EPSO Auditors flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Audit risk model

Audit risk equals inherent risk times control risk times detection risk. Detection risk is controlled by the auditor through the nature, timing and extent of audit procedures.

Reasonable assurance

A high but not absolute level of assurance. It is limited by sampling risk, estimation uncertainty, the nature of evidence and the possibility of collusion or fraud.

Performance materiality

An amount set below overall materiality to reduce to an appropriately low level the probability that uncorrected and undetected misstatements together exceed overall materiality.

Significant risk

An identified risk of material misstatement judged close to the upper end of the spectrum of inherent risk, considering likelihood and magnitude, before taking account of controls.

Key audit matters

Matters selected from those communicated with those charged with governance that were of most significance in the audit. A matter need not be a significant risk to qualify.

Adverse audit opinion

Issued when the auditor, having obtained sufficient appropriate evidence, concludes that misstatements are both material and pervasive to the financial statements as a whole.

Disclaimer of opinion

Issued when the auditor is unable to obtain sufficient appropriate evidence and the possible effects are material and pervasive, so no opinion can be expressed.

IFRS 15 five steps

Identify the contract; identify performance obligations; determine the transaction price; allocate the price to obligations; recognise revenue when each obligation is satisfied.

IFRS 16 lessee recognition

A lessee recognises a right-of-use asset and a lease liability measured at the present value of lease payments, with exemptions for short-term and low-value leases.

Expected credit loss stages

Under IFRS 9, stage 1 recognises 12-month expected credit losses; stages 2 and 3 recognise lifetime expected credit losses as credit risk increases.

Recoverable amount

Under IAS 36, the higher of an asset's fair value less costs of disposal and its value in use. An impairment loss arises when carrying amount exceeds it.

Provision recognition criteria

IAS 37 requires a present obligation from a past event, a probable outflow of resources, and a reliable estimate of the amount. Otherwise the item is a contingent liability.

Control under IFRS 10

An investor controls an investee when it has power over the investee, exposure to variable returns, and the ability to use its power to affect those returns.

SPPI test

Solely payments of principal and interest: a contractual cash flow characteristic test under IFRS 9 used to classify financial assets as measured at amortised cost.

Sound financial management

An EU budgetary principle requiring economy, efficiency and effectiveness in the use of Union funds, set out in the Financial Regulation and TFEU Article 310.

Statement of assurance

The Court of Auditors' annual declaration to the European Parliament and Council on the reliability of the accounts and the legality and regularity of underlying transactions.

Court of Auditors role

Under TFEU Article 285, the Court audits all Union revenue and expenditure, assists Parliament and the Council in budgetary control, and issues the annual statement of assurance.

EPPO competence

The European Public Prosecutor's Office, established by Regulation 2017/1939, investigates and prosecutes crimes affecting the Union's financial interests before national courts.

OLAF mandate

The European Anti-Fraud Office conducts administrative investigations into fraud, corruption and irregularities affecting EU financial interests. It has no power to prosecute.

Authorising officer duties

Under the Financial Regulation, the authorising officer by delegation is responsible for the legality and regularity of transactions and for sound financial management of the budget.

Horizon Europe eligibility

Costs must be actual, incurred during the action, necessary for the project, identifiable and recorded in the beneficiary's accounts, and comply with applicable national and EU law.

Annuity principle

The EU budget principle that expenditure and revenue must be balanced, so the Union cannot borrow to finance a deficit and appropriations cannot exceed own resources.

Cannot say response

In verbal reasoning, the correct answer when the passage neither supports nor contradicts the statement. External knowledge must not be used to decide.

Quantifier traps

Words such as all, some, most and only change truth conditions. A statement about most items cannot be inferred from a statement about all items.

Correlation versus causation

A passage showing that two variables move together supports an association only. It supports a causal claim solely if the text explicitly states causation.

Percentage points

The arithmetic difference between two percentages. A rise from 20% to 25% is five percentage points, which is a 25% relative increase.

Compound growth formula

Final value equals initial value multiplied by one plus the rate raised to the power of the number of periods. Take the nth root to recover the annual rate.

Weighted average

Sum of each value multiplied by its weight, divided by the sum of weights. Applying a simple average to unequal group sizes is a common error.

Margin versus markup

Margin is profit divided by revenue; markup is profit divided by cost. A 25% margin corresponds to a 33.3% markup on cost.

Ratio share formula

To split a total in ratio a:b:c, multiply the total by a/(a+b+c), b/(a+b+c) and c/(a+b+c) respectively.

Rotation versus reflection

Rotation preserves the orientation of a figure while changing its position; reflection reverses orientation, producing a mirror image. This distinguishes common abstract options.

Superposition rules

In abstract sequences, consecutive frames may combine by union (adding elements), intersection (keeping shared elements) or exclusive-or (toggling elements present in only one frame).