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Chapter 24
Auditing Test #3
16
Accounting
Undergraduate 4
12/06/2011

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Cards

Term
Commitments
Definition
agreements that the entity will hold to a fixed set of conditions, such as the purchase or sale of merchandise at a stated price, at a future date, regardless of what happens to profits or to the economy as a whole
Term
Completing the Audit Checklist
Definition
a reminder to the auditor of aspects of the audit that may have been overlooked
Term
Contingent liability
Definition
a potential future obligation to an outside party for an unknown amount resulting from activities that have already taken place
Term
Dual-dated audit report
Definition
the use of one audit report date for normal subsequent events and a later date for one or more subsequent events that come to the auditor's attention after the field work has been completed
Term
Financial Statement Disclosure checklist
Definition
a questionnaire that reminds the auditor of disclosure problems commonly encountered in audits and that facilitates final review of the entire audit by an independent partner
Term
Independent Review
Definition
a review of the financial statements and the entire set of audit files by a completely independent reviewer to whom the audit team must justify the evidence accumulated and the conclusions reached
Term
Inquiry of the client's attorneys
Definition
a letter from the client requesting that legal counsel inform the auditor of pending litigation or any other information involving legal counsel that is relevant to financial statement disclosure
Term
Letter of representation
Definition
a written communication from the client to the auditor formalizing statements that the client has made about matters pertinent to the audit
Term
Management Letter
Definition
an optional letter written by the auditor to a client's management containing the auditor's recommendations for improving any aspect of the client's business
Term
Other information included in annual reports
Definition
information that is not a part of the financial statements but is published with them; auditors must read this information for inconsistencies with the financial statements
Term
Review of Subsequent Events
Definition
the auditing procedures performed by auditors to identify and evaluate subsequent events; also known as a post-balance-sheet review
Term
Review of Audit Documentation
Definition
a review of the completed audit files by another member of the audit firm to ensure quality and counteract bias
Term
Subsequent discover of facts
Definition
auditor discovery that the financial statements are materially misstated after they have been issued
Term
Subsequent events
Definition
transactions and other pertinent events that occurred after the balance sheet date that affect the fair presentation or disclosure of the statements being audited
Term
Unadjusted misstatements audit schedule
Definition
a summary of immaterial misstatements not adjusted at the time they were found, used to help the auditors assess whether the combined amount is material; also known as a summary of possible misstatements
Term
Unasserted Claim
Definition
a potential legal claim against a client where the condition for a claim exists but no claim has been filed
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