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Auditing Ch. 2 Vocab
auditing chapter 2 vocab
15
Accounting
Undergraduate 4
12/15/2012

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Term
Audit Committee
Definition
A committee consisting of members of the board of directors, charged with overseeing the entity's system of internal control over financial reporting, internal and external auditors, and the financial reporting process. Members typically must be independent of management.
Term
Board of Directors
Definition
Persons elected by the stockholders of a corporation to oversee management and to direct the affairs of the corporation.
Term
Business Processes
Definition
Processes implemented by management to achieve entity objectives. Business processes are typically organized into the following categories: revenue, purchasing, human resource management, inventory management, and financial processes.
Term
Corporate Governance
Definition
The oversight mechanisms in place to help ensure the proper stewardship over an entity's assets. Management and the board of directors play primary roles, and the independent auditor plays a key facilitating role.
Term
Ethics
Definition
A system or code of conduct based on moral duties and obligations that indicates how an individual should behave.
Term
Financial Statement Assertions
Definition
Expressed or implied representations by management about information that is reflected in the financial statements. The three sets of assertions relate to ending account balances, transactions, and presentation and disclosure.
Term
Generally Accepted Accounting Principles (GAAP)
Definition
Accounting principles that are generally accepted for the preparation of financial statements in the United States. GAAP standards are currently issued primarily by the FASB, with oversight and influence by the SEC.
Term
Generally Accepted Auditing Standards (GAAS)
Definition
Ten broad statements guiding the conduct of financial statement auditing.
Term
Illegal Acts
Definition
Violations of laws or government regulations.
Term
Independence
Definition
A state of objectivity in fact and in appearance, including the absence of any significant conflicts of interest.
Term
Integrated Audit
Definition
An audit of both financial statements and internal control over financial reporting, provided by the external auditor. Required for public companies.
Term
Management of Advisory Services
Definition
Consulting services that may provide advice and assistance concerning an entity's organization, personnel, finances, operations, systems, or other activities.
Term
Public Accounting Firm
Definition
An organization created to provide professional accounting-related services, including auditing. Usually formed as a proprietorship or as a form of partnership.
Term
Standards of the PCAOB
Definition
Standards regarding the conduct of financial statement auditing for public companies. Currently consist primarily of standards and statements established by the AICPA's Auditing Standards Board, as these statements and standards were adopted by the PCAOB in 2003 on an interim basis, though the PCAOB has added a few significant standards.
Term
Statements on Auditing Standards (SAS)
Definition
Statements issued by the AICPA's Auditing Standards Board, considered as interpretations of the 10 GAAS statements.
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