Chapter 1

Managemnet

________ is responsible for providing reliable Information to users.

Audits information

________ prepped by federal government agencies before its submitted to congress.

Criteria

________ can be the level of input or output errors.

Audit assurance

________ is valued because the information is complete, accurate and unbiased.

Information

________ gathered is often relied on others, when its obtained from others the likelihood of It being intentionally or unintentionally misstated increases.

operational efficiency

Evaluates the ________ and effectiveness of federal programs.

revenue agents

Internal ________: auditors who work for the IRS and conduct examinations of taxpayers returns.

RFR

Auditing has no effect on ________ or BR, but can have a significant effect on information risk.

Attestation services

________: a type of assurance service in which the CPA firm issues a report about a subject matter or assertion that is made by another party.

Assurance service

________: Is an independent professional service that improves the quality of information for decision makers.

evaluation of evidence

Auditing: Is the accumulation and ________ about information to determine and report on the degree of correspondence between the information and established criteria.

Operational audits

________: evaluates the efficiency and effectiveness of any part of an organizations operating procedures and methods, gives recommendations for improving operations.

Auditors

________ focus on determining whether recorded information properly reflects the economic events that occurred during the accounting period.

Financial statement audits

________: conducted to determine whether financial statements are stated in accordance with specific criteria.

Compliance audit

________: conducted to determine whether the auditee is following specific procedures, rules, or regulations set by some higher authority.

Internal control

________ over financial reporting: an engagement in which the auditor reports in the effectiveness of internal control over financial reporting; such reports are required for accelerated filer public companies under SOX 404.

Auditors

________ must have the expertise in accumulation and interpretation of audit evidence.

Financial statement audits

________ are highly technical.

Audit

________ adds little to no value if the individual is biased towards any of the information.

auditing

Is the accumulation and evaluation of evidence about information to determine and report on the degree of correspondence between the information and established criteria

independent auditors

CPAs or firms that perform audits of commercial and noncommercial entities

evidence

any information used by the auditor to determine whether the information being audited is stated in accordance with established criteria

audit report

communication of auditors findings to its users

accounting

the recording, classifying, and summarizing of economic events in a logical manner for the purpose of providing financial information for decision making

risk free rate

the rate the bank could earn by investing in treasury notes for the same length of time as business loans

business risk for the customer

risk reflects the possibility that the business will not be able to repay its loan because of economic or business conditions (recession, management decisions, competition)

information risk

reflects the possibility that the information was inaccurate

information risk

the risk that information upon which a business decision was made is inaccurate

assurance service

Is an independent professional service that improves the quality of information for decision makers

attestation services

a type of assurance service in which the CPA firm issues a report about a subject matter or assertion that is made by another party

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 accounting standards

internal control over financial reporting

an engagement in which the auditor reports in the effectiveness of internal control over financial reporting; such reports are required for accelerated filer public companies under SOX 404

review of historical financial statements

management asserts that the statements are fairly stated in accordance wiht accounting standards, the same as an audit, but a lower level of assurance is needed

operational audits

evaluates the efficiency and effectiveness of any part of an organizations operating procedures and methods, gives recommendations for improving operations

compliance audit

conducted to determine whether the auditee is following specific procedures, rules, or regulations set by some higher authority

financial statement audits

conducted to determine whether financial statements are stated in accordance with specific criteria

Certified public accounting firms

responsible for auditing historical financial statements of all publicly traded companies, large, small and noncommercial organizations

Government accountability office auditors

an auditor working for the US government accountability office (GAO), a nonpartisan agency in the legislative branch of the federal government

Internal revenue agents

auditors who work for the IRS and conduct examinations of taxpayers returns

Internal auditors

auditors employed by a company to audit for the companies board of directors and management

Certified Public Accountant

a person who has met state regulatory requirements, including passing the Uniform CPA exam, and thus has been certified; a CPA may have their primary responsibility the performance of the audit function on historical financial statements of commercial and noncommercial financial entities