InternalControls
The attitude, awareness, and actions of the board, management, owners, and others about the importance of control. This includes integrity and ethical rules, commitment to competence, board or audit committee participation, organizational structure, assignment of authority and responsibility, and human resource policies and practices.
Control environment (or: tone at the top, corporate culture)
This audit technique or procedure attempts to prove the accuracy of the examined records by tracing it to supporting documents.
Vouching
The specific steps and tests auditors perform to address the audit objectives.
Audit procedures
This term refers to costs that can be directly traced to a specific product or activity.
Direct Costs
In 2002, this energy company faced a major financial scandal due to accounting irregularities.
Enron
A significant deficiency or combination of significant deficiencies that result in a reasonable possibility that a material misstatement will not be prevented or detected.
Material Weakness
This auditing technique attempts to follow a transaction through the steps of a system.
Tracing
Laws, regulations, contracts, grant agreements, standards, measures, expected performance, defined business practices, and benchmarks against which performance is compared or evaluated.
Criteria
Costs that change in direct proportion to the level of production are classified as this type of cost.
Variable Costs
The failure of this major U.S. investment bank in 2008 played a pivotal role in the global financial crisis.
Lehman Brothers
A pervasive internal control weakness affecting two or more organizations disrupting or disabling good order of financial and nonfinancial operations rendering unacceptable risk levels with potential for fraud, waste, abuse, mismanagement, and loss of life or limb.
Significant Deficiency
This inventory-examining technique attempts to match a sample of physical assets to inventory records, and then inventory records to physical assets.
Book-to-floor, floor-to-book (or vice versa)
The act of using or expending resources carelessly, extravagantly, or to no purpose. The act can include activities that do not include abuse and does not necessarily involve a violation of law.
Waste
Costs that remain constant regardless of the level of production or activity are known as this type of cost. What is it?
Fixed Costs
This movie, starring Ben Affleck, features an autistic accountant that works for international criminal organizations by day, and then uses hand to hand combat and 50 caliber rifles to implement internal controls by night.
The Accountant (2016)
This acronym, ICOFR, stands for:
Internal control over financial reporting
These two terms describe the evidence obtained and used by an auditor to support their findings; one term describes the quality of the data, while the other term describes the quantity of data.
Sufficiency and Appropriateness (or vice versa)
The threat that an auditor will, as a result of political, ideological, social, or other convictions, take a position that is not objective. (Chapter 3)
Bias Threat
The process of tracking direct and indirect costs to specific cost objects, like products or projects, is known by this term.
Cost Allocation
In 2005, Bunny Greenhouse, working for US Army Corps of Engineers (PARC), testified to congress that Halliburton and KBR were committing fraud waste and abuse using this type of questionable business agreement.
No-bid contracts
This formula, AR = IR x CR x DR, represents what?
Audit Risk
(i.e.: audit risk = inherent risk, control risk, detection risk)
This mathematical law applies to any population of numbers derived from other numbers (such as a ledger, bank statement, or voting/ballot counts. It holds that 30% of the time the first non-zero digit of this derived number will be one, and it will be a nine only 4.6% of the time. This law is used by auditors to identify fictitious populations of numbers.
Benford's Law
This term describes the relative importance of a matter within the context in which it is being considered, including quantitative and qualitative factors. In performance audit requirements, this term is comparable to the term material, or materiality.
Significance
This statistical method is used to determine the relationship between two sets of variables when one set is dependent on the other.
Regression Analysis
The "Father of Accounting", this 15th century Franciscan friar, mathematician, and collaborator of Leonardo da Vinci, is credited with inventing the double entry accounting system.