A B C D E F G H I J K L M N O P Q R S T U V W – Z
Absense of causal connection:
- An auditor’s legal defense under which the auditor contends that the damages claimed by the client were not brought about by any act of the auditor.
Acceptable audit risk:
- A measure of how willing the auditor is to accept that the financial statements may be materially misstated after the audit is completed and an unqualified opinion has been issued.
Acceptable risk of assessing control risk too low (ARACR)
- The risk that the auditor is willing to take of accepting a control as effective or a rate of monetary misstatements as tolerable when the true population exception rate is greater than the tolerable exception rate.
Acceptable risk of incorrect acceptance (ARIA):
- The risk that the auditor is willing to take of accepting a balance as correct when the true misstatement in the balance is equal to or greater than tolerable misstatement.
Acceptable risk of incorrect rejection (ARIR):
- The risk that the auditor is willing to take of rejecting a balance as incorrect when it is not misstated by a material amount.
Accounts receivable related balance-related audit objectives:
- One of the major specific audit objectives used by the auditor to decide the appropriate audit evidence for accounts receivable.
Aged trial balance:
- A listing of the balances in the accounts receivable master file at the balance sheet date broken down according to the amount of time passed between the date of sale and the balance sheet date.
Accounts payable master file:
A computer file for maintaining a record for each vendor of individual acquisitions, cash disbursements, acquisition returns and allowances, and vendor balances.
Accounts payable trial balance:
- A listing of the amount owed to each vendor at a point in time; prepared directly from the accounts payable master file.
Acquisition and payment cycle:
- The transaction cycle that includes the acquisition of and payment for goods and services from suppliers outside the organization.
- Estimated unpaid obligations for services or benefits that have been received prior to the balance sheet date; common accrued liabilities include accrued commissions, accrued income taxes, accrued payroll and accrued rent.
Allocation of the preliminary judgement about materiality:
- The process of assigning to each balance sheet account the misstatement amount to be considered material for that account based on the auditor’s preliminary judgement.
- A report issued when the auditor is of the opinion that the financial statement are so materially misstated or misleading as a whole that they do not present fairly the entity’s financial position or the results of its operations and cash flow in conformity with approved accounting standards
- Use of comparisons and relationships to assess whether account balances or other data appear reasonable.
- Controls related to a specific use of IT, such as inputting, processing and outputting of sales or cash receipts.
Application service providers (ASPs):
- A third-party entity that managers and supplies software applications or software-related services to customers through the internet.
Appropriateness of evidence:
- The degree to which evidence can be considered believable or worthy of trust; evidence is appropriate when it is obtained (1) from a relevant source (2) from an independent provider (3) from a client with effective internal controls (4) from the auditor’s direct knowledge (5) from qualified providers such as law firms and banks (6) from objective sources and (7) in a timely manner.
- The characteristic being tested for in the population
- A statistical, probabilistic method of sample evaluation that results in an estimate of the proportion of items in a population containing a characteristic or attribute of interest.
Assessment of control risk:
- A measure of the auditor’s expectation that internal controls will neither prevent material misstatements from occurring nor detect and correct them if they have occurred; control risk is assessed for each transaction-related audit objective in a cycle or class of transaction.
- Inquiry to corroborate or contradict prior information obtained.
- Independent professional services that improve the quality of information for decision makers.
- A type of assurance service in which the Chartered Accountant firm issues a report about the reliability of an assertion that is the responsibility of another party.
Auditing around the computer:
- Auditing without relying on and testing controls embedded in computer application programs, which is acceptable when the auditor has access to source documents in a readable form that can be reconciled to detailed listings of output or when sufficient non-automated controls exist.
- A complement to acceptable audit risk; an acceptable audit risk of 1% is the same as audit assurance of 99%; also called overall assurance and level of assurance
- Required to be established by listing rules for every listed company. The function is to implement and support the oversight function of the Board of directors. One of its many functions is to assist auditors to remain independent of management.The listing requirements also set out the minimum functions of the audit committee.
- The principal record of auditing procedure applied, evidence obtained, and conclusions reached by the auditor in the engagement.
- A situation in which the auditor issues an erroneous audit opinion as the result of an underlying failure to comply with the requirements of auditing standards.
- Detailed instruction for the collection of a type of audit evidence.
- List of audit procedures for an audit area or an entire audit; the audit program always includes audit procedures and may also include sample sizes, items to select and timing of the tests.
- The risk that the auditor will conclude that the financial statements are fairly stated and an unqualified opinion can therefore be issued when, in fact they are materially misstated.
Audit risk model:
- A formal model reflecting the relationships between acceptable audit risk (AAR), inherent risk(IR), control risk (CR), and planned detection risk (PDR); PDR=AAR/(IR X CR)
- Testing less than 100% of a population for the purpose of making inferences about that population
Audit of historical financial statements:
- A form of attestation service in which the auditor issues a written report stating whether the financial statements are in material conformity with approved accounting standards
- The communication of audit findings to users
- The accumulation and evaluation of evidence about information to determine and report on the degree of correspondence between the information and established criteria
A B C D E F G H I J K L M N O P Q R S T U V W – Z