Acquisition & Expenditure
What is understated?
The misstatement risk for inventories (under vs. over).
What is overstated?
The relevant assertion for investments.
What is presentation and disclosure OR valuation?
A company's ability to continue for the next year.
What is going concern?
The opinion required when evidence shows the financial statements are fairly stated in all material respects.
What is an unmodified/unqualified opinion?
A three-way match of a purchase order, receiving report, and invoice, the purpose of which to substantiate the occurrence of a good or service.
What is a voucher?
The internal costing system not allowed to be used on financial statements.
What is standard costing?
Transactions occur at this level in the finance & investment cycle.
What is c-suite or top management?
The people the attorney letter must be returned to.
Who are the auditors?
The opinion required when evidence shows that the financial statements are fairly stated in accordance with GAAP except for one thing.
What is a qualified opinion?
What is blind/blank?
The way internal departments should be treated in the production cycle.
What are external entities?
Due to lack of separation of duties, auditors will do this much testing in the finance & investment cycle.
What is extensive, or even 100% testing?
The type of testing done before the client's year end hits.
What is interim testing?
The opinion required when audit evidence shows that the financial statements are overall misstated and cannot be relied upon.
What is an adverse opinion?
A list used to prevent fictitious/fraudulent vendors from being paid.
What is the approved vendor list?
The auditors' role in the physical inventory count.
What is observer/tester?
Lenders use these with the intention of mitigating their own risk of lending.
What are loan covenants?
These occur between the balance sheet date and the audit report date.
What are subsequent events?
Required when there is a substantial scope limitation, lack of independence, or management won't take responsibility for the financials.
What is a disclaimer of opinion?
The department that should be in charge of adding and terminating employees from the system.
What is the personnel department?
The application of this product cost relies on estimates.
What is overhead?
An external role used to mitigate lack of separation of duties in the finance & investment cycle.
What is a transfer agent/registrar/trustee?
What are roll-forward procedures/testing?
A paragraph added to an unmodified opinion to provide information fundamental to understanding the financials.
What is emphasis-of-a-matter?