Chapter 33 Law in ACC

auditor

An accountant qualified to perform audits (systematic inspections) of a business’s financial records.

constructive fraud

Conduct that is treated as fraud under the law even when there is no proof of intent to defraud, usually because of the existence of a special relationship or fiduciary duty.

defalcation

Embezzlement or misappropriation of funds.

due diligence

A required standard of care that certain professionals, such as accountants, must meet to avoid liability for securities violations.

generally accepted accounting principles (GAAP)

The conventions, rules, and procedures developed by the Financial Accounting Standards Board to define accepted accounting practices at a particular time.

generally accepted auditing standards (GAAS)

Standards established by the American Institute of Certified Public Accountants to define the professional qualities and judgment that should be exercised by an auditor in performing an audit.

International Financial Reporting Standards (IFRS)

A set of accounting standard used in many nations around the world.

malpractice

Professional negligence, or failure to exercise reasonable care and professional judgment, that results in injury, loss, or damage to those relying on the professional.

working papers

The documents used and developed by an accountant during an audit, such as notes, computations, and memoranda.