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10 Cards in this Set
- Front
- Back
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Acceptable audit risk |
a measure of how willing the auditor is to accept that the financial statements may be materially misstated after the audit is completed and an unqualified opinion has been issued |
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Audit strategy |
overall approach to the audit that considers the nature of the client, risk of significant misstatements, and other factors such as the number of client locations and past effectiveness of client controls |
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Budgets |
written records of the client's expectations for the period; a comparison of budgets with actual results may indicate whether or not misstatements are likely |
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Client business risk |
the risk that the client will fail to achieve its objectives related to (1) reliability of financial reporting (2) effectiveness and efficiency of operations (3) compliance with laws and regulations |
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Corporate minutes |
the official record of the meetings of a corporation's board of directors and stockholders, in which corporate issues such as the declaration of dividends and the approval of contracts are documented |
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Engagement letter |
an agreement between the CPA firm and the client as to the terms of the engagement for the conduct of the audit and related services |
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Inherent risk |
a measure of the auditor's assessment of the likelihood that there are material misstatements in a segment before considering the effectiveness of internal control |
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Initial audit planning |
involves deciding whether to accept or continue doing the audit for the client, identifying the client's reasons for the audit, obtaining an engagement letter, and developing an audit strategy |
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Related party |
affiliated company, principal owner of the client company,m or any other party with which the cllient deals, where one of the parties can influence the management or operating policies of the other |
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Related party transaction |
any transaction between the client and a related party |
