ACCT402 - C1 Vocab Flashcards

risk that an entity will fail to meet its objectives

• (1) Complexity, (2) Remoteness, (3) Time sensitivity, (4) Consequences

• probability that the info circulated by a company will be false or misleading

• lending of credibility to information

• independent professional services that improve the quality of info, or its context, for decision makers

• assurance is provided for specific assertions made by management

• service where a practitioner is requested to examine whether management’s assertations about some type of subject matter can be relied upon

• systematic process of objectively obtaining & evaluating evidence regarding assertions about economic actions & events to ascertain the degree of correspondence between the assertions & established criteria & communicating the result to interested users

• Management team is responsible for the financial reporting process & the financial statements
• Key company officials must certify financial statements

• Entity has a legal claim on all assets & revenues reported & has a legal responsibility for all liabilities & expenses

• management’s need to account for revenue, expenses, & other transactions in the proper period

• Balances are reported at the proper amount in accordance with GAAP

• Existence OR occurrence
• Completeness
• Valuation OR allocation
• Rights & obligations
• Presentation & disclosure

• Occurrence
• Cutoff
• Completeness
• Accuracy
• Rights & Obligations
• Classification
• Presentation

• Existence
• Completeness
• Accuracy
• Rights & obligations
• Presentation

• reasonable possibility that a material misstatement exists related to that assertion for the significant account or footnote disclosure being audited

• chance that the financial statement account or footnote disclosure could contain a material misstatement

• Attitude that “includes a questioning mind & a critical assessment of evidence”

1. Clarify the issues & objectives.
2. Consider the possible alternatives.
3. Gather & evaluate the relevant evidence.
4. Reach an audit conclusion.
5. Carefully document rationale for the professional judgment reached.

• Financial Statement Auditing Services, Non-audit & Attestation Engagements, Compilations, Reviews
• Public

1. Reviews of internal control systems to ensure compliance with company policies, plans, & procedures
2. Compliance with laws & regulations
3. Appraisals of the economy & efficiency of operations
4. Reviews of effectiveness in achieving program results compared to established objs & goals

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