Auditing Chapter 3: Audit Planning I

Fraud

An intentional act through the use of deception to obtain an unjust or illegal advantage

Audit strategy

A strategy that sets the scope, timing, and direction of the audit and provides the basis for developing a detailed audit plan

General controls

Controls that apply to a company's IT system as a whole, including policies and procedures for the purchase, maintenance, and daily operations of an IT system, security, and staff training

Materiality

Information that impacts the decision-making process of the users of the financial statements

Professional scepticism

Maintaining an attitude that includes a questioning mind, being alert to conditions that may indicate possible misstatement due to error or fraud, and a critical assessment of audit evidence

Application controls

Manual or automated controls that operate at a business process level and apply to the processing of transactions by individual applications

Closing procedures

Processes used by a client when finalizing the books for an accounting period

Execution stage

The audit stage involving detailed testing of controls and substantive testing of transactions and accounts

Reporting stage

The audit stage involving evaluating the results of the detailed testing in light of the auditor's understanding of their client and forming an opinion on the fair presentation of the client's financial statements

Planning stage

The audit stage involving gaining an understanding of the client, identifying risk factors, developing an audit strategy, and assessing materiality

Sufficient appropriate evidence

The quantity and quality of the evidence that has been gathered

Corporate governance

The rules, systems, and processes within companies used to guide and control

Going concern

The viability of a company to remain in business for the foreseeable future