Knowra Auditing Auditing Auditing is the independent examination of financial information and related evidence against stated criteria. It culminates in a report on whether the information conforms to those criteria.
Audit evidence : Information auditors use to support conclusions about financial statements or other subject matter. Documents, confirmations, observations, and tests provide the basis for audit conclusions.
Financial statements : Structured reports presenting an entity’s financial position, performance, and cash flows. They are the most common subject matter of an external financial audit.
External audit : An independent examination of an organization’s financial statements by an auditor outside the organization. This is the familiar form of auditing that provides assurance to external users.
Review engagement : A limited-assurance engagement based mainly on inquiry and analytical procedures applied to financial information. A review provides less assurance and requires less extensive evidence gathering than an audit.
Companies Act 1844 : A British statute that required company registration and introduced provisions for shareholder access to company accounts. It formed part of the legal backdrop to the growth of company auditing in Britain.
Audit risk : The risk that an auditor issues an inappropriate opinion when financial statements are materially misstated. Auditors assess and respond to this risk when planning the work.
Generally accepted accounting principles : Authoritative accounting rules and conventions used to prepare financial statements in a jurisdiction. Auditors assess whether statements follow the applicable accounting framework.
Internal audit : An independent organizational function that evaluates governance, risk management, and controls for management and governing bodies. Unlike an external financial audit, it serves the organization through broader, ongoing evaluations.
Agreed-upon procedures : An engagement in which a practitioner performs specified procedures and reports factual findings without an assurance conclusion. It reports results of requested tests rather than an overall audit opinion.
Joint-stock company : A business whose capital is divided into shares held by multiple investors, with liability generally limited to their investment. Ownership separated from management increased demand for independent examination of accounts.
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