Auditing Concepts and Standards Review Flashcards

Comprehensive vocabulary flashcards covering auditing standard concepts, analytical procedures, risk assessment, assertions, and quality control elements based on the lecture notes.

Analytical Procedures (Completion Phase)

Procedures performed during the completion phase that are useful as a final review for material misstatements or financial problems not noted during other testing, helping the auditor take a final objective look at the financial statements.

Analytical Procedures (Comparison)

Audit procedure that uses comparisons and relationships to assess whether account balances or other data appear reasonable compared to the auditor's expectations.

Auditing Standards on Expectations

Standards that emphasize the need for auditors to develop and use expectations during audit procedures.

Analytical Procedures (Data Relationships)

Procedures performed by studying plausible or predictable relationships among both financial and non-financial data.

Deficiency in Design

A internal control deficiency that exists if a necessary control is missing or not properly formulated.

Efficient and Effective Resource Use

The goal that internal controls within an organization are designed to encourage in order to optimize company objectives.

Management Representation Letter

A document containing information that the auditor is required to corroborate by performing standard audit procedures.

Attitude of Management

The core characteristic in which the essence of an effectively controlled organization lies.

Review Engagement Main Procedures

The main audit procedures considered in a review engagement, consisting of analytical procedures and inquiry.

Completeness (Criteria)

A characteristic of suitable criteria ensuring that relevant factors that could affect conclusions in the engagement context are not omitted.

Risk Assessment Procedures

Audit procedures performed to assess risk, including inquiry, observation, and inspection.

Valuation Assertion (Self-Built Equipment)

The ASB balance assertion tested when an auditor examines work orders, purchased materials, labor cost reports, and applied overhead capitalized as part of self-built equipment costs.

Fraud Risk Factor Identification Timing

The three phases during which an auditor may identify fraud risk factors: planning, testing, and completion.

Understandability

The link between decision makers and their decisions that ensures financial information is useful despite variations in user decision-making abilities and background knowledge.

Independence in Mind

The state of mind that permits the provision of an opinion without being affected by influences that compromise professional judgment, allowing an individual to act with integrity, objectivity, and professional skepticism.

Unduly Lavish Lifestyle

Evidence shown by officers or employees that may likely indicate the possibility of fraud or error.

Opportunity (Fraud Triangle)

Pertains to an individual's perception that he or she can commit fraud and that it will not be detected.

Audit Risk

The risk that the auditor gives an inappropriate audit opinion when the financial statements are materially misstated.

Internal Auditor Technical Competence

Evaluated by external auditors by obtaining information about the quality of working paper documentation, reports, and recommendations.

Reliability (Criteria)

A characteristic of suitable criteria that allows reasonably consistent evaluation or measurement of subject matter in similar circumstances by similarly qualified practitioners.

Sufficiency

The characteristic of audit evidence that pertains to quantity.

Appropriateness

The characteristic of audit evidence that pertains to quality.

Significant Deficiency

A deficiency category under which a material weakness is always classified.

Audit Evidence Quantity and Quality

The concept that evidence quantity needed increases with misstatement risk and decreases with higher quality of evidence.

Valuation Assertion (Inventory Inquiry)

The balance assertion assured by inquiries of warehouse personnel concerning possible obsolete or slow-moving inventory items.

Internal Auditor Evaluation Criteria

Competence and objectivity, evaluated by the external auditor to determine if the internal auditor's work is adequate for audit purposes.

Accounting Policy Evaluation (PSA 700)

Evaluation required under PSA 700 to confirm that selected and applied accounting policies are consistent with the financial reporting framework and appropriate.

Accounting Estimates Evaluation (PSA 700)

Evaluation required under PSA 700 ensuring that accounting estimates made by management are reasonable in the circumstances.

Financial Statement Information Qualities (PSA 700)

Attributes required under PSA 700 ensuring presented financial statement information is relevant, reliable, comparable, and understandable.

Financial Statement Disclosures (PSA 700)

Disclosures evaluated under PSA 700 to enable users to understand the effects of material transactions and events conveyed in the financial statements.

Reasonable Assurance

The level of assurance provided by an audit regarding the detection of material misstatements.

Independent Auditor Title

The report title designation used to clearly distinguish the auditor's report from reports issued by others.

Negative Assurance

The form of assurance provided in a review engagement report, best described by the phrase: 'Nothing has come to my attention'.

Prudent Person Concept

The standard of due care to which the auditor is expected to adhere.

Scope of Services

The single feature that most clearly distinguishes auditing, attestation, and assurance services.

Philippine Standards on Auditing (PSA)

Standards described as defining the minimum standards of performance for an auditor.

Failure to Meet PSA Requisites

An auditor's failure to adhere to PSA requirements, which serves as evidence of negligence.

Elements of System of Quality Control

Components comprising Leadership Responsibilities, Ethical Requirements, Acceptance and Continuance of Client Relationships, Human Resources and Assignment, Engagement Performance, and Monitoring.