WGU D215 Auditing

WGU D215 Auditing Leave the first rating Students also studied Terms in this set (269) Western Governors UniversityC 722 Save D215 Auditing WGU All Chapter Quiz...336 terms Sav2215Preview WGU - D080/ FVC1 Enhanced Study...286 terms axsanchezPreview Auditing - D215 - WGU 70 terms Hails_111Preview D217 Ac 226 term van Ability of cash flow from operations to cover current debt and dividends Measures ability to cover current debt maturities and dividends with operating cash flow.Accounting estimateAn approximation of a monetary amount when a precise means of measurement is not available.Accounting recordsClient's records of the initial accounting entry and supporting documents.Acid-test (quick) ratioMeasures ability to meet short-term obligations with liquid assets such as cash, short-term investments, and receivables.Advance shipping notice (ASN)An electronic acknowledgement of a transaction by a supplier indicating goods shipped, prices, and other information such as freight costs or taxes.Adverse interest threatThe threat that a CPA will not act with objectivity because the CPA's interests are opposed to the client's interests.Adverse opinionAuditors state the financial statements are not fairly presented due to a pervasively material departure from the applicable financial reporting framework.Advocacy threatThe 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)A measure of the uncertainty associated with not sampling the entire population.

Analytical proceduresEvaluations 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.AppropriateRefers to the quality of audit evidence gathered.AssertionsStatements or representations, explicit or implied, made by management regarding the recognition, measurement, presentation, and disclosure of items included in the financial statements.Assurance servicesIndependent professional services that improve the quality of information, or its context, for decision makers.Attestation servicesServices performed when an independent practitioner, or CPA, is engaged to issue a report on subject matter that is the responsibility of another party.Attribute samplingA sampling technique used to reach a conclusion about a population in terms of a rate (frequency) of occurrence.Audit committeeA 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)The 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 evidenceInformation gathered by the auditor that is used when forming an opinion on the fair presentation of a client's financial statements.Audit programA listing of details of the audit procedures to be used when testing controls, conducting detailed substantive audit procedures, and completing the audit.Audit riskThe risk that an auditor expresses an inappropriate audit opinion when the financial statements are materially misstated.Audit samplingThe 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 servicesServices 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 strategyThe determination of the amount of time spent testing the client's internal controls and conducting detailed testing of transactions and account balances.Bank confirmationCorrespondence 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)The amount of estimated misstatement in the population, even if no misstatements are detected in the sample.BenchmarkingAn 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 riggingAn 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 transactionsA 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 directorsA group that represents the shareholders and is responsible for ensuring the company is being run to benefit the shareholders.Bond trusteeA 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 contractA binding agreement is not honored by one or more parties to a contract.Cash earnings per share (CEPS) ratioShows cash flow capacity of a company for each common share issued.Classical variables samplingA 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 relativeA covered member's parents, nondependent children, brothers and sisters, or stepbrothers or stepsisters.Closing proceduresProcesses used by a client when finalizing the accounts for an accounting period.Cluster analysisThe 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.Common lawLaw based on justice, reason, and common sense, rather than on absolute rules.

Common-size analysisA comparison of account balances to a single line item.Compilation engagementAn engagement in which a CPA applies accounting and financial expertise to assist management in the presentation of financial statements without undertaking to obtain or provide any assurance that there are no material modifications that should be made to the financial statements for them to be in accordance with the applicable financial reporting framework.Compilation of inventory valuesThe client's documentation behind the value for inventory in the general ledger; this shows the quantity of each item in inventory and the values assigned to each item in inventory.Compliance auditAn audit to determine whether the entity has conformed with regulations, rules, or processes.ComponentAn entity or business activity whose financial information is required by an applicable financial reporting framework to be included in group financial statements.Component auditorAn audit firm that performs work on the financial information of a component that will be used as audit evidence for the group audit.Confirmation biasThe tendency to seek or interpret evidence in ways that support pre-existing beliefs or expectations.Consignment inventoryInventory that is sent by its owner (consignor) to an agent (consignee) who undertakes to sell the goods; the consignee has an obligation to pay the consignor when the goods are sold by the consignee.Consignment salesMay occur in a transaction between a manufacturer and a wholesaler, when the seller retains title to inventory in the wholesaler's possession, and the sale is completed when the wholesaler sells the inventory forward; a consignment sale may be created in economic substance when the terms of sale create uncertainties about whether the wholesaler assumes risk of ownership upon receipt of goods.Control activitiesPolicies and procedures that help ensure that management directives are carried out.Control environmentThe attitudes, awareness, and actions of management and those charged with governance concerning the entity's internal control and its importance in the entity.Control exception (deviation)An observed condition that provides evidence that the control being tested did not operate as intended.Control riskThe risk that a client's system of internal controls will not prevent or detect a material misstatement on a timely basis.