Chapter 3

Front 1

analytical procedures

Back 1

the reasonableness tests used to gain an understanding of financial statement accounts and relationships.

Front 2

audit documentation

Back 2

the written record of the basis for the auditor’s conclusions that provides the support for the auditor's representations, whether those representations are contained in the auditor's report or otherwise.

Front 3

audit plan

Back 3

a comprehensive list of specific audit procedures that the audit team needs to perform to gather sufficient appropriate evidence on which to base their opinions on the financial statements

Front 4

audit trail

Back 4

is a chain of evidence provided through coding, cross-references, and documentation connecting account balances and other summary results with the original transaction source documents

Front 5

Continuing audit files (permanent files)

Back 5

contain info of continuing audit significance for many years of the same client

Front 6

engagement letter

Back 6

a letter from the public accounting firm to the management of an engagement client setting forth the terms of the engagement

Front 7

Form 8-k

Back 7

The "special events report" filled with the SEC whenever certain significant corporate events occur such as changes in control, legal proceedings,and changes of auditor

Front 8

independence in appearance

Back 8

auditors mental attitude and impartiality with respect to the client

Front 9

interim audit work

Back 9

procedures performed several weeks or months before the balance sheet date.

Front 10

lead schedule

Back 10

a summary of the accounts in or components of an account group.

Front 11

materiality

Back 11

refers to an amount or transaction that would influence the decisions of users.

Front 12

Planning memorandum

Back 12

documentsummarizing the preliminary analytical procedures and the materiality assessment with specific directions about the effect on the audit

Front 13

predecessor auditor

Back 13

the audit firm that has been terminated or voluntarily withdrawn from an audit engagement (whether the audit has been completed or not)

Front 14

quality assurance partner

Back 14

the second audit partner on the audit team as required for audits of financial statements filed with the SEC and who reviews the audit teams work in critical audit areas ( those of potential risk)

Front 15

specialists

Back 15

persons skilled in field other than accounting and auditing, such as appraisers, attorneys, engineers etc., and who are not members of the audit team and are unrelated to the company being audited.

Front 16

substantive audit plan

Back 16

audit procedures to obtain evidence about managers assertions.

Front 17

termination letter

Back 17

documentation provided to former clients dealing with the subject of future services, in particular 1) access to audit documentation by a successor auditor, 2) reissurance of the auditors report when required for SEC reporting or comparative financial reporting and 3) fee arrangements for such future services.the termination letter can also contain a report of teh auditors understanding of the circumstances of termination (eg.. diagreements about accounting principles and audit procedures, fees, or other conflicts)

Front 18

tracing

Back 18

taking a source document and following it forward to accounts completeness assertion. Using tracing, an auditor can decide whether all events were recorded and complement the evidence obtaining by vouching.

Front 19

vouching

Back 19

which is the following of the path from balance to journal to source document, supports existence and occurrence assertions but not completeness assertion. Vouching of documents can help auditors decide whether all recorded data are adequately supported but vouching does not provide evidence that all events were recorded

Front 20

year-end audit work

Back 20

procedures preformed shortly before and after the balance sheet date