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Flashcards in Auditoria Deck (39):
1

Parte of the standard unqualified audit report

1. Report title
2. Audit report addres
3. Introductory paragraph
4. Scope paragraph
5. Opinion paragraph
6. Name of CPA firm
7. Audit report date

2

Audit committee

Selected members of a company’s outside directors, who take an active role in overseeing the company’s accounting and financial reporting policies and practices.

3

Accounting system

The series of tasks and records of an entity by which transactions are processed as a means of maintaining financial records. Such systems identify, assemble, analyze, calculate, classify, record, summarize, and report transactions and other events.

4

Analytical procedures

The analysis of significant ratios and trends including the resulting investigation of fluctuations and relationships that are inconsistent with other relevant information or deviate from predictable amounts.

5

Analytical review

The process of planning, executing, and drawing conclusions from analytical procedures.

6

Annual report

An entity ordinarily issues on an annual basis a document which includes its financial statements together with the audit report thereon. This document is frequently referred to as the “annual report.”

7

Audit

The objective of an audit of financial statements is to enable the auditor to express an opinion whether the financial statements are prepared, in all material respects, in accord- ance with an identified financial reporting framework. The phrases used to express the auditor’s opinion are “give a true and fair view” or “present fairly, in all material respects,” which are equivalent terms. A similar objective applies to the audit of financial or other information prepared in accordance with appropriate criteria.

8

Audit client

An entity in respect of which a firm conducts an audit engagement. When the audit client is a listed entity, it will always include its related entities.

9

Audit documentation

The principal record of the basis for the auditor’s conclusions and provides the principal support for the representations in the auditor’s report.

10

Audit engagement

An assurance engagement to provide a high level of assurance that finan- cial statements are free of material misstatement, such as an engagement in accordance with International Standards on Auditing. This includes a statutory audit which is an audit required by national legislation or other regulation.

11

Audit evidence

The information obtained by the auditor in arriving at the conclusions on which the audit opinion is based. Audit evidence will comprise source documents and accounting records underlying the financial statements and corroborating information from other sources.

12

Audit firm

Audit firm is either a firm or entity providing audit services, including where appropriate its partners, or a sole practitioner.

13

Audit objective

The specific expression of a financial statement assertion or assertions for which evidence needs to be obtained. For example, the objective “Investments exist and are owned by the entity.”

14

Audit program

An audit program sets out the nature, timing, and extent of planned audit procedures required to implement the overall audit plan. The audit program serves as a set of instructions to assistants involved in the audit and as a means to control the proper execution of the work. Also called audit plan.

15

Audit report

An Audit report in usually synonymous with an Audit opinion, but it may be a more comprehensive report. The comprehensive audit report contains all important administrative data related to the audit, including comments, results, and the corrective preventive actions that have been determined. The Audit report is an official document that is signed by the lead auditor and the head of the audited area.

16

Compliance auditing

Is a review of an organization’s procedures to determine whether the organization is following a specific set of criteria (e.g. government regulation, commercial contract, lease).

17

Component management

Management responsible for the preparation and presentation of a component’s financial information.

18

Custody

Physical control over assets or record

19

Entity

A separate or self-contained existence that provides goods or services. For example, a company, organization, or agency.

20

Evidence

Anything that can make a person believe that a fact, proposition, or assertion is true or false.

21

Financial statements

The balance sheets, income statements or profit and loss accounts, statements of changes in financial position (which may be presented in a variety of ways, for example, as a statement of cash flows or a statement of fund flows), notes, and other statements and explanatory material which are identified as being part of the financial statements.

22

Firm

(a) A sole practitioner, partnership or corporation of professional accountants; (b) An entity that controls such parties; and (c) An entity controlled by such parties.

23

Internal control

A process, effected by an entity’s board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories: effectiveness and efficiency of operations, reliability of financial reporting, and compliance with applicable laws and regulations. – Committee of Sponsoring Organizations of the Treadway Commission.

24

Management

Management comprises officers and others who also perform senior manage- rial functions. Management includes directors and the audit committee only in those instances when they perform such functions.

25

Modified auditor's report

An auditor’s report is considered to be modified if either an emphasis of matter paragraph(s) is added to the report or if the opinion is other than unqualified.

26

Negligence of auditor

An auditor in the performance of his duty may not use an appropriate level of care and therefore be legally liable.
- Ordinary negligence
- Gross negligence

27

Ordinary negligence

The absence of reasonable care that can be expected in similar circumstances.

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Gross negligence

is reckless behavior with not even slight care

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Opinion

The auditor’s report contains a clear written expression of opinion on the financial statements as a whole.
- Adverse opinion
- disclaimer of opinion
- qualified opinion
- unqualified opinion

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Adverse opinion

An adverse opinion is expressed when the effect of a disagreement is so material and pervasive to the financial statements that the auditor concludes that a qualification of the report is not adequate to disclose the misleading or incomplete nature of the financial statements.

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Disclaimer of opinion

A disclaimer of opinion is expressed when the possible effect of a limitation on scope is so material and pervasive that the auditor has not been able to obtain sufficient appropriate audit evidence and accordingly is unable to express an opinion on the financial statements.

32

Qualified opinion

A qualified opinion is expressed when the auditor concludes that an unqualified opinion cannot be expressed but that the effect of any disagreement with management, or limitation on scope, is not so material and pervasive as to require an adverse opinion or a disclaimer of opinion.

33

Unqualified opinion

An audit opinion expressed when the auditor concludes that the financial statements give a true and fair view (or are presented fairly, in all material respects) in accordance with the identified financial reporting framework. (See also Modified auditor’s report.)

34

Planning

Planning involves developing a general strategy and a detailed approach for the expected nature, timing, and extent of the audit.

35

Reconcilitiation

Relates a specific amount in the accounting records to another source of information (e.g. a reconciliation of accounts payable balances with vendor’s statements).

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Scope of a review

The term “scope of a review” refers to the review procedures deemed necessary in the circumstances to achieve the objective of the review.

37

Scope paragraph

The paragraph in an audit opinion that describes the nature of the audit and the standards by which it was carried out. It is the second paragraph in an unqualified and qualified audit opinion.

38

Conditions for standard unqualified audit report

- includes all financial statements
- three general standards are met
- financial statements comply with GAAP
- no circumstances require an explanatory paragraph or report modification

39

4 categories of audit reports

Standard unqualified
Unqualified with explanatory paragraph / modified wording
Qualified
Adverse / disclaimer