注会考试英文词典

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2024年1月22日发(作者：)

Auditing Dictionary of Terms

The words defined in this dictionary all appeared in questions

on the CPA exam, so they are worth knowing if you are studying

for the exam. 本字典中定义的单词均出现在注册会计师（美国）的考试之中，如果您正在参与此项考试，那么您值得一读。

acceptance sampling is sampling to determine whether internal control

compliance is greater than or less than the tolerable deviation rate.

accounting and review services are official pronouncements covering

compilation and review engagements. Compilation is presenting in the form of

financial statements information that is the representation of management

(owners) without expressing assurance. Review is inquiry and analytical

procedures to provide the accountant a basis for expressing limited assurance

that there are no material modifications that should be made to the statements

for them to be in conformity with U.S. generally accepted accounting principles

or, if applicable, another comprehensive basis of accounting.

accounting data includes journals, ledgers and other records such as

spreadsheets that support financial statements. It may be in computer readable

form or on paper.

accounting estimate An approximation of a financial statement element.

Accounting estimates are often included in historical financial statements

because measurement of some amounts is uncertain pending outcome of

future events and relevant data about events that have occurred cannot be

accumulated on a timely, cost-effective basis.

accounting principles are alternative ways of reporting and disclosing

information in financial statements and related footnotes.

accounts receivable Debts due from customers from sales of products and

services. Normally a current asset.

adjusting entries are accounting entries made at the end of an accounting

period to allocate items between accounting periods.

adverse An audit opinion that the financial statements as a whole are not

presented in conformity with U.S. GAAP.

advisory services are a consulting service in which the CPA develops the

findings, conclusions, and recommendations presented for client consideration

and decision making. This differs from attestation services where the CPA

expresses a conclusion about reliability of a written assertion that is the

responsibility of another.

aggregate (aggregated) Constituting the whole. Aggregate expenses include

expenses of all divisions combined for the entire year.

agreed-upon procedures An engagement where the client specifies

procedures and the accountant agrees to perform those procedures. An

accountant may accept an engagement limited to applying agreed-upon

procedures to financial statement elements, where the scope of the

engagement is not sufficient to express an opinion on the elements, if the users

assume responsibility for sufficiency of the procedures, and use of the report is

restricted to specified users.

aicpa American Institute of Certified Public Accountants. The professional

organization of CPAs in the U.S. It is a private organization of CPAs, not an arm

of the government. Each state issues CPA certificates, not the AICPA. Since

each state makes its own laws, each state could prepare and grade their own

CPA examination. However, each state uses the uniform CPA exam prepared

and graded by the AICPA.

allocation Distribution according to a plan. Depreciation, amortization, and

depletion are methods to allocate a cost to periods benefited.

allowance for doubtful accounts A contra asset account with a credit balance

used to reduce the carrying amount of accounts receivable to net realizable

value. The allowance balance is the estimated total of uncollectible accounts

included in accounts receivable.

allowance for sampling risk The difference between a sample estimate and

the projected population characteristic at a specified sampling risk. This

allowance is also the difference between the expected error rate and the

tolerable deviation rate.

analytical procedure A comparison of financial statement amounts with the

auditor's expectation. An example is the comparison of actual interest expense

for the year (a financial statement amount) with an estimate of what that interest

expense should be. The estimate can be found by multiplying a reasonable

interest rate times the average balance of interest bearing debt outstanding

during the year (the auditor's expectation). If actual interest expense differs

significantly from the expectation the auditor explains the difference in the

working papers.

analyze Identify and classify items for further study.

anticipated Expected.

application control Programmed procedure in application software designed

to ensure completeness and accuracy of information.

approve To authorize. A manager authorizes a transaction by signing a

voucher providing approval for the disbursement.

ascertain An audit procedure to determine or to discover with certainty. For

example, to ascertain the date on which an investment was purchased by

examining source documents.

assertion Management asserts financial statements are correct with regard to

existence or occurrence of assets, liabilities or transactions, completeness of

information in the financial statements, rights and obligations at a point in time,

appropriate valuation or allocation, presentation, and disclosure.

assess To determine the value, significance, or extent of.

assessed Determined. The level of control risk determined by the auditor,

based on tests of controls, is the assessed level of control risk.

assurance The level of confidence one has in a proposition.

attest (attestation) report An attest engagement is one in which a practitioner

is engaged to issue a written conclusion about the reliability of a written

assertion that is the responsibility of another party. A financial statement audit

is one type of attestation.

attorney's letter is signed by the client's lawyer and addressed to the auditor. It

is the auditor's primary means to corroborate information furnished by

management about litigation, claims, and assessments.

attribute sampling The characteristic tested is a property that has only two

possible values (an error exists or it does not).

audit adjustment, whether or not recorded by the entity, is a proposed

correction of the financial statements that may not have been detected except

through audit procedures.

audit committee A committee of the board of directors responsible for

oversight of the financial reporting process, selection of the independent

auditor, and receipt of audit results.

audit objective In obtaining evidence in support of financial statement

assertions, the auditor develops specific audit objectives in the light of those

assertions. For example, an audit objective related to the completeness

assertion an auditor might develop for inventory balances is that inventory

quantities include all products, materials, and supplies on hand.

audit planning is developing an overall strategy for the conduct and scope of

the audit. The nature, extent, and timing of planning varies with the size and

complexity of the entity, experience with the entity, and knowledge of the

entity's business.

audit risk A combination of the risk that material errors will occur in the

accounting process and the risk the errors will not be discovered by audit tests.

Audit risk includes uncertainties due to sampling (sampling risk) and to other

factors (nonsampling risk).

auditing standards board Statements on Auditing Standards are issued by

the auditing standards board, the senior technical body of the AICPA

designated to issue auditing pronouncements.

authorize (authorization) To give permission for. A manager authorizes a

transaction by signing a voucher providing authorization for the disbursement.

backup A copy of a computer program or file stored separately from the

original.

batch A set of computer data or jobs to be processed in a single program run.

benford's law is a mathematical law that applies to any population of numbers

derived from other numbers (such as the dollar amount of a sale, found by

multiplying the quantity sold times the unit price). It holds that 30% of the time

the first non-zero digit of this derived number will be one, and it will be a nine

only 4.6% of the time. Benford's law is used by auditors to identify fictitious

populations of numbers.

bill of lading A document issued by a carrier to a shipper, listing and

acknowledging receipt of goods for transport and specifying terms of delivery.

blind trust A financial arrangement in which a person avoids possible conflict

of interest by transferring financial affairs to a fiduciary who has sole asset

management discretion. The person establishing the trust also gives up the

right to information regarding the assets.

cancel supporting documents To mark supporting documents as having

been used to support a transaction so the same documents can't be used as

support for a second transaction. An example is stamping vouchers "paid" and

marking them with the check number.

capitalized Recorded as an asset. A capitalized lease is in substance a

purchase to the lessee. An asset is recorded equal to the present value of the

lease payments, which is also recorded as a liability. Payments, partly interest

and partly principal, are made on the lease liability. The lease asset is

depreciated by the lessee as though it were legally owned by the lessee.

caveat A warning or caution.

check digit A redundant digit added to a code to check accuracy of other

characters in the code.

check register A listing of checks issued, normally in numeric sequence and in

order by date issued.

classification Arrangement or grouping. Assets and liabilities are normally

classified as current or noncurrent.

collateralize To pledge property as security (collateral) for a debt.

collusion A secret agreement between two or more parties for fraud or deceit.

comfort letter A letter written by the auditor to an underwriter of securities,

which expresses an opinion about whether the audited financial statements

and schedules in the registration statement comply as to form with applicable

accounting requirements of the Act and related rules and regulations adopted

by the SEC. The procedures to be performed are specified by the underwriter.

comparability Users evaluate accounting information by comparison. Similar

companies account for similar transactions in similar ways. Another goal is

comparison of one company's information from one period to the next

(consistency). Operating trends should not be disguised by changing

accounting methods.

comparative Financial statements of a prior period shown with those of the

current period to aid in comparisons between periods.

compare (comparison) An audit procedure. The auditor observes similarities

and differences among similar items such as an account from one year to the

next.

compensating balance An offsetting balance. A requirement by some banks

that a borrower maintain a minimum balance in a checking or savings account

as a condition of granting a loan. The offsetting balance increases the effective

interest rate to the bank since the net amount loaned is reduced but the interest

paid is unchanged.

competence of an internal audit staff is a function of qualifications, including

education, certification, and supervision. Competent audit evidence is valid and

reliable

compile (compilation) A compilation is presenting in the form of financial

statements information that is the representation of management without

expressing assurance. Compilation of a financial projection is assembling

prospective statements based on assumptions of a responsible party, reading

the statements, considering appropriateness of presentation, and issuing a

compilation report. No assurance is provided on the statements or underlying

assumptions. The accountant need not be independent.

completeness Assertions about completeness deal with whether all

transactions and accounts that should be presented in the financial statements

are included. For example, management asserts that all purchases of goods

and services are recorded and included in the financial statements. Similarly,

management asserts that notes payable in the balance sheet include all such

obligations of the entity.

compliance Following applicable rules or laws.

comprehensive basis of accounting A complete set of rules other than U.S.

GAAP applied to all items in a set of financial statements. Examples include a

basis of accounting required by a regulatory agency, a basis of accounting the

entity uses for its income tax return and the cash receipts and disbursements

basis.

computer controls Internal controls performed by computer (software controls)

as opposed to manual controls. Also means general and application controls

over the computer processing of data.

condensed financial statements are presented in considerably less detail

than complete financial statements.

confirm (confirmation) Communication with outside parties to authenticate

internal evidence.

consignment Transfer of possession but not title to goods. Title stays with the

consignor, while the consignee has possession.

consistency To achieve comparability of information over time, the same

accounting methods must be followed. If accounting methods are changed

from period to period, the effects must be disclosed.

consulted Sought advice or information.

consulting services performed by CPAs include consultations, advisory

services, implementation services, product services, transaction services, and

staff and support services.

contingency is an existing condition involving uncertainty as to possible gain

(gain contingency) or loss (loss contingency) that will be resolved by future

events. Estimates, such as the useful life of an asset, are not contingencies.

Eventual expiration of the asset's utility is not uncertain.

continuing auditor is the auditor of the current year who also audited the

financial statements of the client for the previous year.

continuing accounting significance Matters of continuing accounting

significance are those normally included in the permanent audit working paper

file, such as the analysis of balance sheet accounts, and those relating to

contingencies. Such information from a prior year is used by the auditor in the

current year's audit and is updated each year.

control A policy or procedure that is part of internal control.

control environment is the attitude, awareness, and actions of the board,

management, owners, and others about the importance of control. This

includes integrity and ethical rules, commitment to competence, board or audit

committee participation, organizational structure, assignment of authority and

responsibility, and human resource policies and practices.

control policies and procedures Control activities are the policies and

procedures that help ensure management directives are carried out. Those

pertinent to an audit include performance reviews, information processing,

physical controls and segregation of duties.

control risk The risk that material error in a balance or transaction class will not

be prevented or detected on a timely basis by internal controls.

controller An officer who supervises financial affairs of an entity. In internal

control the controller is often the person with recordkeeping (general ledger)

responsibilities, as contrasted with asset custody, management decision

making, and internal audit functions.

corroborate (corroborating) (corroboration) (corroborative) To strengthen

with other evidence, to make more certain.

count Enumerate some characteristic such as the number of items in

inventory.

cumulative effect of changing to a new accounting principle is the effect on

retained earnings at the beginning of the current period. It is included in net

income after extraordinary items. Only the direct effect (net of income tax effect)

is considered.

current ratio Total current assets divided by total current liabilities.

custodian One that has possession or is in charge of something. Some entities

entrust marketable investment securities to a bank which is custodian of the

company's securities.

custody Possession.

cutoff Designating a point of termination. An auditor uses tests of cutoff to

obtain evidence that transactions for each year are included in the financial

statements of the appropriate year.

defalcation To misuse or embezzle funds.

deficiency An internal control shortcoming or opportunity to strengthen internal

controls.

detection risk The risk audit procedures will lead to a conclusion that material

error does not exist when in fact such error does exist.

detective control A control designed to discover an unintended event or result.

deviation Departure from prescribed internal control. Often expressed as a

rate at which the departure occurs.

disclaimer (disclaim) A statement that the auditor is unable to express an

opinion as to the presentation of financial statements in conformity with U.S.

GAAP.

disclosure Revealing information. Financial statement footnotes are one way

of providing necessary disclosures.

discovery sampling Acceptance sampling (sampling to determine whether

internal control compliance is greater than or less than the tolerable deviation

rate) when expected attribute occurrence rate is zero.

document (documentary) (documentation) Written or printed paper that

bears information that can be used to furnish decisive evidence. Could also be

a recording, computer readable information, or a photograph.

dual date If a major event comes to the auditor's attention between the report

date and issuance of the report, the financial statements may include the event

as an adjustment or disclosure. The auditor dual dates the audit report (as of

the end of fieldwork, except footnote XX, which is dated later).

dual-purpose test Audit procedures are classified as substantive tests or tests

of controls. If a procedure provides both types of evidence it is a dual-purpose

test.

edi “Electronic Data Interchange” is the use of communication between an

entity and customers or suppliers to transact business electronically. Purchase,

shipping, billing, cash receipt, and cash disbursements can be completed

entirely by exchanging electronic messages.

edit check Reasonableness, validity, limit, and completeness tests that are

programmed routines designed to check input data and processing results for

completeness, accuracy and reasonableness.

edp “Electronic Data Processing”. Processing of information by computer as

opposed to handwritten records.

effective income tax rate The income tax provision (expense) shown on an

income statement divided by the pretax income. This differs from the statutory

rate because of deductions, credits, and exclusions.

effective internal control Reasonable assurance that the entity’s operational

objectives are achieved, that published financial statements are reliably

prepared, and applicable laws and regulations are complied with.

effectiveness Producing a desired outcome. An audit procedure is effective if

the evidence supports a correct conclusion.

efficiency The ratio of the audit evidence produced to audit resources used.

embedded control performance deals with unexpected changes to data.

embezzlement To take assets in violation of trust.

encryption is scrambling data so it is meaningless to anyone but the intended

recipient, who has the key to unscramble the data.

engagement letter A letter that represents the understanding about the

engagement between the client and the CPA. The letter identifies the financial

statements and describes the nature of procedures to be performed. It includes

an explanation of the objectives of the procedures, an explanation that the

financial information is the responsibility of the company's management, and a

description of the form of report.

environment The control environment is the attitude, awareness, and actions

of the board, management, owners, and others about the importance of control.

This includes integrity and ethical rules, commitment to competence, board or

audit committee participation, organizational structure, assignment of authority

and responsibility, and human resource policies and practices.

error Unintentional misstatements or omissions in financial statements. Errors

may involve mistakes in gathering or processing accounting data, incorrect

estimates from oversight or misinterpretation of facts, and mistakes in

application of principles relating to amount, classification, presentation or

disclosure.

estimation sampling is sampling to estimate the actual value of a population

characteristic within a range of tolerable misstatement.

evidence (evidential matter) includes written and electronic information (such

as checks, records of electronic fund transfers, invoices, contracts, and other

information) that permits the auditor to reach conclusions through reasoning.

examination An examination of prospective financial statements is evaluation

of preparation of the prospective statements, support underlying assumptions,

and presentation. The accountant reports whether, in his or her opinion, the

statements are presented in conformity with AICPA guidelines and the

assumptions provide a reasonable basis for the responsible party's forecast.

The accountant should be independent, proficient, adequately plan the

engagement, supervise assistants, and obtain sufficient evidence to provide a

reasonable basis for the report.

examine (examining) As an audit procedure, to examine something is to look

at it critically.

except for A qualified opinion. An auditor can qualify the audit opinion for both

departures from U.S. GAAP in the financial statements and for restrictions on

the scope of the audit. The opinion paragraph of the qualified report is worded

"In our opinion, "

execute (execution) To carry out an internal control procedure, such as to sign

and mail a check after inspecting supporting documents.

existence Assertions about existence deal with whether assets or liabilities

exist at a given date. For example, management asserts that finished goods

inventories in the balance sheet are available for sale.

expenditure Cash paid or liability incurred.

explanatory A paragraph added to an audit report to explain something, such

as the reason for a qualified or adverse opinion.

explicitly Fully and clearly expressed, leaving nothing implied.

extend means to multiply one number by another (to test extensions is to test

the accuracy of multiplication done by the client). To extend audit procedures is

to apply additional audit procedures to obtain more evidence.

fasab Federal Accounting Standards Advisory Board. An organization that

sets GAAP in the United States for federal government entities.

fasb Financial Accounting Standards Board. A nongovernment private

organization that sets GAAP in the United States for profit making entities and

not-for-profit nongovernmental organizations.

field work The performance of audit procedures outside the CPA's office.

Much field work, but not all, is done in the client's offices after the balance sheet

date.

fifo “First In First Out” inventory cost flow.

financial forecasts present expected future financial position, results of

operations, and cash flows based on expected conditions.

financial institution confirmation request A confirmation sent to the client's

bank or other financial institution asking the bank to confirm direct to the auditor

information about balances at a particular date.

flowchart A schematic representation of a sequence of operations in an

accounting system or computer program. Also called a flow diagram, flow

sheet.

foot a column is to add a column of numbers.

fraud A deliberate deception to secure unfair or unlawful gain. False

representation intended to deceive relied on by another to that person's injury.

Fraud include fraudulent financial reporting undertaken to render financial

statements misleading, sometimes called management fraud, and

misappropriation of assets, sometimes called defalcations.

gaap “Generally Accepted Accounting Principles.” According to Rule 203 of the

AICPA Code of Professional Conduct, GAAP for nongovernment entities

include (in a conflict the source earlier in the list prevails): 1. FASB Statements

and Interpretations, APB Opinions, ARBs. 2. FASB Technical Bulletins, AICPA

Guides and AICPA Statements of Position. 3. Positions of the FASB Emerging

Issues Task Force and AICPA Practice Bulletins. 4. AICPA accounting

interpretations, FASB staff "Qs and As", and widely recognized industry

practices. 5. Other accounting literature, such as FASB Concepts Statements,

textbooks, articles.

gaas “Generally Accepted Auditing Standards.” The ten auditing standards

adopted by the membership of the AICPA. Auditing standards differ from audit

procedures in that "procedures" relate to acts to be performed, whereas

"standards" deal with measures of the quality of the performance of those acts

and the objectives to be attained by use of the procedures undertaken.

gasb Government Accounting Standards Board. A nongovernment private

organization that sets GAAP in the United States for governmental entities.

general controls Policies and procedures to assure proper operation of

computer systems, including controls over data center and network operations,

software acquisition and maintenance, and access security.

general journal A book of original entry in a double-entry system. The journal

lists transactions and indicates accounts to which they are posted. The general

journal includes all transactions which aren't included in specialized journals

used for cash receipts, cash disbursements, and other common transactions.

general ledger A record to which monetary transactions are posted (in the

form of debits and credits) from a journal. It is the final record from which

financial statements are prepared. General ledger accounts are often control

accounts which report totals of details included in subsidiary ledgers.

general standard In the ten U.S. generally accepted auditing standards there

are three general standards: 1. The examination is to be performed by a person

or persons having adequate technical training and proficiency as an auditor. 2.

In all matters relating to the assignment, an independence in mental attitude is

to be maintained by the auditor. 3. Due professional care is to be exercised in

the performance of the examination and preparation of the report.

generalized audit software Packaged computer programs used on a variety

of computers during audit field work to read computer files, select information,

perform calculations, create data files and print reports in a format specified by

the auditor.

going concern assumption assumes the company will continue in operation

long enough to realize its investment in assets through operations (as opposed

to sale). Presenting assets at historical cost is justified by assuming productive

assets will be used rather than sold. This makes market values irrelevant and

supports accounting methods which match the actual cost of an asset to

periods benefited.

government auditing standards A book issued by the comptroller general of

the United States, sometimes called the "yellow book." Government Auditing

Standards contains standards for audits of government organizations,

programs, activities, and functions and of government assistance received by

contractors, not-for-profit organizations, and other nongovernment

organizations. These standards, which include designing the audit to provide

reasonable assurance of detecting material misstatements resulting from

noncompliance with provisions of contracts or grant agreements that have a

direct and material effect on determination of financial statement amounts, are

to be followed when required by law, regulation, agreement, contract, or policy.

For financial audits, Government Auditing Standards prescribes fieldwork and

reporting standards beyond those required by GAAS.

gross margin percentage The gross margin from an income statement

divided by net sales revenue.

hard copy A printed copy of information as opposed to information stored in

computer readable form.

hardware A computer and associated physical equipment involved in

data-processing or communications functions as opposed to software or

computer programs that provide instructions the computer follows.

hardware control Computer controls built into physical equipment by the

manufacturer.

hash total A control total which has no meaning in itself other than for control,

e.g., total social security numbers of employees paid.

hedges protect an entity against the risk of adverse price or interest-rate

movements on its assets, liabilities, or anticipated transactions. A hedge is

used to avoid or reduce risks by creating a relationship by which losses on

positions are counterbalanced by gains on separate positions in another

market.

image processing systems use scanning to convert documents into

electronic images to facilitate storage. Reference and source documents may

not be retained after conversion.

immaterial Of no importance. Something in financial statements that will not

change decisions of investors.

implicitly Implied or understood even though not directly expressed.

implied control performance deals with expected changes to data.

incompatible duties Internal control systems rely on separation of certain

duties to reduce the chance of errors or fraud. Duties are incompatible if they

should be separated for control. For example, one person should not be in a

position to both embezzle funds and to hide the embezzlement by changing the

recorded accountability.

incorrect acceptance The risk of incorrect acceptance is the risk the sample

supports the conclusion that the recorded balance is not materially misstated

when it is materially misstated.

incorrect rejection The risk of incorrect rejection is the risk the sample

supports the conclusion that the recorded balance is materially misstated when

it is not materially misstated.

independent In all matters relating to the assignment, an independence in

mental attitude is to be maintained by the auditors. This means freedom from

bias, which is possible even when auditing one's own business (independence

in fact). However, it is important that the auditor be independent in appearance

(that others believe the auditor is independent).

information systems consist of infrastructure (physical and hardware

components), software, people, procedures (manual and automated), and

data.

inherent limitation The potential effectiveness of an entity's internal control is

subject to inherent limitations. Human fallibility, collusion, and management

override are examples.

inherent risk The susceptibility of a balance or transaction class to error that

could be material, when aggregated with other errors, assuming no related

internal controls.

input control Computer controls designed to provide reasonable assurance

that transactions are properly authorized before processed by the computer,

accurately converted to machine readable form and recorded in the computer,

that data files and transactions are not lost, added, duplicated or improperly

changed, and that incorrect transactions are rejected, corrected and, if

necessary, resubmitted on a timely basis.

inquire (inquiry) Ask questions of client personnel.

inspect (inspection) As an audit procedure, to scrutinize or critically examine

a document. As part of a CPA firm's quality control system, to monitor the

effectiveness of the system.

integrated test facility A "dummy" unit (e.g., a department or employee) is

established. Test (fictitious) transactions are posted to the dummy unit during

the normal processing cycle. If test transactions are processed correctly that

provides evidence that transactions of other units are processed correctly as

well.

integrity Consistent adherence to an ethical code. If client management lacks

integrity the auditor must be more skeptical than usual.

interim audit procedures are done during the year under audit, before year

end.

interim financial information is financial statements of a time period of less

than a full year.

internal auditors are employees of the client. They are responsible for

providing analyses, evaluations, assurances, recommendations, and other

information to the entity's management and board. An important responsibility

of internal auditors is to monitor performance of controls.

internal control Policies and procedures designed to provide reasonable

assurance that specific entity objectives will be achieved. It consists of: the

control environment, risk assessment, control activities, information and

communications, and monitoring.

internal control questionnaire A list of questions about the existing internal

control system to be answered (with answers such as yes, no, or not applicable)

during audit field work. The questionnaire becomes part of the audit working

papers used to document the auditor's understanding of the client's internal

controls.

internal control weakness A defect in the design or operation of internal

controls. A material weakness is a reportable condition which does not reduce

to a relatively low level the risk that material errors or fraud would not be

detected in a timely manner by employees in the normal course of their duties.

introductory paragraph The first paragraph of the auditor's standard report

which identifies the financial statements audited, states that the financial

statements are the responsibility of management and that the auditor's

responsibility is to express an opinion on the financial statements based on the

audit.

inventory tag A tag attached to inventory items that identifies the inventory

items to aid in counting the physical inventory.

inverse The opposite or reverse. An inverse relationship between two

variables means that when one increases the other decreases.

investee The company in which an investment is held. Often used to describe

an equity method investment, in which the investor reports a share of the

investee's net income.

invoice An itemized list of goods shipped or services rendered with costs.

isb Independence Standards Board.

journal A book of original entry in a double-entry system. The journal lists all

transactions and indicates the accounts to which they are posted.

just-in-time An inventory system that attempts to minimize inventory costs that

do not add value for the customer. It arranges for suppliers to deliver small

quantities of raw materials just before those units are needed in production.

Storing, insuring, and handling raw materials are costs that add no value to the

product, and so are minimized in a just in time system.

kiting Drawing a bank check on insufficient funds to take advantage of the time

interval required for collection.

lapping A scheme to cover an embezzlement by using payments made by one

customer to reduce the receivables balance of another customer.

lead schedule The schedule at the beginning of a section of audit working

papers that summarizes the detailed schedules.

lifo “Last In First Out” inventory cost flow.

limit test (limit check). A computer program step that compares data with

predetermined limits as a reasonableness test (hours worked over 60 per

week).

liquidity The availability of cash or ability to obtain it quickly. Debt paying

ability.

lockbox Also called a bank lockbox. A system used to speed the availability of

funds from cash collections by reducing the time from the customer mailing the

check until the funds are available to spend. Remittances are sent to a bank

near the customer and the bank deposits funds speedily to the payee's

account.

management controls are controls performed by one or more managers.

management representation letter A letter addressed to the auditor, signed

by the client's chief executive office and chief financial officer. During an audit,

management makes many representations to the auditor. Written

representations from management in the letter confirm oral representations

given to the auditor, document the continuing appropriateness of such

representations, and reduce the possibility of misunderstanding.

manual controls are controls performed manually, not by computer.

material (materiality) Information important enough to change an investor's

decision. Insignificant information has no effect on decisions, so there is no

need to report it. Materiality includes the absolute value and relationship of an

amount to other information.

material weakness A condition in which internal controls do not reduce to a

relatively low level the risk that material errors or fraud may occur and not be

detected in a timely period by employees in the normal course of their duties.

memos Written records supporting journal entries. Credit memos support

credits, while debit memos support debit entries.

misappropriate To embezzle or appropriate dishonestly for one's own use.

misstatement Stated wrongly or falsely. Untrue financial statement

information.

mitigating Reducing in force or intensity.

narrative A written description of an internal control system.

negative assurance A statement of what the CPA does not know as opposed

to a statement as to what the CPA believes (positive assurance). A statement

that the CPA was "not aware of material modifications that should be made to

financial statements for them to conform with U.S. generally accepted

accounting principles" is negative assurance used in review reports.

negative confirmation request The negative form of accounts receivable

confirmation asks the client's customer to respond only if the customer

disagrees with the balance determined by the client. The positive form asks the

customer to respond whether the customer agrees or disagrees with the client's

receivable balance. The negative form is used when controls over receivables

are strong and accounts receivable consists of many accounts with small

balances. The positive form is used when controls are weak or there are fewer,

but larger, accounts.

nonsampling risk is audit risk not due to sampling. An auditor may apply a

procedure to all transactions or balances and fail to detect a material

misstatement. Nonsampling risk includes the possibility of selecting audit

procedures that are not appropriate to achieve a specific objective. For

example, confirming recorded receivables cannot reveal unrecorded

receivables. Nonsampling risk can be reduced to a negligible level through

adequate planning and supervision.

objective A goal.

objectivity The internal auditors' objectivity depends on the organizational

status of the internal audit function, whether the internal auditor has direct

access and reports regularly to the board, the audit committee, or

owner-manager, and who oversees internal auditor employment decisions.

obligations Assertions about obligations deal with whether liabilities are

obligations of the entity at a given date. For example, management asserts that

amounts capitalized for leases in the balance sheet represent the cost of the

entity's rights to leased property and that the corresponding lease liability

represents an obligation of the entity.

obliterate To do away with something so as to leave no trace.

observe (observation) Watch and test a client action (such as taking

inventory).

occurrence Assertions about occurrence deal with whether recorded

transactions have occurred during a given period. For example, management

asserts that sales in the income statement represent the exchange of goods or

services with customers for cash or other consideration.

online Access to a computer for immediate processing without having to wait

for a batch of transactions to be processed at a later time.

operating effectiveness How an internal control was applied, the consistency

with which it was applied, and by whom.

operating income from continuing operations is reported on an income

statement.

opinion A CPA's conclusion held with confidence but not substantiated by

positive knowledge or proof.

opinion paragraph The paragraph in the audit report that expresses the

auditor's conclusions. The wording of the standard, unqualified opinion

paragraph is: "In our opinion, the financial statements referred to above present

fairly, in all material respects, the financial position of XYZ Company at

December 31, year A, and the results of its operations and its cash flows for the

year then ended in conformity with U.S. generally accepted accounting

principles."

overall review The objective of the overall review stage of the audit is to assist

the auditor in assessing conclusions reached and in evaluation of the overall

financial statement presentation. The overall review includes reading the

financial statements and notes and considering the adequacy of evidence

gathered in response to unusual or unexpected balances. Results of an overall

review may indicate the need for additional evidence.

parallel processing is the simultaneous performance of multiple operations,

usually in reference to computer systems.

parity bit An extra bit added to a string of bits to increase the accuracy of data

transmission.

password A sequence of characters required to gain access to a computer

system. Passwords are used to restrict computer system access to only

authorized persons.

payroll Department that determines amounts of wage or salary due to each

employee.

peer review A practice monitoring program in which the working papers of one

CPA firm are periodically reviewed by independent partners of other firms to

determine that the working papers conform to the standards of the profession.

pending Legal proceedings not yet decided.

per diem An allowance for daily expenses. Often used to reimburse employees

for estimated expenses as opposed to accounting for each small component of

the expenses.

permanent audit working paper files include working papers related to matters

of continuing accounting significance, such as the analysis of balance sheet

accounts, and contingencies. Such information from a prior year is used by the

auditor in the current audit and is updated each year. Sometimes referred to as

the continuing file.

perpetrate Carry out an action such as a crime.

perpetual An inventory accounting system updated for each addition to

inventory and each issuance from inventory so the records indicate the exact

quantity on hand at any moment. The alternative is a periodic inventory system

where actual inventory on hand is determined only once a year.

personal financial statements of individuals present assets and liabilities at

estimated current value on an individual's balance sheet (statement of financial

condition). A statement of changes in net worth presents major changes in net

worth during a period. The accrual basis is used for assets and liabilities which

are presented in order of liquidity and maturity, without classification as to

current and noncurrent. The cash value of life insurance less the amount of

loans against it is an asset. Deferred income tax on the difference between the

income tax basis and estimated current values is presented between liabilities

and equity.

personnel The department that maintains records of each individual's

employment.

persuasive Having the power to influence. Most audit evidence is persuasive,

but not conclusive.

pervasive Having the ability to permeate. An error is pervasive if it is material to

more than one of the primary financial statements.

piecemeal opinion Expression of an opinion on an item in financial statements

is not permitted as part of a disclaimer or an adverse opinion on the financial

statements as a whole because piecemeal opinions tend to overshadow or

contradict a disclaimer of opinion or an adverse opinion.

plan Audit planning is developing an overall strategy for conduct and scope of

the audit. The nature, extent, and timing of planning vary with size and

complexity of the entity, experience with the entity, and knowledge of the

business. In planning the audit, the auditor considers the entity's business and

its industry, its accounting policies and procedures, methods used to process

accounting information, the planned assessed level of control risk, and the

auditor's preliminary judgment about audit materiality levels.

pledge Something given as security to guarantee payment of a debt.

population size The number of items in the population from which a sample is

drawn.

positive assurance A statement as what the CPA believes is positive

assurance. An example is an opinion that the financial statements are

presented fairly in conformity with U.S. GAAP. The opposite is negative

assurance, which is a statement about what the CPA does not know. A

statement that the CPA was "not aware of material modifications that should be

made to financial statements for them to conform with U.S. generally accepted

accounting principles" is negative assurance used in review reports.

positive confirmation (positive request) The positive form of receivables

confirmation asks the customer to respond whether the customer agrees or

disagrees with the client's reported receivable balance. The negative form of

accounts receivable confirmation asks the client's customer to respond only if

the customer disagrees with the balance determined by the client. The negative

form is used when controls over receivables are strong and accounts

receivable consists of many accounts with small balances. The positive form is

used when controls are weak or there are fewer, but larger, accounts.

predecessor auditor The auditor of a client for a prior year who no longer

audits that client.

presentation Assertions about presentation deal with whether particular

financial statement components are properly classified and described. For

example, management asserts that long-term liabilities in the balance sheet will

not mature in one year. Similarly, management asserts that extraordinary items

in the income statement are properly classified and described.

preventative control A control designed to avoid an unintended event.

principal auditor The auditor responsible for the greater portion of financial

statements. The principal auditor may assume responsibility for the work of the

other auditor or divide responsibility with the other auditor.

pro forma The objective of pro forma financial information is to show effects on

historical financial information if a proposed event had occurred earlier.

probability proportional to size (pps) sampling A sampling plan that bases

the likelihood of selecting a particular account on the relative size of that

account, so larger accounts have a greater probability of being selected for the

sample than smaller accounts.

probable A contingent loss is probable if it is uncertain but likely to happen.

procedure An action, such as a step performed as part of an audit program or

as part of the client's internal controls.

processing control is an internal control included in computer software

designed to assure that all transactions are handled as authorized and none

omitted or added.

production cycle The portion of an entity that acquires resources and converts

them to the product or service for customers.

production order A document that initiates the manufacturing process.

proficiency Attainment of proficiency as an auditor begins with the auditor's

formal education and extends to subsequent experience. The independent

auditor must undergo training adequate in technical scope, including

commensurate general education. The junior assistant, entering an auditing

career, must obtain professional experience with proper supervision and review

of his or her work by a more experienced superior.

program An audit program is a listing of audit procedures to be performed in

completing the audit. A computer program (software) is a listing of steps to be

performed in processing the data.

programmed controls are built into computer software and include

reasonableness tests, control totals, and sequence checks.

projection Financial projections are prospective financial statements that

present, to the best of the responsible party's knowledge, given one or more

hypothetical assumptions, an entity's expected financial position, results of

operations, and changes in financial position. A financial projection is prepared

to present hypothetical actions for evaluation.

pronouncements of the FASB and GASB are rules that determine the

principles for external financial reporting and disclosure.

prospective financial statements are either financial forecasts or financial

projections. Although prospective financial statements may cover a period that

has partially expired, statements for periods that have completely expired are

not prospective financial statements.

prospectus A registration statement filed with the SEC includes audited

financial statements (balance sheet, income statement, and statement of cash

flows) for the previous three years. A prospectus contains the same information

and must be supplied to all parties to whom offers are made. There is a twenty

day waiting period between the filing of the registration statement and the first

sale of securities. During this period, preliminary ads and a "red herring"

prospectus can be provided to offerees but must be clearly marked as

preliminary.

proxy A power of attorney granting a third party the right to a stockholder's vote.

When management or others solicit proxies from stockholders, a copy of the

proxy statement must be filed with the SEC ten days before mailing the

solicitation. The proxy statement must include all information relevant to the

matter voted on.

purchase order A document sent by a buyer to a seller placing an order and

providing quantities and specifications.

purport Intending to present.

qualified (qualify) An audit opinion that the financial statements as a whole are

presented in conformity with U.S. GAAP, with the exceptions noted.

qualitative Relating to the quality of a trait, as opposed to quantitative, which

means expressed as a number.

quality control systems provide a CPA firm with reasonable assurance that

personnel comply with applicable professional standards and the firm's

standards of quality, independence, integrity, and objectivity. It covers

personnel management, acceptance and continuance of clients and

engagements, engagement performance, and monitoring.

quantitative (quantitatively) Expressed as a number, as opposed to

qualitative measurement.

questionnaire An internal control questionnaire is a list of questions about the

internal control system to be answered (with answers such as yes, no, or not

applicable) during audit field work. The questionnaire is part of the audit

working papers used to document the auditor's understanding of the client's

internal controls.

quick ratio Quick assets divided by current liabilities. Quick assets are current

assets less inventories and prepaid expenses.

random sample (random-number sampling) Identical probability of each

population item being selected for a sample. Also refers to the use of a table of

random numbers to select a random sample from a population.

ratio estimation In audit sampling a ratio of the proportion of errors in the

sample applied to the population value to estimate total error.

ratio The relation between two quantities expressed as the quotient of one

divided by the other. The ratio of 8 to 2 is written 8/2 and equals four. Financial

statement ratios are used in analytical procedures in audits.

reasonable assurance (in audit report) An auditor works within economic

limits. The audit opinion, to be economically useful, must be formed in a

reasonable time and at reasonable cost. The auditor must decide, exercising

professional judgment, whether evidence available within limits of time and cost

is sufficient to justify an opinion.

reasonable assurance (in internal control) An internal control, no matter

how well designed and operated, can not guarantee that an entity’s objectives

will be met because of inherent limitations in all internal controls systems.

reaudit When an auditor is asked to audit and report on financial statements

that have been previously audited and reported on.

recalculate Perform procedures again and compare to original results.

receiving report A document completed in the receiving department which

identifies the purchase order that initiated the purchase, and the date, quantity,

and condition of goods received.

recomputation Perform procedures again and compare to original results.

reconcile (reconciliation) A schedule establishing agreement between

separate sources of information, such as accounting records reconciled with

the financial statements.

registration statement A statement submitted to officially provide the SEC

with information about an offering of securities. A registration statement

includes audited financial statements (balance sheet, income statement, and

statement of cash flows) for the previous three years.

regression analysis A statistical method for finding the relationship between

two or more variables. Also called least squares or linear regression.

regulation s-x is a regulation of the SEC that explains the format of information

to be submitted to the SEC. It is entitled "Form and Content of and

Requirements for Financial Statements, Securities Act of 1933, Securities

Exchange Act of 1934, Public Utility Holding Company Act of 1935, Investment

Company Act of 1940, and Energy Policy and Conservation Act of 1975."

related parties are those with whom the client has a relationship which might

destroy the self-interest of one of the parties (accounting is based on

measurement of arm's length transactions). Related parties include affiliates of

the client, principle owners, management (decision makers who control

business policy) and members of their immediate families.

reliable (reliability) Different audit evidence provides different degrees of

assurance to the auditor. When evidence can be obtained from independent

sources outside an entity, it provides greater assurance of reliability for an

independent audit than that secured solely in the entity. More effective internal

controls provide more assurance about reliability of the accounting data and

financial statements. The independent auditor's direct personal knowledge,

obtained through physical examination, observation, computation, and

inspection, is more persuasive than information obtained indirectly.

remittance Sending money to someone at a distance. A remittance advice is a

paper record of the amount sent, purpose of the payment, and associated

account identification.

remote A contingency with only a slight chance of occurring. In computer

processing of information, a distant computer.

reperformance The repeating by the auditor of a computation made by the

client to check its accuracy.

reportable condition Matters coming to the auditor's attention that are

communicated to the audit committee because they are significant deficiencies

in internal control which could adversely affect the organization's ability to

record, process, summarize, and report financial data.

representation A letter from management to the auditor representing that the

financial statements are fairly presented. The letter is addressed to the

independent auditor, and dated at the date of the auditor's report. It is signed by

members of management whom the auditor believes are responsible for, and

knowledgeable about, matters covered (chief executive officer and chief

financial officer).

requisition A formal written request for something needed. A purchase by a

company is often initiated internally by a requisition, which results in the

issuance of a purchase order to the outside supplier.

revenue cycle The portion of a company that fills customer orders, accounts

for receivables, and collects those receivables.

review To examine again. The overall review of audit working papers is

completed after field work. A peer review is a practice monitoring program in

which the working papers of one CPA firm are periodically reviewed by

independent partners of other firms to determine that the working papers

conform to professional standards. An analytical review is a type of substantive

audit procedure. A review of the financial statements of a nonpublic company is

an engagement that results in the expression of less assurance than an audit,

but more than in a compilation. A review of the interim financial statements of a

public company consists of analytical procedures and inquiries.

rights Assertions about rights deal with whether the entity has rights to the

asset at a given date. For example, management asserts that amounts

capitalized for leases in the balance sheet represent the cost of the entity's

rights to leased property.

risk analysis An analysis of the possibility of suffering loss.

sample size The number of population items selected when a sample is drawn

from a population.

sampling error Unless the auditor examines 100% of the population, there is

always some chance the sample results will mislead the auditor. This risk is

sampling error. The larger the sample, the less chance of sampling error and

the greater the reliability of the results.

sampling risk The possibility that conclusions drawn from the sample may not

represent correct conclusions for the entire population.

sas "Statements on Auditing Standards" are interpretations of U.S. generally

accepted auditing standards.

scope The type of engagement. The scope of an engagement might be a

review, an audit, or a compilation. A scope limitation is a restriction on the

evidence the auditor can gather.

scope paragraph The paragraph in the audit report that explains the scope of

the engagement. The wording of the standard scope paragraph is: "We

conducted our audit in accordance with U.S. generally accepted auditing

standards. Those standards require that we plan and perform the audit to

obtain reasonable assurance about whether the financial statements are free of

material misstatement. An audit includes examining, on a test basis, evidence

supporting the amounts and disclosures in the financial statements. An audit

also includes assessing the accounting principles used and significant

estimates made by management, as well as evaluating the overall financial

statement presentation. We believe that our audit provides a reasonable basis

for our opinion."

sec The Securities and Exchange Commission is an agency that administers

Federal securities laws. These laws require disclosure of information about

publicly traded securities. The SEC requires that businesses disclose facts and

investigates securities fraud. It regulates securities exchanges and brokers.

second request When an auditor confirms receivables some customers of the

client fail to respond to the first confirmation request. Another request sent to

the same customers is the second request.

secured transaction Right to repossess goods as security for payment of a

debt.

segregation of duties means assigning different people the responsibilities of

authorizing transactions, recording transactions, and maintaining custody of

assets. Segregation of duties reduces the opportunities for one person to both

perpetrate and conceal errors or fraud.

self-checking digit An extra digit is added to a number. The extra digit is

computed from the other digits in the number. The computer program can then

check input by recomputing and comparing the check digit. This is a useful

control over the input of account numbers.

service auditor The auditor of an organization that provides services such as

data processing or pension trust administration to other organizations (the

users). Auditors of the users (user auditors) rely on a report from the service

auditor about controls in the service organization that apply to the financial

statements of the user organization they are auditing.

shipping document A document prepared when goods are shipped. It

identifies the date shipped, the customer, the method of shipment, and the

quantity and specifications of goods shipped.

simulation Representation of the operation or features of one process or

system through the use of another. Computer simulation of waiting lines can aid

in determining the number of employees needed to serve customers at a

particular time of day.

single audit act This federal legislation requires state and local governments

that receive federal aid of $300,000 or more in a fiscal year to have an audit

under the act. A government that receives from $25,000 to $300,000 has the

option of an audit under the act or with specific federal laws and regulations of

programs in which the government participates. State and local governments

receiving less than $25,000 in federal aid need not have an audit. Under the

Single Audit Act, auditors report whether the audited entity has followed laws

and regulations that may have a material effect on each major federal aid

program.

software Programs and languages that control computer hardware.

specialist An expert at activities not usually done by auditors (such as an

appraiser for valuation).

ssars Statements on Standards for Accounting and Review Services (SSARS)

are pronouncements concerning unaudited financial information of a nonpublic

entity. They are issued by the AICPA Accounting and Review Services

Committee.

standard deviation A statistic used to measure dispersion equal to the square

root of the arithmetic mean of the squares of the deviations from the arithmetic

mean.

statistical Making inferences in uncertain situations using applied

mathematics. Measurements from a small group, the sample, are used to infer

the behavior of a larger group, the population. Probability theory determines

how well the sample represents the population.

stop-or-go sampling Taking a sample from a population and checking after

each sample item is drawn whether the sample supports a desired conclusion.

Sampling ceases as soon as that conclusion is supported.

stratify To arrange a population or a sample in distinct layers. Stratified

sampling is used in auditing to select a greater percentage of accounts with

high balances than of accounts with low balances.

subject to Years ago there was a type of qualified audit opinion that was

worded "In our opinion, " Auditors are no longer permitted to issue

such opinions.

subsequent events affect the client and occur between the balance sheet date

and issuance of the audit report. Some such events provide additional evidence

about conditions that existed at the balance sheet date, such as the bankruptcy

of a customer with a history of financial difficulty. The financial statements are

adjusted to reflect this evidence. Evidence about conditions that did not exist at

the balance sheet date, such as fire that destroyed the client's plant after the

balance sheet date, may be so significant as to require disclosure. General

conditions, such as a war, do not require disclosure, even if they have a major

impact on financial statements. Such items are public knowledge.

subsidiary ledger The detailed information which totals to the balance in the

general ledger account. The total of all customer accounts receivable included

in the subsidiary ledger of accounts receivable is the balance in the general

ledger accounts receivable account.

substantiated Supported with proof or evidence.

substantive A substantive audit procedure is a direct test of a financial

statement balance.

successor auditor The auditor of a client for the current year when that client

had another auditor in prior years. The auditor who is no longer the auditor of

that client is the predecessor auditor.

sufficiency (sufficient) A measure of the quantity of audit evidence. The

independent auditor's objective is to obtain sufficient competent evidence to

provide a reasonable basis for forming an opinion.

supervise Supervision is directing efforts of assistants in the audit and

determining whether objectives were accomplished. Elements of supervision

include instructing assistants, keeping informed of problems, reviewing work

performed, and dealing with differences of opinion among firm personnel. The

appropriate extent of supervision depends on the complexity of subject matter

and qualifications of persons performing the work.

suppliers provide goods or services to an audited entity. Sometimes called

vendors.

test A sample from a population to estimate characteristics of the population.

test count As part of inventory audit procedures auditors normally observe the

client's employees counting physical inventory. A test count is inventory

counted by the auditors to check the client's count.

test data is run through a computer program to test the software. Test data can

be used to test compliance with controls in the software.

test of controls (tests of the operating effectiveness of internal controls)

Auditors evaluate the design of controls, then determine if the controls are in

operation. In order to rely on the controls they must also obtain evidence as to

whether the controls are operating effectively.

test of detail Direct tests of financial statement balances (substantive audit

procedures) that are not analytical procedures. If tests of details are performed

as tests of controls as well as substantive tests they are "dual-purpose" tests.

tick marks in audit work papers are footnotes represented by a symbol instead

of by a number. They indicate procedures that have been carried out on

specific items in the work papers.

times interest earned Income before interest and taxes divided by interest

expense.

tolerable deviation rate is the maximum rate of deviation from an internal

control that will allow the auditor to place the planned reliance on that control.

tolerable misstatement When planning a sample for a substantive test of

details, the auditor considers how much monetary misstatement may exist

without causing the financial statements to be materially misstated. This

maximum misstatement is called tolerable misstatement for the sample.

trace Follow a transaction through the steps of the system.

treasurer The officer who controls the entity's funds. The treasurer normally

signs checks and is responsible for cash management.

treasury stock is stock of the corporation that has been issued and later

reacquired. It is not an asset. It is a reduction of stockholders' equity. Treasury

stock can be recorded at either its cost or its par value.

trend analysis An analysis of the change in something over time. Analytical

procedures which compare financial statement ratios of different years are an

example of trend analysis.

trial balance A statement of open debit and credit accounts in a ledger to test

their equality.

turnover Inventory turnover is a measure of the time from receipt of inventory

to its sale. It is found by dividing cost of sales by average inventory.

Receivables turnover is a measure of the time it takes collects to collect

receivables. It is found by dividing net credit sales by average net receivables.

Employee turnover is the rate at which new employees replace old employees.

unqualified An audit opinion that the financial statements as a whole are in

conformity with U.S. GAAP.

update (updated) If an auditor notices events that affect financial statements

on which an audit report has been issued, they are considered when updating

the report on the prior statements. If those statements are changed, the report

says they have been restated and expresses the appropriate opinion. If an

updated opinion differs from the previous opinion, an explanatory paragraph

preceding the opinion paragraph explains that the report has been updated,

discloses the date and type of opinion previously expressed, and events that

caused the revision.

user auditor A “service auditor” is the auditor of an organization that provides

services such as data processing or pension trust administration to other

organizations (the users). Auditors of the users (user auditors) rely on a report

from the service auditor about controls in the service organization that apply to

financial statements of the user organization they are auditing.

validity check A software control over the input of data to a computer system.

In a validity check, data is compared with the type of data properly included in

each input field, e.g., only letters in a name field.

valuation An assertion made by management that each asset and liability is

recorded at an appropriate carrying value.

value-added network A telecommunications network providing

communication facilities, which enhance basic telecommunications services.

They add value by passing, storing and converting messages. Also known as

service providers and EDI service providers. May be operated by a clearing

house, an organization that provides message/file collection, routing and

distribution service on behalf of other organizations.

variable sampling The characteristic tested has many possible values (such

as dollar value of inventory).

variance A statistical measure of dispersion in a population. The variance is

the square of the standard deviation. The standard deviation equals the square

root of the arithmetic mean of the squares of deviations from the arithmetic

mean.

vendors provide goods or services to an audited entity. Also called suppliers.

verify (verification) Prove accuracy of numbers or existence of assets.

vouch Prove accuracy of accounting entries by tracing to supporting

documents.

voucher A document in support of an expenditure. The signature of an

appropriate official on the voucher is authorization for the treasurer to issue a

check.

working papers are records kept by the auditor of procedures applied, tests

performed, information obtained, and pertinent conclusions reached in the

engagement. Working papers provide the principal support for the auditor's

report.

write-off Cancellation of part or all of a balance. Costs incurred which have no

future utility are charged (written-off) to an expense or loss account, not carried

forward as an asset.

write-up In dollar terms a write-up is an intentional over-valuation of assets. In

narrative terms a write-up is a written description of something or some event.

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