WGU D215 Auditing
Ability of cash flow from operations to cover current debt and dividends - ANSMeasures ability
to cover current debt maturities and dividends with operating cash flow.
Accounting estimate - ANSAn approximation of a monetary amount when a precise means of
measurement is not available.
Accounting records - ANSClient's records of the initial accounting entry and supporting
documents.
Acid-test (quick) ratio - ANSMeasures ability to meet short-term obligations with liquid assets
such as cash, short-term investments, and receivables.
Advance shipping notice (ASN) - ANSAn electronic acknowledgement of a transaction by a
supplier indicating goods shipped, prices, and other information such as freight costs or taxes.
Adverse interest threat - ANSThe threat that a CPA will not act with objectivity because the
CPA's interests are opposed to the client's interests.
Adverse opinion - ANSAuditors state the financial statements are not fairly presented due to a
pervasively material departure from the applicable financial reporting framework.
Advocacy threat - ANSThe threat that a CPA will promote a client's interests or position to the
point that his or her objectivity or independence is compromised.
Allowance for sampling risk (ASR) - ANSA measure of the uncertainty associated with not
sampling the entire population.
Analytical procedures - ANSEvaluations of financial information through analysis of plausible
relationships among both financial and nonfinancial data; analytical procedures also encompass
such investigation, as is necessary, of identified fluctuations or relationships that are
inconsistent with other relevant information or that differ from expected values by a significant
amount.
Appropriate - ANSRefers to the quality of audit evidence gathered.
Assertions - ANSStatements or representations, explicit or implied, made by management
regarding the recognition, measurement, presentation, and disclosure of items included in the
financial statements.
,Assurance services - ANSIndependent professional services that improve the quality of
information, or its context, for decision makers.
Attestation services - ANSServices performed when an independent practitioner, or CPA, is
engaged to issue a report on subject matter that is the responsibility of another party.
Attribute sampling - ANSA sampling technique used to reach a conclusion about a population in
terms of a rate (frequency) of occurrence.
Audit committee - ANSA committee of the board of directors responsible for oversight of internal
controls, financial reporting and disclosure in the financial statements, regulatory compliance,
and the company's independent auditors.
Audit data analytics (ADA) - ANSThe science and art of discovering and analyzing patterns,
identifying anomalies, and extracting other useful information in data underlying or related to the
subject matter of an audit through analysis, modeling, and visualization for planning and
performing the audit.
Audit evidence - ANSInformation gathered by the auditor that is used when forming an opinion
on the fair presentation of a client's financial statements.
Audit program - ANSA listing of details of the audit procedures to be used when testing controls,
conducting detailed substantive audit procedures, and completing the audit.
Audit risk - ANSThe risk that an auditor expresses an inappropriate audit opinion when the
financial statements are materially misstated.
Audit sampling - ANSThe selection and evaluation of less than 100% of the population of audit
relevance such that the auditor expects the items selected (the sample) to be representative of
the population and, thus, likely to provide a reasonable basis for conclusions about the
population.
Audit services - ANSServices by an independent CPA that provide financial statement users
with (1) an opinion on whether the financial statements are presented fairly, in all material
respects, in accordance with an applicable financial reporting framework and, in some cases,
(2) an opinion on the effectiveness of ICFR, which enhances the degree of confidence that
intended users can place in the financial statements.
Audit strategy - ANSThe determination of the amount of time spent testing the client's internal
controls and conducting detailed testing of transactions and account balances.
Bank confirmation - ANSCorrespondence sent directly by the auditors to their client's bank
requesting information such as cash held in the bank and details of any loans with the bank and
interest rates charged.
, Basic precision (BP) - ANSThe amount of estimated misstatement in the population, even if no
misstatements are detected in the sample.
Benchmarking - ANSAn audit testing strategy that can be used to allow evidence obtained in
prior audit periods to support a conclusion about IT application controls in the current audit
period.
Bid rigging - ANSAn employee assists a vendor in winning a competitive bid for a contract;
employee is compensated, usually in the form of a cash payment.
Bill-and-hold transactions - ANSA customer is billed for goods, but goods are not shipped;
accounting principles have very narrow criteria for when revenue can be recognized for a
bill-and-hold transaction; the transaction must be initiated by the customer, and the customer
must have a sound economic reason for purchasing the goods and asking the seller to continue
to hold the goods.
Board of directors - ANSA group that represents the shareholders and is responsible for
ensuring the company is being run to benefit the shareholders.
Bond trustee - ANSA bond trustee is usually a commercial bank or a trust company that is given
fiduciary powers by a bond issuer to enforce the terms of a bond indenture; the trustee sees that
bond interest payments are made as scheduled and protects the interests of the bondholders if
the issuer defaults.
Breach of contract - ANSA binding agreement is not honored by one or more parties to a
contract.
Cash earnings per share (CEPS) ratio - ANSShows cash flow capacity of a company for each
common share issued.
Classical variables sampling - ANSA sampling method that uses normal distribution theory to
select a sample from a population and evaluate the characteristics of a population based on the
results of the sample.
Close relative - ANSA covered member's parents, nondependent children, brothers and sisters,
or stepbrothers or stepsisters.
Closing procedures - ANSProcesses used by a client when finalizing the accounts for an
accounting period.
Cluster analysis - ANSThe process of discovering groups (termed clusters in data science) of
similar items in a set of data; items in the same group are similar, while items in different groups
are not as similar.
Ability of cash flow from operations to cover current debt and dividends - ANSMeasures ability
to cover current debt maturities and dividends with operating cash flow.
Accounting estimate - ANSAn approximation of a monetary amount when a precise means of
measurement is not available.
Accounting records - ANSClient's records of the initial accounting entry and supporting
documents.
Acid-test (quick) ratio - ANSMeasures ability to meet short-term obligations with liquid assets
such as cash, short-term investments, and receivables.
Advance shipping notice (ASN) - ANSAn electronic acknowledgement of a transaction by a
supplier indicating goods shipped, prices, and other information such as freight costs or taxes.
Adverse interest threat - ANSThe threat that a CPA will not act with objectivity because the
CPA's interests are opposed to the client's interests.
Adverse opinion - ANSAuditors state the financial statements are not fairly presented due to a
pervasively material departure from the applicable financial reporting framework.
Advocacy threat - ANSThe threat that a CPA will promote a client's interests or position to the
point that his or her objectivity or independence is compromised.
Allowance for sampling risk (ASR) - ANSA measure of the uncertainty associated with not
sampling the entire population.
Analytical procedures - ANSEvaluations of financial information through analysis of plausible
relationships among both financial and nonfinancial data; analytical procedures also encompass
such investigation, as is necessary, of identified fluctuations or relationships that are
inconsistent with other relevant information or that differ from expected values by a significant
amount.
Appropriate - ANSRefers to the quality of audit evidence gathered.
Assertions - ANSStatements or representations, explicit or implied, made by management
regarding the recognition, measurement, presentation, and disclosure of items included in the
financial statements.
,Assurance services - ANSIndependent professional services that improve the quality of
information, or its context, for decision makers.
Attestation services - ANSServices performed when an independent practitioner, or CPA, is
engaged to issue a report on subject matter that is the responsibility of another party.
Attribute sampling - ANSA sampling technique used to reach a conclusion about a population in
terms of a rate (frequency) of occurrence.
Audit committee - ANSA committee of the board of directors responsible for oversight of internal
controls, financial reporting and disclosure in the financial statements, regulatory compliance,
and the company's independent auditors.
Audit data analytics (ADA) - ANSThe science and art of discovering and analyzing patterns,
identifying anomalies, and extracting other useful information in data underlying or related to the
subject matter of an audit through analysis, modeling, and visualization for planning and
performing the audit.
Audit evidence - ANSInformation gathered by the auditor that is used when forming an opinion
on the fair presentation of a client's financial statements.
Audit program - ANSA listing of details of the audit procedures to be used when testing controls,
conducting detailed substantive audit procedures, and completing the audit.
Audit risk - ANSThe risk that an auditor expresses an inappropriate audit opinion when the
financial statements are materially misstated.
Audit sampling - ANSThe selection and evaluation of less than 100% of the population of audit
relevance such that the auditor expects the items selected (the sample) to be representative of
the population and, thus, likely to provide a reasonable basis for conclusions about the
population.
Audit services - ANSServices by an independent CPA that provide financial statement users
with (1) an opinion on whether the financial statements are presented fairly, in all material
respects, in accordance with an applicable financial reporting framework and, in some cases,
(2) an opinion on the effectiveness of ICFR, which enhances the degree of confidence that
intended users can place in the financial statements.
Audit strategy - ANSThe determination of the amount of time spent testing the client's internal
controls and conducting detailed testing of transactions and account balances.
Bank confirmation - ANSCorrespondence sent directly by the auditors to their client's bank
requesting information such as cash held in the bank and details of any loans with the bank and
interest rates charged.
, Basic precision (BP) - ANSThe amount of estimated misstatement in the population, even if no
misstatements are detected in the sample.
Benchmarking - ANSAn audit testing strategy that can be used to allow evidence obtained in
prior audit periods to support a conclusion about IT application controls in the current audit
period.
Bid rigging - ANSAn employee assists a vendor in winning a competitive bid for a contract;
employee is compensated, usually in the form of a cash payment.
Bill-and-hold transactions - ANSA customer is billed for goods, but goods are not shipped;
accounting principles have very narrow criteria for when revenue can be recognized for a
bill-and-hold transaction; the transaction must be initiated by the customer, and the customer
must have a sound economic reason for purchasing the goods and asking the seller to continue
to hold the goods.
Board of directors - ANSA group that represents the shareholders and is responsible for
ensuring the company is being run to benefit the shareholders.
Bond trustee - ANSA bond trustee is usually a commercial bank or a trust company that is given
fiduciary powers by a bond issuer to enforce the terms of a bond indenture; the trustee sees that
bond interest payments are made as scheduled and protects the interests of the bondholders if
the issuer defaults.
Breach of contract - ANSA binding agreement is not honored by one or more parties to a
contract.
Cash earnings per share (CEPS) ratio - ANSShows cash flow capacity of a company for each
common share issued.
Classical variables sampling - ANSA sampling method that uses normal distribution theory to
select a sample from a population and evaluate the characteristics of a population based on the
results of the sample.
Close relative - ANSA covered member's parents, nondependent children, brothers and sisters,
or stepbrothers or stepsisters.
Closing procedures - ANSProcesses used by a client when finalizing the accounts for an
accounting period.
Cluster analysis - ANSThe process of discovering groups (termed clusters in data science) of
similar items in a set of data; items in the same group are similar, while items in different groups
are not as similar.
