ACC 235 Chapter 1

  
Created Jan 17, 2011
by mhregan
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Side ASide B
An assurance engagement would include
-Giving an opinion on a prize promoter’s claim about the amount of sweepstakes prizes awarded...
A determination of cost savings obtained by outsourcing cafeteria services is most likely...
operational auditing
The primary difference between operational auditing and financial auditing is that in operation...
the operational auditor is seeking to help management use resources in the most effective...
According to the AICPA, the purpose of an audit of financial statements is to
enhance the degree of confidence that intended users can place in the financial statements
Bankers who are processing loan applications from companies seeking large loans will probably...
they generally see a potential conflict of interest between company managers who want...
The Sarbanes-Oxley Act of 2002 prohibits public accounting firms from providing the following...
-Bookkeeping services-Internal audit services-Valuation services
Independent auditors of financial statements perform audits that reduce
information risk faced by investors
The primary objective of compliance auditing is to
determine whether auditee personnel are following laws, rules, regulations, and policies
These requirements are usually necessary to become licensed as a certified public accountant
-Successful completion of the Uniform CPA Examination-
The objective in an auditor’s review of credit rating of a client’s customers is to obtain...
valuation and allocation
Someone verbally asserting that all expenses for the year have been recorded in the accounts...
not considered a sufficient basis for a CPA to conclude that all expenses have been recorded
The risk to investors that a company’s financial statements may be materially misleading...
information risk
When auditing merchandise inventory at year-end, the auditor performs audit procedures to...
cutoff management assertion
When auditing merchandise inventory at year-end, the auditor performs audit procedures to...
rights and obligation management assertion
When an auditor reviews additions to the equipment (fixed asset) account to make sure that...
existence
The Sarbanes-Oxley Act of 2002 generally prohibits public accounting firms from:
-acting in a managerial decision-making role for an audit client -auditing the firm’s...
Substantial equivalency refers to
permitting a CPA to practice in another state without having to obtain a license in that...
Reasons to obtain professional certification
-
Attest engagement
Providing an opinion on subject matter or an assertion about the subject matter that is the...
Attestation
The lending of credibility to assertions made by a third party
Auditing
A systematic process of objectively obtaining and evaluating evidence regarding assertions...
Business Risk
The probability an entity will fail to meet its objectives and, ultimately, fail
Cutoff (or cutoff date)
Refers to a date, normally the client’s year-end balance sheet date, around which transactions...
Financial reporting
Broad based process of providing statements of financial position (balance sheets), results...
Information risk
The probability that the information circulated by a company will be false or misleading
Internal auditing
An assurance and consulting activity that provides management with information regarding...
Operational auditing
The study of business operations for the purpose of making recommendations about the efficient...
Professional Skepticism
An auditor’s tendency not to believe management’s assertions without...
Substantial Equivalency
The process through which CPAs licensed in one state can practice in another state


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