Chapter 10
An intentional misstatement of the financial statements.
What is Fraud?
The PCAOB places responsibility for the reliability of internal controls over the financial reporting process on this group.
Who is Management?
Less severe than a material weakness but important enough to merit attention by those responsible for oversight.
What is a significant deficiency?
These are not considered further audit procedures
What are risk assessment procedures?
Fraud that involves theft of an entity's assets
What is misappropriation of assets?
Built by the manufacturer to detect equipment failure.
What are hardware controls?
The design or operation of controls does not permit company personnel to prevent or detect misstatements on a timely basis.
What is a control deficiency?
Helps the auditor determine whether internal controls have been properly implemented
What is a system walkthrough?
Shifting revenues and expenses between periods to reduce fluctuations in earnings.
What is income smoothing?
Two key concepts that underline management's design and implementation of internal controls.
What are inherent limitations and reasonable assurance?
The starting point when making a preliminary assessment of control risks?
What are entity level controls?
The primary emphasis in most tests of details balances is on the ____?
What are balance sheet accounts?
There are weak internal controls.
Why do most people commit fraud?
Consist of policies and procedures designed to provide reasonable assurance the company achieves is objectives and goals
What are internal controls?
Double Jeopardy
The golden rule of double entry accounting?
The least costly audit test.
What are substantive analytical procedures?
The primary party responsible to oversee an organizations financial reporting and internal control process.
What is the audit committee?
Firewalls are used to protect from _____.
What are unauthorized external users?
An issued report with one or more material internal control weaknesses.
What is an adverse opinion?
The document that details the specific audit procedures for each type of test.
What is the audit program?