Key Concepts
Pressure, Perceived Opportunity, Rationalization
What are the three components to the Fraud Triangle
This body is responsible for setting the accounting standards for publicly traded companies.
FASB
Auditors provide this type of assurance regarding financial statements.
Reasonable
This type of service is improves the quality of information for decision makers.
Assurance Services
This is the system of rules, practices, and processes by which a firm is directed and controlled.
Corporate Governance
The information used by the auditor in arriving
at the conclusions on which the audit opinion is
based
What is Audit Evidence?
This body is responsible for adopting the auditing standards.
FRC
This type of audit opinion would be issued by an auditor if there was a GAAP departure that affected the usability of the financial statements as a whole.
Adverse Opinion
This is an attitude that includes a questioning mind, being alert to conditions which may indicate possible misstatement due to error or fraud, and a critical assessment of audit evidence.
Professional skepticism
This is the group to which internal audit reports in order to optimize organizational independence.
Audit Committee
The most common type of Occupational Fraud
What is Asset Misappropriation
This describes when management has more information about the entity's true financial position than do the absentee owners (i.e. stockholders).
Information Asymmetry
This type of audit opinion would be issued by an auditor if there was a GAAP departure that affected only the account with the GAAP departure.
Qualified Opinion
This term describes a person on the attest team or in the position to influence the engagement and is instrumental in determining independence violations.
Covered Member
These are the parties to which an audit report is typically addressed.
Board of Directors and Shareholders
Represents an auditor's questioning mindset toward management representations and evidential material gathered.
What is professional skepticism.
This body is responsible for setting the auditing standards for privately traded companies.
AICPA Accounting Standards Board (ASB)
The risk that the auditor will provide an unqualified (clean) opinion on financial statements that are, in fact, materially misstated.
Audit Risk
Even though a covered member on an engagement team may not have violated any independence rules (independence in fact), this concept may cause concern if the covered member has routine dinners with the CEO or CFO of the audited entity.
Independence in appearance
The passage of this law in 2002 changed the corporate governance landscape after the Worldcom and and Enron scandals of the early 2000s.
Sarbanes-Oxley Act of 2002 (SOX)
A class of transactions, account balance, or disclosure is considered significant when it has an identified risk of material misstatement at the assertion level.
What is SCOT?
This body is responsible for setting auditing standards for international companies.
IAASB (International Auditing and Assurance Standards Board)
This is the portion of the auditor's report that states:
“In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of ABC, Inc. as of December 31, 2017 and 2016.”
Opinion Paragraph
This is how frequently the lead audit partner must rotate in the U.S. in order to maintain independence.
5 years
This is the body that creates accounting standards for public companies outside of the U.S.
IASB