Account reconciliation is a critical accounting procedure used to ensure that balances in financial records correspond with the actual account balances, typically those presented in bank statements. It is essential for maintaining the accuracy and integrity of a company's financial data.
An Accountant is a qualified professional responsible for collating, recording, and communicating financial information. They prepare analyses for decision-making purposes and must have passed examinations from recognized accountancy bodies and completed required work experience.
Accounting records are essential documentation that provides a detailed account of financial transactions pertaining to a particular organization, allowing for accurate tracking and analysis of financial performance over time.
Accounting records are the documentation used to prepare, verify, and audit the financial statements of a company. They provide a detailed account of all financial transactions, assets, liabilities, equity, revenues, and expenses.
Understanding the sampling risks in auditing, namely alpha risk and beta risk, which affect the accuracy of audit conclusions. Alpha risk involves rejecting a true population, while beta risk involves accepting a false population.
In the USA, the professional organization of certified public accountants. The Institute provides technical advice and guidance to its members and such government bodies as the Securities and Exchange Commission. It issues many influential publications in the areas of accounting, auditing, and taxation.
An analytical approach to an audit comparing financial and non-financial data to determine if they appear reasonable, used during various audit stages.
In accounting and auditing, an attribute is a specific characteristic or feature that each member of a population either has or does not have.
An independent examination and subsequent expression of opinion on the financial statements of an organization, involving collecting evidence through compliance and substantive tests.
A comprehensive series of documents providing guidance on the application of auditing standards, originally issued by the Auditing Practices Committee (APC) and subsequently adopted by the Auditing Practices Board (APB).
The Auditing Practices Committee (APC) develops auditing standards and guidelines that ensure effective audit practices in accordance with legal and regulatory requirements.
The Auditing Standards Board (ASB) is the American Institute of Certified Public Accountants' (AICPA) senior technical committee designated to issue Statements on Auditing Standards (SASs). Since 2002, ultimate oversight of the auditing profession in the United States has rested with the Public Company Accounting Oversight Board (PCAOB).
Auditors' remuneration is the compensation paid to auditors for the services they provide in scrutinizing a company's financial statements. This term is often interchangeable with audit fees.
A Bank Report is a document generated by a banking institution at the request of an auditor to provide detailed information regarding a business's transactions and interactions with the bank over a specified period.
The 'Big Four' refers to the four largest firms in the world of accountancy and auditing, which include Deloitte, Ernst & Young, KPMG, and PricewaterhouseCoopers, as well as the major commercial banks in the UK such as Barclays, Lloyds, HSBC, and Royal Bank of Scotland.
Block Sampling is a judgment sampling method in which accounts or items are chosen in a sequential order. After the initial item in the block is selected, the balance of the block is automatically chosen.
A Comprehensive Annual Financial Report (CAFR) is a detailed presentation of a state, municipality, or other governmental entity's financial condition. It can serve various stakeholders, including citizens, governing bodies, investors, and creditors.
A Certified Public Accountant (CPA) is a professional designation awarded to accountants who meet specific education, experience, and examination requirements within the jurisdiction of a U.S. state. CPAs hold responsibilities in accounting, auditing, taxation, and financial consulting for both corporations and individuals.
A Certified Public Accountant (CPA) is a designation given to accounting professionals who have passed the Uniform CPA Examination and met additional state-specific educational and experience requirements. CPAs are licensed to provide audit opinions on financial statements and offer various other accounting services.
In the UK, a Chartered Accountant (CA) is a qualified member of the Institute of Chartered Accountants in England and Wales (ICAEW), the Institute of Chartered Accountants of Scotland (ICAS), or the Institute of Chartered Accountants in Ireland (ICAI). Chartered Accountants provide a range of services including auditing, taxation, financial advice, and management roles in various industries.
A Chartered Certified Accountant (CCA) is a highly qualified financial professional, recognized by the Association of Chartered Certified Accountants (ACCA), equipped to audit company accounts, with a robust training background in various sectors.
A clean opinion, also known as an unqualified opinion, is an auditor's verdict that a company's financial statements are accurate and comply with Generally Accepted Accounting Principles (GAAP).
Cluster sampling is a method of selecting a sample by dividing the population into clusters (groups) and then taking a random sample from each cluster. This technique is commonly used in auditing.
A complete audit is an extensive examination of a company's system of internal controls and the details of its books of account, including subsidiary records and supporting documents.
Compliance in accounting and corporate governance refers to the adherence to laws, regulations, and internal controls that govern an entity's operations, ensuring legal and regulatory obligations are met.
Techniques developed by auditors for performing compliance tests and substantive tests on computer systems for firms in which the data being audited is processed by computers and held on computer files.
A written or oral request by the auditor of a party having financial dealings with the client about the accuracy of an item. A response is required whether the particular item is correct or incorrect.
In the USA, the chief accounting executive of an organization responsible for financial reporting, taxation, and auditing but typically leaving the planning and control of finances to the treasurer.
To falsify financial records or statements with the intention of misleading others about the financial performance or financial position of an accounting entity.
Defalcation is a financial crime that involves the embezzlement of property or funds by an individual entrusted with its custody or control.
A statistical method used in auditing and quality control to ensure that the proportion of units with a particular attribute (such as an error) does not exceed a predefined threshold in a population.
The Expectations Gap, often referred to as the audit expectations gap, highlights the divergence between what the public perceives auditors are responsible for and what auditors actually are responsible for within the scope of their engagements.
The extent of non-compliance with recognized control procedures that an auditor expects to find when performing compliance tests on a population or a sample of it.
External documents refer to the documents needed for company recordkeeping that have been handled by external individuals or entities, such as vendor invoices and canceled checks. Auditors regard these documents as more reliable than internal documents due to their increased independence and verifiability.
The Financial Reporting Council (FRC) is a regulatory body established to oversee the accounting, auditing, and actuarial professions, ensuring high standards in financial reporting and corporate governance.
In accounting, 'footing' refers to the process of totaling a column of numbers to ensure accuracy in financial statements. This fundamental task is essential in maintaining the integrity of financial data.
Generally Accepted Auditing Standards (GAAS) are a set of systematic guidelines used by auditors when conducting audits on companies' financial statements. These standards ensure the accuracy, consistency, and verifiability of auditors' actions and reports.
An overview of the Generally Accepted Auditing Standards (GAAS) set by the Auditing Standards Board of the American Institute of Certified Public Accountants (AICPA), detailing the three General Standards, three Field Work Standards, and four Standards of Reporting.
The Government Accountability Office (GAO) is an independent agency that provides auditing, evaluation, and investigative services for the United States Congress.
A hash total is a control mechanism used by auditors in computer applications to ensure the accuracy and completeness of data. It involves summing numbers that have no practical meaning to detect discrepancies, such as lost or omitted records during processing.
An embedded audit facility created by auditors within a client's accounting system to continuously monitor and test internal processing functions using fictitious entities and transactions.
An Internal Control Questionnaire (ICQ) is a structured set of queries used by auditors and management to evaluate the effectiveness of an organization's internal controls.
An Internal Control Questionnaire (ICQ) is a structured document used by auditors to evaluate the effectiveness of an organization's internal control system. By answering tailored questions, auditors can identify strengths and weaknesses within different operational cycles.
Internal control risk refers to the likelihood that internal controls within an organization will fail to prevent or detect financial reporting inaccuracies, leading to potential financial misstatements. It is a critical component auditors assess to ensure the accuracy and reliability of financial statements.
The International Auditing Practices Committee (IAPC), now known as the International Auditing and Assurance Standards Board (IAASB), was responsible for establishing international standards for auditing, review, other assurance, and related services.
ISA stands for International Standard on Auditing and Individual Savings Account, addressing auditing standards and personal savings respectively.
The Lehman Brothers scandal emerged after the collapse of Lehman Brothers in late 2008. It involved using a loophole in US accounting standards known as 'Repo 105' to hide substantial losses on the subprime mortgage market.
Professional assistance provided by nonlawyers to lawyers during the litigation process, including services by forensic accountants, investigative accounting, auditing, economic and tax determinations, expert testimonies, and financial valuations in dispute situations.
Opinion shopping refers to the practice of a company seeking out an auditor who is willing to approve its financial statements without qualifications, even when they do not meet generally accepted accounting principles.
A qualified opinion is a statement issued by an auditor that indicates exceptions or limitations to the comprehensive nature of the audit conducted on financial statements.
Sampling is a process in which a small group of items, known as a sample, is selected from a larger group (population) to represent the characteristics of the larger group. It is widely used in auditing, market research, and quality control.
An abbreviation with differing definitions in the United Kingdom and the United States, crucial for understanding standardized auditing practices.
Stewardship is a traditional approach in accounting that emphasizes the duty of stewards or agents, such as company directors, to provide accurate and reliable financial information concerning resources they control but do not own, usually for the proprietors or shareholders.
Audit tests designed to check the completeness, ownership, existence, valuation, and disclosure of the information contained in the accounting records and financial statements of an organization being audited.
An approach to auditing focused on evaluating an organization's internal control system to determine the quality of its accounting system, thereby assessing the required level of substantive testing for financial statements.
Testchecking is a procedure used in auditing to verify the accuracy of certain items in financial records, allowing the auditor to form an opinion about the entire account.
Tick marks are symbols used by auditors to indicate that they have performed a certain operation during an audit, such as verifying a number on a trial balance against a source document or checking the addition of a column of numbers. A legend should appear on the work papers to indicate the meaning of each tick mark.
An essential audit concept, primarily used in the UK, requiring auditors to ensure that the published accounts of companies present a 'true and fair view' of the organization's financial position, even if it means departing from legal requirements.
Variables sampling is a statistical method used primarily in auditing to predict the value of a given variable within a population. It is often used to estimate the total amount or the arithmetic mean of a characteristic within a sample.
Year-end refers to the end of an accounting period, which may align with the calendar year or a fiscal year, and is a pivotal moment when financial books are closed.
