Chapter 1

The accumulation and evaluation of evidence about information to determine and report on the degree of correspondence between the information and established criteria. This should be done by a competent, independent person.

Certified public accountants or accounting firms that perform audits of commercial and noncommercial entities.

The communication of audit findings to users.

The recording, classifying, and summarizing of economic events in a logical manner for the purpose of providing financial information for decision making.

The risk that information upon which a business decision is made is inaccurate.

An independent professional service that improves the quality of information for decision makers.

A federal securities law passed in 2002 that providess for additional regulation of public companies and their auditors; the Act established the Public Company Accounting Oversight Board and also requires auditors of larger public companies to audit the effectiveness of internal control over financial reporting.

A type of assurance service in which the CPA firm issues a report about a subject matter or assertion that is the responsibility of another party.

A form of attestation service in which the auditor issues a written report stating whether the financial statements are in material conformity with accounting standards.

An engagement in which the auditor reports on the effectiveness of internal control over financial reporting; such reports are required for accelerated filer public companies under Section 404 of the Sarbanes-Oxley Act.

A form of attestation in which a CPA firm issues a written report that provides less assurance than an audit as to whether the financial statements are in material conformity with accounting standards.

A review of any part of an organization's operating procedures and methods for the purpose of evaluating efficiency and effectiveness.

(1) A review of an organization's financial records performed to determine whether the organization is following specific procedures, rules, or regulations set by some higher authority.
(2) An audit performed to determine whether an entity that receives financial assistance from the federal government has complied with specific laws and regulations.

An audit conducted to determine whether the overall financial statements of an entity are stated in accordance with specified criteria (usually U.S. or international accounting standards).

An auditor working for the U.S. Government Accountability Office (GAO); the GAO reports to and is responsible solely to Congress.

Auditors who work for the Internal Revenue Service (IRS) and conduct examinations of taxpayers' returns.

Auditors employedby a company to audit for the company's board of directors and management.

A person who has met state regulatory requirements, including passing the Uniform CPA Examination, and has thus been certified; they may have as their primary responsibility the performance of the audit function on historical financial statemtens of commercial and noncommercial financial entities.

A recently completed effort of the American Institute of Certified Public Accountants (AICPA), working together with the National Association of State Boards of Accountancy (NASBA), that significantly revied the CPA exam and licensure process.