Chapter 1 - Vocabulary Flashcards Preview

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Flashcards in Chapter 1 - Vocabulary Deck (19):
1

Assurance

The lending of credibility to information.

2

Assurance Services

Independent professional services that improve the quality or its context for decision makers.

3

Attestation

The lending of credibility to assertions made by a third party.

4

Attestation Engagement

The provision of an opinion on subject matter or an assertion about the subject matter that is the responsibility of another party.

5

Auditing

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.

6

Business Risk

The risk that an entity will fail to meet its objectives. If the company fails to meet its objectives enough times, the company may ultimately fail.

7

Completeness

All of the transactions, events, assets, liabilities, equity interests and other disclosures that should have been recorded in the financial statements have been recorded.

8

Cutoff

Refers to accounting for revenue, expenses and other transactions in the proper period. The cutoff date refers to the audit clients year-end balance sheet date.

9

Existence

All assets, liabilities, and equity interests do actually exist.

10

Financial Reporting

Process of providing statements of financial position, results of operations, changes in cash flows, and accompanying disclosure to outside decision makers who do not have access to management's internal sources of information. A company's accountants perform this function.

11

Information Risk

The probability that the information circulated by a company will be false or misleading.

12

Internal Auditing

An independent, objective assurance and consulting activity designed to add value and improve an organization's operations.

13

Occurrence

All of the transactions and events that have been recorded are valid, pertain to the entity, and have actually taken place.

14

Operational Auditing

The study of business operations for the purpose of making recommendations about the efficient use of resources, effective achievement of business objectives, and compliance with company policies.

15

Presentation and Disclosure

Management assertion that all transactions and events have been presented correctly and that all relevant information has been disclosed to financial statement users, usually in the footnotes to the financial statements.

16

Professional Skepticism

Having an attitude that includes a questioning mind and a critical assessment of evidence. A tendency to not believe management's assertions without corroboration.

17

Rights and Obligations

The entity is entitled to all rights of the assets, the liabilities are the legal responsibility of the entity, and all of the disclosed events and transaction pertain to the entity.

18

Substantial Equivalency

The process that allows a CPA registered in one state to practice in another state.

19

Valuation or Allocation

All assets, liabilities, and equity interests of the entity have been valued in accordance with the relevant financial reporting standard (GAAP) and are listed in the financial statements at the proper amount and any resulting valuation adjustments have been appropriately recorded in the financial statements.