Financial Accounting > Class Notes > Audit Glossary (All)

Audit Glossary

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Assurance Engagement faith. Audit Opinion The opinion concludes on whether or not the subject matter (e.g. the annual accounts) Audit Risk This is the risk that the auditor will sign the wrong audit opinion on the accounts - this may be due to them not detecting a material fraud or error within the accounts. Business Risk This is typically the risks to the profitability (or other objectives) of a company. Not to be confused with audit risk! External Audit . Financial Statement Assertions Going Concern Internal Audit Internal auditing is an activity that includes examining, evaluating, and monitoring the Pervasive Agreed-upon procedures engagement—An engagement in which an auditor is Analytical procedures—Evaluations of financial information made by a study of Annual report—. Appropriateness— Assertions— Assurance engagement— Assurance engagement risk— Audit documentation— Audit evidence— Audit of financial statements— Audit plan— Audit risk— Control risk— Inherent risk— Audit sampling— Control environment— Engagement letter—. Entity’s risk assessment process— Error— Fair value—. Fraud— Fraudulent financial reporting— General IT-controls— Going concern assumption— Governance— Independence—Comprises: (a) Independence of mind— (b) Independence in appearance— Information system relevant to financial reporting— Initial audit engagement— Internal control—: (a) The control environment; (b) The entity’s risk assessment process; (c) The information system, including the related business processes, relevant to financial reporting, and communication; (d) Control activities; and (e) Monitoring of controls. Listed entity — Management representations— Materiality— Misappropriation of assets— Misstatement— Monitoring of controls— Opinion— Overall audit strategy— Planning— Reperformance— Review engagement— Review procedures— Risk assessment procedures— Subsequent events— (a) Those that provide further evidence of conditions that existed at period end; and, (b) Those that are indicative of conditions that arose subsequent to period end. Substantive procedures— (a) Tests of details of classes of transactions, account balances; and disclosures and, (b) Substantive analytical procedures. Tests of control— Understanding of the entity and its environment—the auditor’s understanding of the entity and its environment consists of the following aspects: (a) Industry, regulatory, and other external factors, including the applicable financial reporting framework. (b) Nature of the entity, including the entity’s selection and application of accounting policies. (c) Objectives and strategies and the related business risks that may result in a material misstatement of the financial statements. (d) Measurement and review of the entity’s financial performance. (e) Internal control.

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