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11 Cards in this Set

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accumulation and evaluation of evidence about information to determine and report on the degree of correspondence between the info and est. criteria. Auditing should be done by a competent, independent person.
1. Oral testimony of client
2. Written communication with outsiders
3. Observations by the auditor
4. Electronic and other data about transactions
Auditing vs Accounting
Accounting = recording, classifying, and summarizing economic events in a logical manner for the purpose of producing financials for business decisions. Auditing = understanding GAAP and making sure, through accumulation of evidence, that client adhered to GAAP
Information Risk
Possibility that the info upon which the business risk decision was made was inaccurate, usually due to inaccurate financial statements.
Causes of Information Risk
1. Remoteness of info
2. Biases and motives of provider
3. Voluminous data
4. Comples exchange transactions
Reducing Information Risk
1. User verifies info (examine onsite)
2. User shares info risk w/ management
3. Audited financial statements provided
Attestation Services (definition)
CPA firm issues report on reliability of an assertion made by another party
Attestation Services (five categories)
1. audit of historical financials
2. attestation on internal controls over financial reporting
3. reveiw of historical financials
4. attestation svcs on information technology
5. other (broad range)
Operational Audit
Evaluates the efficiency and effectiveness of any part of an organization's operating procedures and methods.
Compliance Audit
Conducted to determine whether the client is following specific procedures, rules or regulations set by a higher authority.
Financial Statement Audit
Conducted to determine whether the financial statements are stated in accordance w/ GAAP