Word Bank

• Assertions
• audit committee
• audit plan
• confirmation
• Cutoff
• inherent risk
• misappropriation of assets
• risk
• substantive procedures (tests)
• tests of controls

Statements Answer 1. The of SEC registrants selects the company's audit firm. 2. The auditors must assess the risk of material misstatement of financial statements due to the two types of fraud, fraudulent financial reporting and Audit risk at the account balance level consists of three components: (1). (2) control risk and (3) detection 3. risk. 4. The audit. provides an overview which includes the nature, timing and extent of procedures to be performed in an 5. Audit procedures that are focused on the effectiveness of internal control are called 8. 6. Tests of balances and transactions designed to detect material misstatements are called 7. Performing certain audit procedures at an interim date, rather than at the balance sheet date, results in additional that must be controlled by the auditors. . The existence and accuracy of an account receivable may be tested by with the debtor, or by vouching entries in the account to supporting documents. are representations of management, explicit or otherwise, that are embodied in the financial statements as 9. used by auditors to consider the different types of potential misstatements that may occur that are communicated, explicitly or implicitly by the financial that are set forth in the financial statements. . procedures are used by auditors to determine that transactions are reflected in the proper accounting period. 10