Audit Risk And Strategy
General term for the business entity being audited.
Client
Gathering oral or written information from client personnel.
Inquiry
Intentional misrepresentation performed to deceive statement users.
Fraud
Standard audit opinion issued when statements are fully compliant.
Unmodified
Mindset combining a questioning attitude with critical assessment.
Skepticism
Risk of misstatement existing before considering internal controls.
Inherent
Visually witnessing a client procedure being performed live.
Observations
Dividing transaction duties among employees to minimize risk.
Segregation
Opinion issued when financial statements are pervasively misstated.
Adverse
Independent regulator created by SOX to oversee public audits.
PCAOB
Risk that internal controls fail to prevent or detect misstatement.
Control
Moving backward from general ledger entries to source documents.
Vouching
Most severe control deficiency exposing statements to material error.
Weakness
Action taken when severe scope limitations prevent issuing an opinion.
Disclaimer
Independence threat when evaluating work performed by one's own firm.
Self Review
The only risk factor directly manipulated by auditor test procedures.
Detection
Moving forward from source documents to general ledger entries.
Tracing
Concealing stolen cash by applying subsequent customer payments.
Lapping
Engagement offering limited assurance via inquiry and analytics.
Review
Mandatory annual comprehensive financial filing submitted to SEC.
10-K
Dividing a non-homogeneous population into sub-groups before sampling.
Stratification
Recalculating the vertical totals of a column in a working schedule.
Footing
Intentional state of mind required to establish legal liability for fraud.
Scienter
Audit report section detailing complex, highly subjective judgments.
CAM's
Landmark 1931 court case establishing gross negligence liability.
Ultramares