Chapter 6

An unintentional misstatement of the financial statements.

An intentional misstatement of the financial statements.

A fraud involving the theft of an entity's assets; often called defalcation

Intentional misstatements or omissions of amounts of disclosures in financial statements to deceive users; often called management fraud.

Failure to comply with applicable laws and regulations; often referred to as illegal acts.

An attitude of the auditor that includes a questioning mind that is alert to conditions that may indicate possible misstatement due to fraud or error and a critical assessment of audit evidence.

A method of dividing an audit by keeping closely related types of transactions and account balances in the same segment.

Seven audit objectives that must be met before the auditor can conclude that the total for any fiven class of transactions is fairly stated; the general ones are occurrence, completeness, accuracy, classification, timing, posting and summarization, and presentation.

Nine audit objectives that must be met before the auditor can conclude that any given account balance is fairly stated and related disclosures are relevant and understandable; the general ones are existence, completeness, accuracy, cutoff, detail tie-in, realizable value, classification, rights and obligations, and presentation.

Implied or expressed representations by management about classes of transactions, related account balances, and presentation and disclosures in the financial statements.

Assertions that have a meaningful bearing on whether an account is fairly stated and used to assess the risk of material misstatement and the design and performance of audit procedures.

The four aspects of a complete audit:
(1) plan and design an audit approach,
(2) perform tests of controls and substantive tests of transactions,
(3) perform substantive analytical procedures and tests of details of balances,
(4) complete the audit and issue an audit report

Audit procedures performed to obtain an understanding of the entity and its environment and the entity's system of internal control to identify and assess the risks of material misstatement and design further audit procedures.

Audit procedures to test the effectiveness of controls in support of a reduced assessed control risk.

Audit procedures testing for monetary misstatements to determine whether the seven transaction-related audit objectives have been satisfied for each class of transactions.

Evaluations of financial information through analysis of plausible relationships among financial and nonfinancial data.

An analytical procedure in which the auditor develops an expectation of recorded amonuts or ratios to provide evidence supporting an account balance.

Audit procedures testing for monetary misstatements to determine whether the nine balance-related audit objectives have been satisfied for each significant account balance.