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30 Cards in this Set
- Front
- Back
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Business Risk
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the risk an entity will fail to meet its objectives.
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4 environmental conditions increase user demand for relevan, reliable information
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a) transactions that are numerous and complex; b) users separated from accounting records by distance and time; c) financial decisions that are important to investors and users; d) decisions are time-sensitive
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Information Risk
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the probability that the information circulated by the company will be false or misleading
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Assurance (def.)
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lending of credibility to information
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Attestation (def.)
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When assurance is provided for specific assertions made by management.
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Auditing (def.)
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When assertions are embodied in a company's financial statements. Primarily the certification of financial statements.
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Attestation Engagements
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on historical financial statements. Practitioner is engaged to issue a report on subject matter that is the responsibility of another party (management).
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Assurance Services
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Independent professional services that improve the quality of information, or its context for decision makers.
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4 Major elements of Assurance Services
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a) Independence: preserving integrity and objectivity; b) Professional services: involves some element of judgement based on education and experience c) Improving quality of information: how the information is used in the decision-making context d) Decision makers: consumers of assurance services
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Management Assertions: Existence or Occurence: Events and Transactions
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Occurence
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Management Assertions: Existence or Occurence: Account Balances
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Existence
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Management Assertions: Existence or Occurence: Presentation and Footnote Disclosures
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Occurence
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Management Assertions: Rights and Obligations: Events and Transactions
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N/A
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Management Assertions: Rights and Obligations: Account Balances
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Rights and Obligations
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Management Assertions: Rights and Obligations: Presentation and Footnote Disclosures
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Rights and Obligations
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Management Assertions: Completeness: Events and Transactions
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Completeness and cutoff
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Management Assertions: Completeness: Account Balances
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Completeness
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Management Assertions: Completeness: Presentation and Footnote Disclosures
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Completeness
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Management Assertions: Valuation and Allocation: Events and Transactions
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Accuracy
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Management Assertions: Valuation and Allocation: Account Balances
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Valuation and Allocation
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Management Assertions: Valuation and Allocation: Presentation and Footnote Disclosures
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Accuracy Valuation and allocation
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Management Assertions: Presentation and Disclosure: Events and Transactions
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Classification
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Management Assertions: Presentation and Disclosure: Account Balances
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N/A
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Management Assertions: Presentation and DisclPosure: Presentation and Footnote Disclosures
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Classification and understandability
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PCAOB
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Public Company Accounting Oversigt Board.
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AICPA
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Accounting Institue of Certified Public Accountants (private)
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Professional Skepticism
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Auditor's tendance to NOT accept management's asserrtions without corroboration.
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Operational Auditing
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economic and efficient use of resources
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Assurance Services Involve (3):
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a) relevance as well as reliability; b) nonfinancial information as well as traditional financial statements; c) electronic databases as well as printed reports.
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Internal Auditing
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is made up of the Board of Directors of the client company, who do not have involvement in the day to day activities
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