a financial statement

A

Footnote

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75
Q

the prediction of outcomes, trends, or expected behavior for the economy, an industry, a particular business, or an item such as sales or market prices using statistical methods

A

Forecast

76
Q

the intentional misrepresentation or failure to disclose a material fact or facts that results in injury or loss to someone relying on it

A

Fraud

77
Q

the financial statements include all the information relevant to the formation of business decisions by users external to the enterprise

A

Full Disclosure

78
Q

basic accounting principles and standards and specific conventions, rules, and regulations that define accepted accounting practice at a particular time by incorporation of consensus and substantial authoritative support

A

Generally Accepted Accounting Principles (GAAP)

79
Q

the Statements on Auditing Standards issued by the Auditing Standards Board (ASB), the senior committee of the AICPA designated to issue pronouncements on auditing matter for nonissuers

A

Generally Accepted Auditing Standards (GAAS)

80
Q

a business entity that is expected to continue in operation indefinitely

A

Going Concern

81
Q

audit standards that must be followed for audits of federal organizations, programs, activities, functions, and funds received by contractors, nonprofit organizations, and other external organizations

A

Government Auditing Standards

82
Q

external financial reporting which is intended to meet the common informational needs of various users who must rely on the information communicated by management

A

General Purpose Financial Statements (GPFS)

83
Q

a series of questions about specific internal controls

A

Internal Control Questionnaire (ICQ)

84
Q

a financial statement that shows an organization’s revenues and expenses for a defined period of time

A

Income Statement

85
Q

to be free from conflicts of interest and bias, self-governing, impartial, not subject to control by others, not requiring or relying on something else, not contingent, and acting with integrity and objectivity (i.e., with judgment that is unimpaired and without bias or prejudice)

A

Independence

86
Q

the susceptibility of an assertion about a class of transaction, account balance, or disclosure to a misstatement that could be material, either individually or when aggregated with other misstatements, before consideration of any related controls

A

Inherent Risk

87
Q

the seeking of appropriate information from knowledgeable persons inside (both management and staff) or outside the entity (e.g., bankers, attorneys, vendors, customers, predecessor auditor) with the approval of management

A

Inquiry

88
Q

examination of records, documents, and tangible assets

A

Inspection

89
Q

an audit of internal control over financial reporting being integrated with the audit of financial statements

A

Integrated Audit

90
Q

audit work performed prior to year-end.

A

Interim Audit Work

91
Q

defines the area of activities covered and the depth of the audit testing procedures

A

Internal Audit Scope

92
Q

a process, effected by an entity’s board of directors, management and other personnel, which is designed to provide reasonable assurance regarding the achievement of objectives in one or more categories:

Effectiveness and efficiency of operations
Reliability of financial information
Compliance with applicable laws and regulations

A

Internal Control

93
Q

the first paragraph of the standard auditor’s report, in which the company and the financial statements audited are identified.

A

Introductory Paragraph

94
Q

The aggregate of items of tangible personal property owned by the business (to which the firm has legal title) intended either for internal consumption in the production of goods for sale or for sale

A

Inventory

95
Q

an activity ratio that measures the liquidity of inventory; it is the measurement of the effectiveness with which a firm manages its inventory

A

Inventory Turnover

96
Q

an entity who issues or proposes to issue any security, with some noted exceptions

A

Issuer

97
Q

an agreement conveying the right to use property, plant, or equipment (i.e., land and/or depreciable property), usually for a stated period of time.

A

Lease

98
Q

provides “negative assurance” to the underwriters that “nothing came to our attention which would indicate that the information does not meet the specified standard.”

A

Letter for Underwriters

99
Q

a letter from an auditor to an outside party seeking corroboration of information furnished by management

A

Letter of Inquiry

100
Q

a cost flow assumption that matches the latest (most recent) costs to current sales revenues

A

Last In, First Out (LIFO)

101
Q

a statement that “there are no material modifications that should be made to the financial statements in order for the statements to be in conformity with the applicable financial reporting framework

A

Limited Assurance

102
Q

a suit that is contested in court

A

Litigation

103
Q

affirms (AU-C 580):

the fair presentation of the financial statements and management’s responsibility for them,
the completeness of all information provided to the auditor and in the financial statements,
representations relating to recognition, measurement, and disclosure (including the absence of knowledge of fraud or suspected fraud), and
information concerning subsequent events.

A

Management Representation Letter

104
Q

a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis

A

Material Weakness

105
Q

an entity-specific aspect of relevance based on the nature or magnitude or both of the items to which the information relates in the context of an individual entity’s financial report.

A

Materiality

106
Q

an untrue statement that misrepresents the facts and which, by its magnitude or nature, influences the decision making of the user

A

Materially Misstated

107
Q

a reported amount that is over (overstated) or under (understated) the actual amount

A

Misstatement

108
Q

an opinion that has been changed in some way to limit or specify its meaning

A

Modified Opinion

109
Q

the type of audit procedure to be used, whether a class of transactions is tested by analytical procedures, tests of controls or substantive testing through confirmation, recalculation, examination of documents (tracing and vouching), reperformance, etc. It is related to the appropriateness of the audit evidence

A

Nature

110
Q

a statement made by the auditor which says that, as a result of specified procedures, “nothing came to our attention which would indicate that specified matters do not meet a specified standard.”

A

Negative Assurance

111
Q

a confirmation letter that requests a reply only if the account balance is considered incorrect

A

Negative Confirmations

112
Q

describes violations of laws or governmental regulations perpetrated by the entity or by the management or employees acting on behalf of the entity

A

Noncompliance with Laws and Regulations by Client

113
Q

an organization formed for charitable purposes—to serve the community versus to make a profit

A

Nonprofit

114
Q

all aspects of audit risk that are not due to sampling

A

Nonsampling Risk

115
Q

a sampling technique for which the auditor considers sampling risk in evaluating an audit sample without using statistical theory to measure that risk or statistical procedures to draw up the sample

A

Nonstatistical Sampling

116
Q

looking at a process or procedures being performed by others

A

Observation

117
Q

all transactions and other events that are not investing or financing activities

A

Operating Activities

118
Q

he paragraph of the standard auditor’s report in which the auditor’s opinion is expressed

A

Opinion Paragraph

119
Q

information presented outside the basic financial statements, excluding required supplementary information that is not considered necessary for the financial statements to be fairly presented in accordance with the applicable financial reporting framework

A

Other Supplementary Information

120
Q

the rate used to charge overhead costs to work in process.

A

Overhead Rate

121
Q

the investor company that owns over 50% of the outstanding voting stock of another (investee) company, the majority interest, or the controlling interest

A

Parent

122
Q

stablished by Congress to oversee public company audits

A

Public Company Accounting Oversight Board (PCAOB)

123
Q

the physical count of inventory taken by the client at year-end (i.e., on the last day of the fiscal year) to obtain evidence regarding existence and completeness

A

Physical Inventory

124
Q

a method of short-term financing in which a business uses its accounts receivable as collateral for a loan

A

Pledging

125
Q

a method of accounting for business combinations in which the parent acquires substantially all (90% or more) of the voting stock of another entity by exchanging shares of its own stock for the shares of the subsidiary; the parent does not disburse resources

A

Pooling of Interests

126
Q

all of the members or elements of a group, universe, or field that constitutes the account balance or class of transactions of interest from which the sample will be drawn and about which the auditor wishes to generalize results

A

Population

127
Q

an auditor’s statement to the effect that the tested items are in compliance with applicable laws or regulations or agreement with specified standards

A

Positive Assurance

128
Q

one in which the debtor is requested to respond whether or not he is in agreement with the information given

A

Positive Confirmations

129
Q

an auditor who was previously the auditor of an entity and who has resigned or been replaced by another auditor

A

Predecessor Auditor

130
Q

Occurrence and rights and obligations—Disclosed events, transactions, and other matters have occurred and pertain to the entity.
Completeness—All disclosures that should have been included in the financial statements have been included.
Classification and understandability—Financial information is appropriately presented and described, and disclosures are clearly expressed.
Accuracy and valuation—Financial and other information are disclosed fairly and at appropriate amounts.

A

Presentation

131
Q

an accounting period that ended before the current period. This need not be the period immediately preceding the current period

A

Prior Period

132
Q

how what the significant effects on historical financial information might have been had a consummated or proposed transaction or event occurred at an earlier date

A

Pro Forma Financial Statements

133
Q

the application of relevant training, knowledge, and experience, within the context provided by auditing, accounting, and ethical standards, in making informed decisions about the courses of action that are appropriate in the circumstances of the audit engagement

A

Professional Judgment

134
Q

the entity’s expected future position and results of operations based on hypothetical assumptions

A

Projection

135
Q

official, authoritative statements or standards that must be complied with

A

Pronouncements

136
Q

consists of financial estimates of future events that may be a forecast (the entity’s expected future position and results of operations based on expected conditions and expected courses of action) or a projection (based on hypothetical assumptions)

A

Prospective Financial Information

137
Q

a business form prepared by the buyer describing the merchandise he or she wishes to purchase

A

Purchase Order

138
Q

states that except for the effects of the matter to which the qualification relates, the financial statements present fairly, in all material respects, the financial position, results of operations, and cash flow in accordance with accounting standards generally accepted in the United States or an applicable financial reporting framework

A

Qualified Opinion

139
Q

the reasonable assurance that policies and procedures are in place during an audit engagement to be in compliance with GAAS (generally accepted auditing standards)

A

Quality Control

140
Q

a CPA firm’s system of specified standards that are required to be developed to assure that firm is in compliance with professional standards for the services it provides

A

Quality Control Standards

141
Q

a proportional relationship between two single amounts

A

Ratio

142
Q

the study of proportional relationships between recorded amounts. It is the comparison of ratios to expectations

A

Ratio Analysis

143
Q

to change the account used to record an item, or its category, on a financial statement

A

Reclassification

144
Q

an action to bring two related balances into agreement, to identify differences between two related balances (as, for example, the cash balance per the accounting records and the balance per the bank statement), and to detect errors or items that were included in the preparation of one balance omitted from the other.

A

Reconciliation

145
Q

management, owners, family members of owners or management, affiliates, or any party which “can significantly influence the management or operating policies” such that the entity might be “prevented from fully pursuing its separate interests.”

A

Related Parties (Financial Statements)

146
Q

a fundamental decision-specific quality of decision usefulness and the capacity of information to “make a difference.”

A

Relevance

147
Q

a belief that motivates a person to act.

A

Reliance

148
Q

Change from LIFO method of inventory pricing to another method
Change in the method of accounting for long-term construction contracts
Changes to or from the “full cost” method of accounting used in the extractive industries
Changes made at the time of an initial distribution of company stock

A

Restatement

149
Q

an increase in net assets from results of operations, retained by the corporation for use in the enterprise.

A

an increase in net assets from results of operations, retained by the corporation for use in the enterprise.

150
Q

an engagement undertaken to achieve, through the performance of inquiry and analytical procedures, limited assurance that there are no material modifications that should be made to the statements in order for them to be in conformity with GAAP or, if applicable, with a comprehensive basis of accounting other than generally accepted accounting principles

A

Review

151
Q

management assertions that all recorded assets are owned by (i.e., are rights of) the entity and that all liabilities are obligations of (i.e., are owed by) the entity at the given date

A

Rights and Obligations

152
Q

the combination of inherent risk (IR) and control risk (CR) for an entity

A

Risk of Material Misstatement (RMM)

153
Q

arises from the possibility that, when a test of controls or a substantive test is restricted to a sample, the auditor’s conclusions may be different from the conclusions that would have been reached if the tests have been applied in the same way to all of the items in the account balance or class of transactions (i.e., a particular sample may contain proportionately more or less deviation from prescribed internal controls or monetary misstatement than exists in the balance or class as a whole)

A

Sampling Risk

154
Q

a restriction on an audit that is caused by the client, issues beyond the control of the client, or other events that do not allow the auditor to complete all aspects of his or her audit procedures.

A

Scope Limitation

155
Q

a federal government agency charged with the responsibility of writing rules consistent with federal security laws, investigation of violations, maintenance of financial disclosure documentation, and initiation of action against violators of federal securities acts

A

Securities and Exchange Commission (SEC)

156
Q

provides that any person who acquired securities and was injured by false financial statements or misleading omissions from registration statements may sue any party associated with the statement, including the accountant. It relieves the plaintiff of burden of proof; it includes investors who are not clients of the accountant and who are not in privity with the accountant.

A

Section 11

157
Q

an organization or segment of an organization that provides services to user entities that are relevant to those user entities’ internal control over financial reporting.

A

Service Organization

158
Q

a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance

A

Significant Deficiency

159
Q

an identified and assessed risk of material misstatement that, in the auditor’s professional judgment, requires special audit consideration

A

Significant Risk

160
Q

federal legislation that establishes uniform requirements for the audits of federal financial assistance provided to state and local governments

A

Single Audit Act Amendment of 2013

161
Q

financial reports, such as offering statements, budgets, and reports filed with federal grantor agencies or senior levels of government, issued to satisfy the specific needs of specific users.

A

Special-Purpose Financial Statements

162
Q

states that the financial statements present fairly, in all material respects, the entity’s financial position, results of operations, and cash flows in accordance with accounting principles generally accepted in the United States of America

A

Standard Auditor’s Report

163
Q

provides information about the entity’s assets, liabilities, and equity and their relationships to one another at a particular point in time

A

Statement of Financial Position

164
Q

a sampling plan in which the laws of probability are used for selecting and evaluating a sample from a population for the purpose of reaching a conclusion about the population. It allows the auditor to design an efficient sample, to measure the sufficiency of the audit evidence obtained, and to evaluate the sample results

A

Statistical Sampling

165
Q

distributions of the corporation’s own stock (treasury or newly issued shares) to stockholders in proportion to the number of outstanding shares held

A

Stock Dividend

166
Q

an event occurring after the balance sheet date but prior to the issuance of the auditor’s report, which has a material effect on the financial statements and therefore requires adjustment or disclosure in the statements

A

Subsequent Event

167
Q

a term applied by an auditor to indicate his opinion, based upon sufficient appropriate audit evidence, that an entity may not be able to continue as a going concern beyond a year from the period being audited

A

Substantial Doubt

168
Q

tests of transaction details and account balances and analytical procedures performed to detect material misstatements in the account balances, transaction class, and disclosure components of the financial statements

A

Substantive Procedures

169
Q

an auditor who replaces the previous auditor

A

Successor Auditor

170
Q

relates to the amount and kind of audit evidence required by an auditor to form an opinion

A

Sufficient

171
Q

the directing and reviewing the efforts of assistants

A

Supervision

172
Q

financial information outside of the basic financial statements

A

Supplemental Information

173
Q

provides evidence on a sample basis about the presence or absence of a control condition

A

Test of Controls

174
Q

the person(s) with responsibility for overseeing the strategic direction of the entity and obligations related to the accountability of the entity

A

Those Charged with Governance

175
Q

the auditor’s shorthand for abbreviating comments about work performed

A

Tick Marks

176
Q

the time frame during which the audit procedure is performed (e.g., interim or at year-end), which is related to the appropriateness of the audit evidence

A

Timing of Audit Procedure

177
Q

follow the course of development of some object

A

Trace

178
Q

a particular kind of external event, namely, an external event involving transfer of something of value between two or more entities

A

Transaction

179
Q

carry significant authority because they are the Treasury Department’s official interpretation of tax statutes

A

Treasury Regulations

180
Q

a listing of all account balances as of a particular date

A

Trial Balance

181
Q

decision making without knowledge of which state of nature will occur

A

Uncertainty

182
Q

one who distributes a new issue of securities or a large block of issued securities—that is, a secondary offering, commonly including an obligation to purchase the underwritten securities, regardless of whether they can be resold to others

A

Underwriter

183
Q

states that the financial statements are presented fairly in accordance with accounting principles generally accepted in the United States of America or an applicable financial reporting framework—the basic premise being that the auditor has tested the financials and they give an accurate representation of the company’s condition

A

Unmodified Opinion

184
Q

states that the financial statements are presented fairly in accordance with accounting principles generally accepted in the United States of America or an applicable financial reporting framework—the basic premise being that the auditor has tested the financials and they give an accurate representation of the company’s condition

A

Unmodified Opinion

185
Q

designed to ensure that all recorded transactions are those which should have been recorded

A

Validity

186
Q

document the work done and conclusions reached by the auditor, showing procedures applied, tests performed, information obtained, and pertinent conclusions reached

A

Workpapers

AUD (7 decks)

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