WGU D251 Advanced Auditing – Questions With
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Terms in this set (297)
misstatement An error, either intentional or unintentional, that
exists in a transaction or financial statement account
balance.
alternative procedures Procedures used to obtain evidence about the
existence and valuation of accounts receivable when
a positive confirmation is not returned, including
examining cash collected after the confirmation date
and vouching unpaid invoices to customers' orders,
sales orders, shipping documents, and sales invoices.
Altman Z-scores A series of ratios that have predictive power in
indicating the likelihood of bankruptcy. This score is
named for the person who first introduced the
concept and associated measurement.
attribute A characteristic of the population of interest to the
auditor.
Attributes sampling A statistical sampling method used to estimate the
rate of control procedure failures based on selecting
one sample and performing the appropriate audit
procedure.
Audit Risk The risk that the auditor expresses an inappropriate
audit opinion when the financial statements are
materially misstated.
,Audit Risk Model Audit Risk = Inherent Risk X Control Risk X Detention
Risk
audit risk model A conceptual depiction of the relationship between
inherent risk, control risk, detection risk, and audit
risk.
Audit sampling The application of an audit procedure to less than
100% of the items within an account balance or class
of transactions for the purpose of evaluating some
characteristic of the balance or class.
audit scope The range of accounts and transactions that the
auditor evaluates, along with the amount of evidence
that they gather, assessments of which accounts and
transactions are material, as well as the critical areas
where the auditor employed significant assumptions
and made associated professional judgments.
auditor business risk This risk reflects the potential for loss to the auditor
that the client poses, including being a publicly
traded client, not being a profitable engagement,
damaging the auditor's reputation, and/or potential
litigation relating to the engagement.
auditor-detected misstatements Such a misstatement occurs when, during the audit,
the auditor comes to find that there exists an error in
the recording of a particular transaction, regardless
of whether it was intentional or unintentional.
automated purchasing system A networked software system that links a company's
website to other vendors whose offerings and prices
have been preapproved by appropriate
management.
Basic precision The amount of uncertainty associated with testing
only a part of the population (sampling risk). Basic
precision is calculated as the sampling interval
multiplied by a confidence factor.
,big data High volume, high velocity, and/or high variety
information assets that require new forms of
processing to enable enhanced decision making,
insight discovery, and process optimization.
Block sampling A sampling technique that involves selecting a
sample that consists of contiguous population items,
such as selecting transactions by day or week.
brainstorming A group discussion designed to encourage auditors
to creatively assess client risks, particularly those
relevant to the possible existence of fraud in the
organization.
business intelligence The process of transforming all of the raw data that
companies (providers) collect from their various
operations into actionable information.
busy season An error, either intentional or unintentional, that
exists An intensive time of the year during which the
auditor faces the greatest deadline pressure and
work volume based upon the need to provide
assurance over the client's financial reports.
Client business risks Risks affecting the business operations and potential
outcomes of an organization's activities.
Collectibility The risk that the seller will be unable to collect the
entitled contractual consideration from the customer.
component An entity or business activity for which group or
component management prepares financial
information that is required by the applicable
financial reporting framework to be included in the
group financial statements.
, component auditor An auditor who performs work on the financial
information of a component that will be used as audit
evidence for the group audit. A component auditor
may be part of the group engagement partner's firm,
a network firm of the group engagement partner's
firm, or another firm.
concurring partner review A review at the end of each audit conducted by an
experienced auditor, usually a partner, who was not a
part of the audit team, but who has appropriate
competence, independence, integrity, and
objectivity. The purpose of this review is to help make
sure that the audit and audit documentation are
complete and support the audit opinion on the
financial statements and, for public companies, on
the client's internal controls.
Control Risk The risk that a misstatement that could occur in an
assertion about a class of transaction, account
balance, or disclosure and that could be material,
either individually or when aggregated with other
misstatements, will not be prevented, or detected
and corrected, on a timely basis by the entity's
internal control.
corruption perception index A ranking put forth by Transparency International that
ranks countries according to the extent to which
people believe corruption exists; the ranking
includes about 200 countries and ranks them on a
scale from 0 to 10 (0 5 high corruption; 10 5 low
corruption).
critical audit matter Any matter that was communicated or required to be
communicated to the audit committee, relating to
accounts or disclosures material to the financial
statements, and involving especially challenging,
subjective, or complex auditor judgment.
Accurate Solutions
Save
Terms in this set (297)
misstatement An error, either intentional or unintentional, that
exists in a transaction or financial statement account
balance.
alternative procedures Procedures used to obtain evidence about the
existence and valuation of accounts receivable when
a positive confirmation is not returned, including
examining cash collected after the confirmation date
and vouching unpaid invoices to customers' orders,
sales orders, shipping documents, and sales invoices.
Altman Z-scores A series of ratios that have predictive power in
indicating the likelihood of bankruptcy. This score is
named for the person who first introduced the
concept and associated measurement.
attribute A characteristic of the population of interest to the
auditor.
Attributes sampling A statistical sampling method used to estimate the
rate of control procedure failures based on selecting
one sample and performing the appropriate audit
procedure.
Audit Risk The risk that the auditor expresses an inappropriate
audit opinion when the financial statements are
materially misstated.
,Audit Risk Model Audit Risk = Inherent Risk X Control Risk X Detention
Risk
audit risk model A conceptual depiction of the relationship between
inherent risk, control risk, detection risk, and audit
risk.
Audit sampling The application of an audit procedure to less than
100% of the items within an account balance or class
of transactions for the purpose of evaluating some
characteristic of the balance or class.
audit scope The range of accounts and transactions that the
auditor evaluates, along with the amount of evidence
that they gather, assessments of which accounts and
transactions are material, as well as the critical areas
where the auditor employed significant assumptions
and made associated professional judgments.
auditor business risk This risk reflects the potential for loss to the auditor
that the client poses, including being a publicly
traded client, not being a profitable engagement,
damaging the auditor's reputation, and/or potential
litigation relating to the engagement.
auditor-detected misstatements Such a misstatement occurs when, during the audit,
the auditor comes to find that there exists an error in
the recording of a particular transaction, regardless
of whether it was intentional or unintentional.
automated purchasing system A networked software system that links a company's
website to other vendors whose offerings and prices
have been preapproved by appropriate
management.
Basic precision The amount of uncertainty associated with testing
only a part of the population (sampling risk). Basic
precision is calculated as the sampling interval
multiplied by a confidence factor.
,big data High volume, high velocity, and/or high variety
information assets that require new forms of
processing to enable enhanced decision making,
insight discovery, and process optimization.
Block sampling A sampling technique that involves selecting a
sample that consists of contiguous population items,
such as selecting transactions by day or week.
brainstorming A group discussion designed to encourage auditors
to creatively assess client risks, particularly those
relevant to the possible existence of fraud in the
organization.
business intelligence The process of transforming all of the raw data that
companies (providers) collect from their various
operations into actionable information.
busy season An error, either intentional or unintentional, that
exists An intensive time of the year during which the
auditor faces the greatest deadline pressure and
work volume based upon the need to provide
assurance over the client's financial reports.
Client business risks Risks affecting the business operations and potential
outcomes of an organization's activities.
Collectibility The risk that the seller will be unable to collect the
entitled contractual consideration from the customer.
component An entity or business activity for which group or
component management prepares financial
information that is required by the applicable
financial reporting framework to be included in the
group financial statements.
, component auditor An auditor who performs work on the financial
information of a component that will be used as audit
evidence for the group audit. A component auditor
may be part of the group engagement partner's firm,
a network firm of the group engagement partner's
firm, or another firm.
concurring partner review A review at the end of each audit conducted by an
experienced auditor, usually a partner, who was not a
part of the audit team, but who has appropriate
competence, independence, integrity, and
objectivity. The purpose of this review is to help make
sure that the audit and audit documentation are
complete and support the audit opinion on the
financial statements and, for public companies, on
the client's internal controls.
Control Risk The risk that a misstatement that could occur in an
assertion about a class of transaction, account
balance, or disclosure and that could be material,
either individually or when aggregated with other
misstatements, will not be prevented, or detected
and corrected, on a timely basis by the entity's
internal control.
corruption perception index A ranking put forth by Transparency International that
ranks countries according to the extent to which
people believe corruption exists; the ranking
includes about 200 countries and ranks them on a
scale from 0 to 10 (0 5 high corruption; 10 5 low
corruption).
critical audit matter Any matter that was communicated or required to be
communicated to the audit committee, relating to
accounts or disclosures material to the financial
statements, and involving especially challenging,
subjective, or complex auditor judgment.
