ACCT 4317 - CH3 T

analytical procedures

evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data

audit procedures

specific acts performed by the auditor in gathering evidence to determine if specific assertations are being met

audit risk

the risk that the auditor may fail to modify the opinion on materially misstated financial statements

business risks

risks resulting from significant conditions, events, circumstances, and actions or inactions that could adversely affect management's ability to execute its strategies and to achieve its objectives, or through the setting of inappropriate objectives or st

closest reasonable estimate

a range of acceptable amounts or a precisely determined point estimate for an estimate (e.g. uncollectible receivables), if that is a better estimate than any other amount

control risk

the risk that material misstatements that could occur will not be prevented or detected by internal controls

detection risk

the risk that the auditor will not detect a material misstatement that exists in the financial statements

engagement risk

the risk that the auditor's exposure to loss or injury to professional practice from litigation, adverse publicity, or other events arising in connection with financial statements audited and reported on

errors

unintentional misstatements or omissions of amounts or disclosures

fraud

intentional misstatements that can be classified as fraudulent financial reporting and misappropriation of assets

inherent risk

the susceptibility of an assertion to material misstatement, assuming no related controls

materiality

the magnitude of an omission or misstatement of accounting information that, in light of surrounding circumstances, makes it probable that the judgement of a reasonable person relying on the information would have been changed or influenced

professional skepticism

an attitude that includes a questioning mind and a critical assessment of audit evidence. the auditor should not assume that management is either honest or dishonest

risk assessment

the identification, analysis, and management of risks relevant to the preparation of financial statements that are fairly presented in conformity with GAAP

risk of material misstatement

the auditor's combined assessment of inherent risk and control risk

scope of the audit

refers to the nature, timing, and extent fo audit procedures, where nature refers to the type of evidence; timing refers to when the evidence will be gathered; and extent refers to how much of the type of evidence will be evaluated

significant risk

a risk of material misstatement that is imporatant enough to require special audit consideration

tolerable misstatement

the amount of the planning materiality that is allocated to a financial statement account