Audit Chapter 2

jlc522's version from 2016-01-25 03:01

Section 1

Question Answer
Audit CommitteeConsists of members of the board of directors, charged with overseeing the entity's system of internal control over financial reporting, internal and external auditors, and the financial reporting process. Members typically must be independent of management.
Board of directorsPersons elected by the stockholders of a corporation to oversee management and to direct the affairs of the corporation.
Business processesImplemented by management to achieve entity objectives. Typically organized into the following: revenue, purchasing, HR management, inventory management, and financing processes
Code of professional conducea set of principles, rules, and interpretations that establish guidance for acceptable behavior for accountants and auditors
Corporate governanceThe oversight mechanisms in place to help ensure the proper stewardship over an entity's assets. Management and the board of directors pay primary roles, and the independent auditor plays a key facilitating role.
EhticsA system or code of conduct based on moral duties and obligations that indicates how an individual should behave.
GAAPAccounting principles that are generally accepted for the preparation of financial statements in the U.S. Currecntly issued primarily by FASB with influence by the SEC. IFRS are set by International Accounting Standards Board.
Generally Accepted Accounting Standards (GAAS)Ten broad statements guiding the conduct of F/ST auditing.
Integrated auditAn audit of both F/ST and internal control over financial reporting, provided by the external auditor. Required for public companies.
International Standards of Auditing (ISA)Statements issued by IFAC's International Auditing and Assurance Standards Board

Section 2

Question Answer
Management advisory servicesConsulting services that may provide advice and assistance concerning an entity's organization, personnel, finances, operations, systems, or other activities
Principles Underlying an Audit Performed in Accordance with GAASThe ASB replaced the 1- GAAS with these principles, organized into four parts: 1) Purpose of an Audit and Premise upon which an Audit is Conducted, Auditor Responsibilities, Audit Performance, and Audit Reporting
Publice Accounting firmAn orgnization created to provide professional accounting-related services, including auditing. Usually formed as a proprietorship or as a form of partnership.
Standards of the PCAOBStandards regarding the conduct of F/ST audits for public companies. Currently consist primariyl of standards and statements established by the AS, as these statements and standards were adopted by the PCAOB in 2003 on an interim basis, though the PCAOB has added a few significant standards.
Statements of Auditing Standards (SAS)Statements issued by the AICPA's Auditing Standards Board