Auditing Chapter 7

Foot

addition of a column of numbers to determine whether the total is the same as the client's

Current Files

all audit documentation applicable to the year under audit, audit program, general information, working trial balance, adjusting and reclassification

Read

an examination of written information to determine facts pertinent to the audit

Working Trial Balance

auditor obtains or prepares a listing of the general ledger accounts and their year end balances

Documentation

auditor's inspection of the client's documents and records to substantiate the information that is, or should be, included in the financial statements, records used by the client to provide information for conducting its business in an organized manner

Compute

calculation done by the auditor independent of the client

Recompute

calculation done to determine whether a client's calculation is correct

Compare

comparison of assets on hand at a given time. term should be associated only with the type of evidence defined as physical examination

Permanent Files

contain data of a historical or continuing nature pertinent to the current audit, extracts, analysis of previous years,

Lead Schedule

contains the detailed accounts from the general ledger making up the line item sold

Audit Process

detailed instruction that explains the audit evidence to be obtained during the audit

Count

determination of assets on hand at a given time, term should be associated only with the type of evidence defined as physical examination

External Document

has been handled by someone outside the client's organization who is a party to the transaction being documented, but which are either currently held by the client or readily accessible, vendors' invoices, cancelled notes payable, insurance policies

Reperformance

independent tests of client accounting procedures or controls that were originally done as part of the entity's accounting and internal control involves checking other procedures

Physical Examination

inspection or count by the auditor of a tangible asset, most often associate with inventory and cash

Trace

instruction normally associated with documentation or reperformance. The instruction should state what the auditor is tracing and where it is being traced from and to.

Scan

less-detailed examination of a document or record to determine whether there is something unusual warranting further investigation

Appropriateness of Evidence

measure of the quality of evidence, meaning its relevance and reliability in meeting audit objectives for classes of transactions, account balances, and related disclosures

inquiry

obtaining of written or oral information from the client in response to questions from the auditor, cannot be regarded as conclusive because it is not from an independent source and may be biased in the client's favor

Internal Document

prepared and used within the client's organization and is retained without ever going to an outside party, duplicate sales invoices, employees' time reports, inventory receiving reports

Supporting Schedules

prepared by the client or the auditors in support of the specific amounts on the financial statements, analysis, trial balance, reconciliations of amounts, tests of reasonableness, summary of procedures, examination of supporting documents, informational

audit documentation

principal record of auditing procedures applied, evidence obtained, and conclusions reached by the auditor in the engagement, should include all the information the auditor considers necessary to adequately conduct the audit and to provide support for the audit report

Sufficiency of Evidence

quantity of evidence, measure primarily by the sample size the auditor selects

Examine

reasonably detailed study of a document or record to determine specific facts about it

Recalculation

rechecking a sample of calculations made by the client, testing the client's arithmetical accuracy

Unusual fluctuations

significant unexpected differences between the current year's unaudited financial data and other data used in comparisons, occur when significant differences are not expected but do exist, when significant differences are expected but do not exist

Reliability of evidence

the degree to which evidence can be believable or worthy of trust

Persuasiveness of Evidence

the degree to which the auditor is convinced that the evidence supports the audit opinion; the two determinants are appropriateness and sufficiency

audit program

the list of audit procedures for an audit area or an entire audit, always includes a list of the audit procedures and includes sample sizes, items to select, and timing of the tests

Confirmation

the receipt of a direct written response from a third party verifying the accuracy of information that was requested by the auditor

Analytical procedures

use comparisons and relationships to assess whether account balances or other data appear reasonable compared to the auditor's expectations

vouch

use of documents to verify recorded transactions or amounts

Observation

use of the senses to assess client activities, sight, hearing, touch, smell, rarely sufficient by itself

Vouching

when auditors use documentation to support recorded transactions or amounts