DE LA SALLE UNIVERSITY MANILA RVR – COB DEPARTMENT OF ACCOUNTANCY REVDEVT 3rd Term AY 13-14 ======================================================================== = GLOSSARY OF TERMS (Effective for audits of financial statements for periods beginning on or after December 15, 2009) ACCESS CONTROLS CONTROLS —Procedures —Procedures designed to restrict access to on-line terminal devices, programs and data. Access controls consist of “user authentication” and “user authorization.” “User authentication” typically attempts to identify a user through unique logon identifications, passords, access cards or !iometric data. “User authorization” consists of access rules to determine the computer resources each user may access. "pecifically, such procedures are designed to prevent or detect# $a% Unauthorized access to on-line terminal devices, programs and data& $!% 'ntry of unauthorized transactions& $c% Unauthorized changes to data files& $d% (he use of computer programs !y unauthorized personnel& and $e% (he use of computer programs that have not !een authorized. ACCOUNTING ACCOUNTING ESTIMATE —An —An accounting estimate is an appro)imation of the amount of an item in the a!sence of a precise means of measurement. ACCOUNTING ACCOUNTING SYSTEM —An —An accounting system is the series of tas*s and records of an entity !y hich transa transacti ctions ons are are proces processed sed as a means means of mainta maintaini ining ng finan financia ciall record records. s. "uch "uch system systems s identi identify, fy, assem!le, analyze, calculate, classify, record, summarize and report transactions and other events. ADVERSE OPINION —$see —$see +odified auditors report% AGREED-UPON AGREED-UPON PROCEDURES PROCEDURES ENGAGEMENT ENGAGEMENT —n — n an enga engage geme ment nt to perf perfor orm m agre agreed ed-u -upo pon n procedures, an auditor is engaged to carry out those procedures of an audit nature to hich the auditor and the entity and any appropriate third parties have agreed and to report on factual findings. (he recipients of the report must form their on conclusions from the report !y the auditor. (he report is restricted to those parties that have agreed to the procedures to !e performed since others, unaare of the reasons for the procedures may misinterpret the results. ANALYTICAL ANALYTICAL PROCEDURES PROCEDURES —Analytical —Analytical procedures consist of the analysis of significant ratios and trends including the resulting investigation of fluctuations and relationships that are inconsistent ith other relevant information or deviate from predicta!le amounts. ANNUAL REPORT —An —An entity entity ordinari ordinarily ly issues issues on an annual annual !asis !asis a docume document nt hich hich inclu includes des its financial statements together ith the audit report thereon. (his document is frequently referred to as the “annual report.” ANOMALOUS ANOMALOUS ERROR —$see —$see Audit sampling% APPLICATION APPLICATION CONTROLS CONTROLS IN COMPUTER INFORMATION INFORMATION SYSTEMS —(he SYSTEMS —(he specific controls over the relevant accounting applications maintained !y the computer. (he purpose of application controls is to esta!lish specific control procedures over the accounting applications in order to provide reasona!le assurance that all transactions are authorized and recorded, and are processed completely, accurately and on a timely !asis. APPROPRIATENES APPROPRIATENESS S —Appropriateness —Appropriateness is the measure of the quality of audit evidence and its relevance to a particular assertion and its relia!ility. ASSERTIONS ASSERTIONS —Assertions —Assertions are representations !y management, e)plicit or otherise, that are em!odied in the financial statements. $see inancial statements assertions% ASSISTANTS ASSISTANTS —Assistants —Assistants are personnel involved in an individual audit other than the auditor.
Gl!!"r# $ Term!
ASSURANCE —$see /easona!le assurance% ATTENDANCE —Attendance consists of !eing present during all or part of a process !eing performed !y others& for e)ample, attending physical inventory ta*ing ill ena!le the auditor to inspect inventory, to o!serve compliance of managements procedures to count quantities and record such counts and to testcount quantities. AUDIT —(he o!0ective of an audit of financial statements is to ena!le the auditor to e)press an opinion hether the financial statements are prepared, in all material respects, in accordance ith an identified financial reporting frameor*. (he phrase used to e)press the auditors opinion is “present fairly, in all material respects. A similar o!0ective applies to the audit of financial or other information prepared in accordance ith appropriate criteria. AUDIT EVIDENCE —Audit evidence is the information o!tained !y the auditor in arriving at the conclusions on hich the audit opinion is !ased. Audit evidence ill comprise source documents and accounting records underlying the financial statements and corro!orating information from other sources. AUDIT FIRM —Audit firm is either a firm or entity providing audit services, including here appropriate its partners, or a sole practitioner. AUDIT OPINION —$see 1pinion% AUDIT PROGRAM —An audit program sets out the nature, timing and e)tent of planned audit procedures required to implement the overall audit plan. (he audit program serves as a set of instructions to assistants involved in the audit and as a means to control the proper e)ecution of the or*. AUDIT RISK —Audit ris* is the ris* that the auditor gives an inappropriate audit opinion hen the financial statements are materially misstated. Audit ris* has three components# inherent ris*, control ris* and detection ris*. CONTROL RISK —2ontrol ris* is the ris* that a misstatement that could occur in an account !alance or class of transactions and that could !e material, individually or hen aggregated ith misstatements in other !alances or classes, ill not !e prevented or detected and corrected on a timely !asis !y the accounting and internal control systems. DETECTION RISK —3etection ris* is the ris* that an auditors su!stantive procedures ill not detect a misstatement that e)ists in an account !alance or class of transactions that could !e material, individually or hen aggregated ith misstatements in other !alances or classes. INHERENT RISK —nherent ris* is the suscepti!ility of an account !alance or class of transactions to misstatement that could !e material, individually or hen aggregated ith misstatements in other !alances of classes, assuming that there ere no related internal controls. AUDIT SAMPLING —Audit sampling $sampling% involves the application of audit procedures to less than 4556 of items ithin an account !alance or class of transactions such that all sampling units have a chance of selection. (his ill ena!le the auditor to o!tain and evaluate audit evidence a!out some characteristic of the items selected in order to form or assist in forming a conclusion concerning the population from hich the sample is dran. Audit sampling can use either a statistical or a non-statistical approach. Anomalous error —Anomalous error means an error that arises from an isolated event that has not recurred other than on specifically identifia!le occasions and is therefore not representative of errors in the population. E!e"#e$ error —(he error that the auditor e)pects to !e present in the population. Non-sam!l%n& r%s' —7on-sampling ris* arises from factors that cause the auditor to reach an erroneous conclusion for any reason not related to the size of the sample. or e)ample, most audit evidence is persuasive rather than conclusive, the auditor might use inappropriate procedures, or the auditor might misinterpret evidence and fail to recognize an error. Po!ula#%on—Population means the entire set of data from hich a sample is selected and a!out hich the auditor ishes to dra conclusions. A population may !e divided into strata, or su!populations, ith each stratum !eing e)amined separately. (he term population is used to include the term stratum. Sam!l%n& r%s' —"ampling ris* arises from the possi!ility that the auditors conclusion, !ased on a sample may !e different from the conclusion reached if the entire population ere su!0ected to the same audit procedure.
2
Gl!!"r# $ Term!
Sam!l%n& un%# —"ampling unit means the individual items constituting a population, for e)ample chec*s listed on deposit slips, credit entries on !an* statements, sales invoices or de!tors !alances, or a monetary unit. S#a#%s#%"al sam!l%n& —"tatistical sampling means any approach to sampling that has the folloing characteristics# $a% /andom selection of a sample& and $!% Use of pro!a!ility theory to evaluate sample results, including measurement of sampling ris*. A sampling approach that does not have characteristics $a% and $!% is considered non statistical sampling. S#ra#%(%"a#%on—"tratification is the process of dividing a population into su!populations, each of hich is a group of sampling units hich have similar characteristics $often monetary value%. Tolera)le error —(olera!le error means the ma)imum error in a population that the auditor is illing to accept. AUDITOR —(he auditor is the person ith final responsi!ility for the audit. (his term is also used to refer to an audit firm. $or ease of reference, the term “auditor” is used throughout the P"As hen descri!ing !oth auditing and related services hich may !e performed. "uch reference is not intended to imply that a person performing related services need necessarily !e the auditor of the entitys financial statements.% AU3(78 Con#%nu%n& au$%#or —(he continuing auditor is the auditor ho audited and reported on the prior periods financial statements and continues as the auditor for the current period. E#ernal au$%#or —9here appropriate the terms “e)ternal auditor” and “e)ternal audit” are used to distinguish the e)ternal auditor from an internal auditor and to distinguish the e)ternal audit from the activities of internal auditing. In"om%n& au$%#or —(he incoming auditor is a current periods auditor ho did not audit the prior periods financial statements. O#*er au$%#or —(he other auditor is an auditor, other than the principal auditor, ith responsi!ility for reporting on the financial information of a component hich is included in the financial statements audited !y the principal auditor. 1ther auditors include affiliated firms, hether using the same name or not, and correspondents, as ell as unrelated auditors. Personnel —Personnel includes all partners and professional staff engaged in the audit practice of the firm. Pre$e"essor au$%#or —(he auditor ho as previously the auditor of an entity and ho has !een replaced !y an incoming auditor. Pr%n"%!al au$%#or —(he principal auditor is the auditor ith responsi!ility for reporting on the financial statements of an entity hen those financial statements include financial information of one or more components audited !y another auditor. AUDITOR+S ASSOCIATION —An auditor is associated ith financial information hen the auditor attaches a report to that information or consents to the use of the auditors name in a professional connection. COMPARATIVES —2omparatives in financial statements, may present amounts $such as financial position, results of operations, cash flos% and appropriate disclosures of an entity for more than one period, depending on the frameor*. (he frameor*s and methods of presentation are as follos# $a% 2orresponding figures here amounts and other disclosures for the preceding period are included as part of the current period financial statements, and are intended to !e read in relation to the amounts and other disclosures relating to the current period $referred to as “current period figures”%. (hese corresponding figures are not presented as complete financial statements capa!le of standing alone, !ut are an integral part of the current period financial statements intended to !e read only in relationship to the current period figures& and $!% 2omparative financial statements here amounts and other disclosures for the preceding period are included for comparison ith the financial statements of the current period, !ut do not form part of the current period financial statements.
3
Gl!!"r# $ Term!
COMPILATION ENGAGEMENT —n a compilation engagement, the accountant is engaged to use accounting e)pertise as opposed to auditing e)pertise to collect, classify and summarize financial information. COMPONENT —2omponent is a division, !ranch, su!sidiary, 0oint venture, associated company or other entity hose financial information is included in financial statements audited !y the principal auditor. COMPREHENSIVE ,ASIS OF ACCOUNTING —A comprehensive !asis of accounting comprises a set of criteria used in preparing financial statements hich applies to all material items and hich has su!stantial support.
COMPUTATION —2omputation consists of chec*ing the arithmetical accuracy of source documents and accounting records or of performing independent calculations. COMPUTER-ASSISTED AUDIT TECHNIUES —Applications of auditing procedures using the computer as an audit tool are *non as 2omputer Assisted Audit (echniques $2AA(s%. COMPUTER INFORMATION SYSTEMS —A computer information systems $2"% environment e)ists hen a computer of any type or size is involved in the processing !y the entity of financial information of significance to the audit, hether that computer is operated !y the entity or !y a third party. CONFIRMATION —$see ')ternal confirmation% CONTINUING AUDITOR —$see Auditor% CONTROL ENVIRONMENT —(he control environment comprises the overall attitude, aareness and actions of directors and management regarding the internal control system and its importance in the entity. CONTROL PROCEDURES —2ontrol procedures are those policies and procedures in addition to the control environment hich management has esta!lished to achieve the entitys specific o!0ectives. CONTROL RISK —$see Audit ris*% CORPORATE GOVERNANCE —$see 8overnance% DATA,ASE —A collection of data that is shared and used !y a num!er of different users for different purposes. DETECTION RISK —$see Audit ris*% DISCLAIMER OF OPINION —$see +odified auditors report% DOCUMENTATION —3ocumentation is the material $or*ing papers% prepared !y and for, or o!tained and retained !y the auditor in connection ith the performance of the audit. ELECTRONIC DATA INTERCHANGE .EDI/ —(he electronic transmission of documents !eteen organizations in a machine-reada!le form. EMPHASIS OF MATTER PARAGRAPH.S/ —$see +odified auditors report% ENCRYPTION .CRYPTOGRAPHY/ —(he process of transforming programs and information into a form that cannot !e understood ithout access to specific decoding algorithms $cryptographic *eys%. or e)ample, the confidential personal data in a payroll system may !e encrypted against unauthorized disclosure or modification. 'ncryption can provide an effective control for protecting confidential or sensitive programs and information from unauthorized access or modification. :oever, effective security depends upon proper controls over access to the cryptographic *eys. ENGAGEMENT LETTER —An engagement letter documents and confirms the auditors acceptance of the appointment, the o!0ective and scope of the audit, the e)tent of the auditors responsi!ilities to the client and the form of any reports. AU3(78 ENVIRONMENTAL MATTERS —'nvironmental matters are defined as# a. nitiatives to prevent, a!ate, or remedy damage to the environment, or to deal ith conservation of renea!le and non-renea!le resources $such initiatives may !e required !y environmental las and regulations or !y contract, or they may !e underta*en voluntarily%& !. 2onsequences of violating environmental las and regulations& c. 2onsequences of environmental damage done to others or to natural resources& d. 2onsequences of vicarious lia!ility imposed !y la $for e)ample, lia!ility for damages caused !y previous oners%.
4
Gl!!"r# $ Term! ENVIRONMENTAL PERFORMANCE REPORT —An environmental performance report is a report, separate from the financial statements, in hich an e ntity provides third parties ith qualitative information on the entitys commitments toards the environmental aspects of the !usiness, its policies and targets in that field, its achievement in managing the relationship !eteen its !usiness processes and environmental ris*, and quantitative information on its environmental performance. ENVIRONMENTAL RISK —n certain circumstances, factors relevant to the assessment of inherent ris* for the development of the overall audit plan may include the ris* of material misstatement of the financial statements due to environmental matters. ERROR —An error is an unintentional mista*e in financial statements. E0PECTED ERROR — $see Audit sampling% E0PERT —An e)pert is a person or firm possessing special s*ill, *noledge and e)perience in a particular field other than accounting and auditing. E0TERNAL AUDIT1AUDITOR —$see Auditor% E0TERNAL CONFIRMATION —')ternal confirmation is the process of o!taining and evaluating audit evidence through a direct communication from a third party in response to a request for information a!out a particular item affecting assertions made !y management in the financial statements. FAIR VALUE —(he amount for hich an asset could !e e)changed, or a lia!ility settled, !eteen *noledgea!le, illing parties in an arms length transaction. FINANCIAL STATEMENTS —(he !alance sheets, income statements or profit and loss accounts, statements shoing either all changes in equity or changes in equity other than those arising from capital transactions ith oners and distri!utions to oners, cash flo statements, notes and other statements and e)planatory material hich are identified as !eing part of the financial statements. SUMMARI2ED FINANCIAL STATEMENTS —An entity may prepare financial statements summarizing its annual audited financial statements for the purpose of informing user groups interested in the highlights only of the entitys financial performance and position. FINANCIAL STATEMENT ASSERTIONS — inancial statement assertions are assertions !y management, e)plicit or otherise, that are em!odied in the financial statements and can !e categorized as follos# a% ')istence# an asset or a lia!ility e)ists at a given date& !% /ights and o!ligations# an asset or a lia!ility pertains to the entity at a given date& c% 1ccurrence# a transaction or event too* place hich pertains to the entity during the period& d% 2ompleteness# there are no unrecorded assets, lia!ilities, transactions or events, or undisclosed items& e% ;aluation# an asset or lia!ility is recorded at an appropriate carrying value& f% +easurement# a transaction or event is recorded at the proper amount and revenue or e)pense is allocated to the proper period& and g% Presentation and disclosure# an item is disclosed, classified, and descri!ed in accordance ith the applica!le financial reporting frameor*. FIRE3ALL—A com!ination of hardare and softare that protects a 9A7,
5
Gl!!"r# $ Term! GOVERNANCE —(he term “governance” descri!es the role of persons entrusted ith the supervision, control and direction of an entity. (hose charged ith governance ordinarily are accounta!le for ensuring that the entity achieves its o!0ectives, financial reporting, and reporting to interested parties. (hose charged ith governance include management only hen it performs such functions. GOVERNMENT ,USINESS ENTERPRISES —8overnment !usiness enterprises are !usinesses hich operate ithin the pu!lic sector ordinarily to meet a political or social interest o!0ective. (hey are ordinarily required to operate commercially, that is, to ma*e profits or to recoup, through user charges a su!stantial proportion of their operating costs. INCOMING AUDITOR —$see Auditor% INHERENT RISK —$see Audit ris*% INUIRY — nquiry consists of see*ing information of *noledgea!le persons inside or outside the entity. INSPECTION —nspection consists of e)amining records, documents, or tangi!le assets. INTERIM FINANCIAL INFORMATION OR STATEMENTS —inancial information $hich may !e less than full financial statements as defined a!ove% issued at interim dates $usually half yearly or quarterly% in respect of a financial period. INTERNAL AUDITING —nternal auditing is an appraisal activity esta!lished ithin an entity as a service to the entity. ts functions include, amongst other things, e)amining, evaluating and monitoring the adequacy and effectiveness of the accounting and internal control systems. INTERNAL CONTROL SYSTEM —An internal control system consists of all the policies and procedures $internal controls% adopted !y the management of an entity to assist in achieving managements o!0ective of ensuring, as far as practica!le, the orderly and efficient conduct of its !usiness, including adherence to management policies, the safeguarding of assets, the prevention and detection of fraud and error, the accuracy and completeness of the accounting records, and the timely preparation of relia!le financial information. (he internal control system e)tends !eyond these matters hich relate directly to the functions of the accounting system. IT ENVIRONMENT —(he policies and procedures that the entity implements and the ( infrastructure $hardare, operating systems, etc% and application softare that it uses to support !usiness operations and achieve !usiness strategies. KNO3LEDGE OF THE ,USINESS —(he auditors general *noledge of the economy and the industry ithin hich the entity operates and a more particular *noledge of ho the entity operates. LIMITATION ON SCOPE —A limitation on the scope of the auditors or* may sometimes !e imposed !y the entity $for e)ample, hen the terms of the engagement specify that the auditor ill not carry out an audit procedure that the auditor !elieves is necessary%. A scope limitation may !e imposed !y circumstances $for e)ample, hen the timing of the auditors appointment is such that the auditor is una!le to o!serve the counting of physical inventories%. t may also arise hen, in the opinion of the auditor, the entitys accounting records are inadequate or hen the auditor is una!le to carry out an audit procedure !elieved desira!le. LOCAL AREA NET3ORK .LAN/—A communications netor* that serve users ithin a confined geographical area.
6
Gl!!"r# $ Term! MATERIAL 3EAKNESSES —(he ea*nesses in internal control that could have a material effect on the financial statements. MATERIALITY —nformation is material if its omission or misstatement could influence the economic decisions of users ta*en on the !asis of the financial statements. +ateriality depends on the size of the item or error 0udged in the particular circumstances of its omission or misstatement. (hus, materiality provides a threshold or cutoff point rather than !eing a primary qualitative characteristic hich information must have if it is to !e useful.
MISSTATEMENT —A mista*e in financial information hich ould arise from errors and fraud. MODIFIED AUDITOR+S REPORT —An auditors report is considered to !e modified if either an emphasis of matter paragraph$s% is added to the report or if the opinion is other than unqualified#
+A(('/" (:A( 31 71( A'2( (:' AU3(1/" 1P717 EMPHASIS OF MATTER PARAGRAPH.S/ —An auditors report may !e modified !y adding an emphasis of matter paragraph$s% to highlight a matter affecting the financial statements hich is included in a note to the financial statements that more e)tensively discusses the matter. (he addition of such an emphasis of matter paragraph$s% does not affect the auditors opinion. (he auditor may also modify the auditors report !y using an emphasis of matter paragraph$s% to report matters other than those affecting the financial statements. +A(('/" (:A( 31 A'2( (:' A U3(1/" 1P717 UALIFIED OPINION —A qualified opinion is e)pressed hen the auditor concludes that an unqualified opinion cannot !e e)pressed !ut that the effect of any disagreement ith management, or limitation on scope is not so material and pervasive as to require an adverse opinion or a disclaimer of opinion. DISCLAIMER OF OPINION —A disclaimer of opinion is e)pressed hen the possi!le effect of a limitation on scope is so material and pervasive that the auditor has not !een a!le to o!tain sufficient appropriate audit evidence and accordingly is una!le to e)press an opinion on the financial statements. ADVERSE OPINION —An adverse opinion is e)pressed hen the effect of a disagreement is so material and pervasive to the financial statements that the auditor concludes that a qualification of the report is not adequate to disclose the misleading or incomplete nature of the financial statements. AU3(78 NATIONAL PRACTICES .AUDITING/ - A set of auditing guidelines not having the authority of standards defined !y an authoritative !ody at a country level and commonly applied !y auditors in the conduct of an audit or related services.=(his definition does not apply in the Philippines and is therefore not used.> NATIONAL STANDARDS .AUDITING/ —A set of auditing standards defined !y the Auditing "tandards and Practices 2ouncil or !y la or regulations or an authoritative !ody at the country level, the application of hich is mandatory in conducting an audit or related services and hich should !e complied ith in the conduct of an audit or related services. NONCOMPLIANCE —(he term “noncompliance” is used to refer to acts of omission or commission !y the entity !eing audited, either intentional or unintentional, hich are contrary to the prevailing las or regulations. NON-SAMPLING RISK —$see Audit sampling% O,SERVATION —1!servation consists of loo*ing at a process or procedure !eing performed !y others, for e)ample, the o!servation !y the auditor of the counting of inventories !y the entitys personnel or the performance of internal control procedures that leave no audit trail. OPENING ,ALANCES —1pening !alances are those account !alances hich e)ist at the !eginning of the period. 1pening !alances are !ased upon the closing !alances of the prior period and reflect the effects of transactions of prior periods and accounting policies applied in the prior pe riod. OPINION —(he auditors report contains a clear ritten e)pression of opinion on the financial statements as a hole. An unqualified opinion is e)pressed hen the auditor concludes that the financial statements are presented fairly, in all material respects, in accordance ith the identified financial reporting frameor*. $"ee +odified auditors report% OTHER AUDITOR —$see Auditor%
Gl!!"r# $ Term! PCS OR PERSONAL COMPUTERS .ALSO REFERRED TO AS MICROCOMPUTERS/ —'conomical yet poerful self-contained general purpose computers consisting typically of a monitor $visual display unit%, a case containing the computer electronics and a *ey!oard $and mouse%. (hese features may !e com!ined in porta!le computers =laptops>. Programs and data may !e stored internally on a hard dis* or on remova!le storage media such as 23s or floppy dis*s. P2s may !e connected to on-line netor*s, printers and other devices such as scanners and modems. PERSONNEL—$see Auditor% PLANNING —Planning involves developing a general strategy and a detailed approach for the e)pected nature, timing and e)tent of the audit. POPULATION —$see Audit sampling% POST ,ALANCE SHEET EVENTS —$see "u!sequent events% PREDECESSOR AUDITOR —$see Auditor% PRINCIPAL AUDITOR —$see Auditor% PROGRAMMING CONTROLS —Procedures designed to prevent or detect improper changes to computer programs that are accessed through on-line terminal devices. Access may !e restricted !y controls such as the use of separate operational and program development li!raries and the use of specialized program li!rary softare. t is important for on-line changes to programs to !e adequately documented, controlled and monitored. PRO4ECTION —A pro0ection is prospective financial information prepared on the !asis of# a% :ypothetical assumptions a!out future events and management actions hich are not necessarily e)pected to ta*e place, such as hen some entities are in a start-up phase or are considering a ma0or change in the nature of operations& or !% A mi)ture of !est-estimate and hypothetical assumptions. PROSPECTIVE FINANCIAL INFORMATION —Prospective financial information is financial information !ased on assumptions a!out events that may occur in the future and possi!le actions !y an entity. Prospective financial information can !e in the form of a forecast, a pro0ection or a com!ination of !oth. $"ee orecast and Pro0ection% PU,LIC SECTOR —(he term “pu!lic sector” refers to national governments, regional $for e)ample, provincial, territorial% governments, local $for e)ample, city, ton% governments and related governmental entities $for e)ample, agencies, !oards, commissions and enterprises%. UALIFIED OPINION —$see +odified auditors report% UALITY CONTROLS —(he policies and procedures adopted !y a firm to provide reasona!le assurance that all audits done !y the firm are !eing carried out in accordance ith the 1!0ective and 8eneral Principles 8overning an Audit of inancial "tatements, as set out in Philippine "tandard on Auditing ??5 “@uality 2ontrol for Audit 9 or*.” REASONA,LE ASSURANCE —n an audit engagement, the auditor provides a high, !ut not a!solute, level of assurance, e)pressed positively in the audit report as reasona!le assurance, that the information su!0ect to audit is free of material misstatement. RELATED PARTIES —/elated parties and related party transaction are defined in nternational Accounting "tandard ? $A" ?% as# Related party —Parties are considered to !e related if one party has the a!ility to control the other party or e)ercise significant influence over the other party in ma*ing financial and operating decisions. RELATED PARTY TRANSACTION —A transfer of resources or o!ligations !eteen related parties, regardless of hether a price is charged. RELATED SERVICES —/elated services comprise revies, agreed-upon procedures and compilations. REVIE3 ENGAGEMENT —(he o!0ective of a revie engagement is to ena!le an auditor to state hether, on the !asis of procedures hich do not provide all the evidence that ould !e required in an audit, anything has come to the auditors attention that causes the auditor to !elieve that the financial statements are not prepared, in all material respects, in accordance ith an identified financial reporting frameor*. SAMPLING RISK —$see Audit sampling% SAMPLING UNIT —$see Audit sampling%
!
Gl!!"r# $ Term! SCOPE OF AN AUDIT5(he term “scope of an audit” refers to the audit procedures deemed necessary in the circumstances to achieve the o!0ective of the audit. SCOPE OF A REVIE3 —(he term “scope of a revie” refers to the revie procedures deemed necessary in the circumstances to achieve the o!0ective of the revie. SCOPE LIMITATION —$see
9
Gl!!"r# $ Term! UNCERTAINTY — An uncertainty is a matter hose outcome depends on future actions or events not under the direct control of the entity !ut that may affect the financial statements. UNUALIFIED OPINION —$see 1pinion% 3ALK-THROUGH TEST —A al*-through test involves tracing a fe transactions through the accounting system. 3IDE AREA NET3ORK .3AN/—A communications netor* that transmits information across an e)panded area such as !eteen plant sites, cities and nations. 9A7s allo for on-line access to applications from remote terminals. "everal
%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%
10
