Auditing - Ch. 10
Terms
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- Internal Control
- Process designed to provide reasonable assurance regarding the achievmt. of mgmt's objs of: reliab. of fin. reporting; eff+eff of ops; abiding by laws
- Control Environment
- The actions, policies, and procedures that reflect the overall attitude of top mgmt., directors, and owners of an entity about IC + importance
- Risk Assessment
- Mgmt's ID and analysis of risks relevant to the preparation of financial statements in accordance w/GAAP
- Control Activities
- Policies and procedures, in addition to those included in the other four components of IC, that help ensure necess. actions are taken to asses. risk in objs
- Monitoring
- Management's ongoing and periodic assessment of the quality of IC performance to determine that controls are operating as intended + mod.
- Narrative
- A written description of a client's IC, including the origin, processing, and disposition of documents + records + relevant control proc.
- Flowchart
- A diagrammatic representation of the client's documents and records and the sequence in which they are processed
- Internal Control Questionnaire
- A series of questions about the controls in each audit area used as a means of indicating to the auditor aspects of IC that may be inadequate
- Assessment of Control Risk
- A measure of the auditor's expectations that IC will neither prevent mat. mist. from occurring nor detect+correct them if ocrd.
- Control Risk Matrix
- A methodology used to help the auditor assess control risk by matching key IC + IC weaknesses w/trans.-related audit objectives
- Significant Deficiency
- An IC deficiency that could adversely affect the entity's ability to initiate, record, process, and report finan. data consistent w/mgmts. assert.of FS
- Material Weakness
- A sig. deficiency in IC that, by itself, or in combo. w/ other sig. defic; results in more than a remote likelihood that a material mistmt./FS w/not detct.
- Tests of Controls
- Audit procedures to test the operating effectiveness of controls in support of reduced assessed control risk