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Audit Exam 1

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Auditing

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Terms in this set (48)

the accumulation and evaluation of evidence about information to determine and report on the degree of correspondence between the information and established criteria

- performed by a competent, independent person

Nature of auditing

- information and established criteria
- accumulating and evaluating evidence
- competent, independent person
- reporting

Difference between audit and accounting

-Accounting is recording, classifying, and summarizing of economic events in a logical manner
- Audit focuses on determining whether recorded information properly reflects the economic events that occurred during the accounting period (use expertise)

Causes of information risk

1. remoteness of information
2. Biases and motives of the provider
4. Voluminous data
5. Complex exchange transactions

How to reduce information risk

1. user verifies information
2. user shares information risk with management
3. Audited financial statements are provided