Ch 38 - Accountants' Liability Pgs 903 - 907

Front 1

Two Mirror image processes accountants use to verify transactions:

Back 1

Vouching and tracing.

Front 2

Vouching:

Back 2

Accountants choose a transaction listed in the company's books and check backwards to make sure that there are original data to support it.

Front 3

Tracing:

Back 3

Accountants begin with an item or original data and trace it forward to ensure that it has been properly recorded throughout the bookkeeping process.

Front 4

In preforming their duties, accountants must follow two sets of rules:

Back 4

generally accepted accounting principles (GAAP) and generally accepted auditing standards (GAAS).

Front 5

GAAP:

Back 5

the rules for preparing financial statements.

Front 6

GAAS:

Back 6

the rules for conduction audits.

Front 7

Unqualified Opinion:

Back 7

Also known as a clean opinion, it indicates that the company's financial statements fairly present its financial condition in accordance with GAAP.

Front 8

Qualified Opinion:

Back 8

this opinion indicates that although the financial statements are generally accurate, there is nonetheless an outstanding, unresolved issue.

Front 9

Adverse Opinion:

Back 9

This indicates the company's financial statements do not accurately reflect its financial position. In other words, the company is lying about its finances.

Front 10

Disclaimer of Opinion:

Back 10

Although not as damning as an adverse opinion, a disclaimer is when the auditor does not have enough information to form an opinion.

Front 11

The Public Company Accounting Oversight Board (PCAOB):

Back 11

to ensure that investors receive accurate and complete financial information.

Front 12

Accountants must inform the audit committee of any:

Back 12

1. significant flaws they find in the company's internal controls
2. alternative options that the firm considered in preparing the financial statements
3. accounting disagreements with management.