CA Inter Auditing and Ethics key terms

A financial statement presentation that is free from material misstatement and faithfully reflects the entity's financial position and performance, so that users can rely on it for decisions.

An attitude of questioning and alertness to conditions suggesting possible misstatement, including a critical assessment of audit evidence rather than accepting management's explanations at face value.

The risk that the auditor expresses an inappropriate opinion on financial statements that are materially misstated, arising from inherent risk, control risk and detection risk taken together.

The threshold amount or nature of misstatement that could influence economic decisions of users; it guides what to test and whether uncorrected misstatements need reporting.

The overall approach chosen for an engagement, setting scope, timing, direction and resourcing, so that the detailed audit plan can be prepared for the entity.

A detailed schedule describing the nature, timing and extent of audit procedures to be performed, developed from the audit strategy and updated as the engagement progresses.

A written list of audit procedures to be performed, often cross-referenced to working papers, recording what is to be done, by whom and when.

The susceptibility of an assertion to material misstatement before considering related internal controls, driven by the nature of the item, judgement involved or complex transactions.

The risk that a material misstatement could occur and not be prevented or detected on a timely basis by the entity's internal control system.

The risk that the auditor's own procedures fail to detect a material misstatement, reduced by designing more effective and extensive substantive testing.

The processes, policies and procedures established by those charged with governance to provide reasonable assurance about reliability of reporting, effectiveness of operations and compliance with laws.

Procedures designed to evaluate whether internal controls operate effectively throughout the period, such as inquiry combined with inspection, observation or re-performance.

Audit procedures performed to detect material misstatements at the assertion level, comprising tests of details and substantive analytical procedures rather than assessments of controls.

Information used by the auditor in arriving at conclusions and forming the opinion, gathered through inspection, observation, inquiry, confirmation, recalculation, re-performance and analytical procedures.

Direct written response from a third party to the auditor, such as a bank or customer, providing evidence about account balances or terms that cannot be obtained from the entity's own records.

Evaluations of financial information through plausible relationships among data, used in risk assessment, as substantive tests and in the final review of the financial statements.

A file containing items of continuing importance across audits, such as the engagement letter, constitution documents and accounting policies, kept separately from the current year's working papers.

Records prepared or obtained by the auditor documenting procedures performed, evidence obtained and conclusions reached, providing support for the audit opinion.

Events occurring between the date of the financial statements and the date of the auditor's report, which may require adjustment or disclosure in the accounts.

The assumption that the entity will continue in operation for the foreseeable future; the auditor evaluates whether material uncertainty exists about this assumption and reports accordingly.

A written statement from management confirming its responsibilities and certain assertions made to the auditor, dated near the date of the audit report and required by auditing standards.

The auditor's conclusion that the financial statements give a true and fair view in accordance with the applicable financial reporting framework, without any modification for misstatement or scope limitation.

An opinion expressed when misstatements or scope limitations are material but not pervasive, stated as "except for" the effects of the matter described.

An opinion that the financial statements do not give a true and fair view because misstatements are both material and pervasive to the financial statements as a whole.

A statement that the auditor is unable to obtain sufficient appropriate evidence and cannot express an opinion, used when a scope limitation is material and pervasive.

Matters selected from those communicated to those charged with governance that were of most significance in the current audit, described in the auditor's report for listed entities.

A paragraph in the auditor's report referring to a matter appropriately disclosed in the financial statements that is fundamental to users' understanding, without modifying the opinion.

The Companies (Auditor's Report) Order requiring specified statements in the auditor's report on companies, covering matters such as fixed assets, loans, deposits and statutory dues.

A written agreement with the client setting out the objective and scope of the audit, responsibilities of the auditor and management, and the expected form of reports.

Freedom from relationships or interests that could compromise objectivity, comprising independence of mind and independence in appearance for the audit engagement.

A threat arising when the auditor evaluates work previously performed by the firm or its personnel, such as preparing records that are later audited.

A bank loan or advance where interest or principal remains overdue beyond the period specified by the regulator, requiring classification and provisioning in the bank's accounts.

Customer identification and verification requirements imposed on banks to prevent money laundering, which the auditor considers when testing advances and deposit accounts.

Policies and procedures designed by a company to ensure orderly and efficient conduct of business, safeguarding of assets, prevention of fraud and accurate financial reporting.

The assertion that transactions and events are recorded in the correct accounting period, tested by examining transactions around the year-end.

A possible obligation whose existence depends on uncertain future events, or a present obligation not recognised because outflow is not probable or cannot be reliably measured.