| Agreed-upon procedures engagement | An attest engagement in which the CPAs agree to perform procedures for a specified party and issue a report that is restricted to use by that party.
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| American Institute of Certified Public Accountants (AICPA) | The national professional organization of CPAs engaged in promoting high professional standards to ensure that CPAs serve the public interest.
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| Assertion | A representation or declaration made by the responsible party, typically management of the entity.
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| Assurance services | Professional services that enhance the quality of information, or its context, for decision makers. Many assurance services involve some form of attestation.
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| Attest engagement | An engagement in which the CPAs issue an examination, a review, or an agreedupon procedures report on subject matter or an assertion about subject matter that is the responsibility of another party (e.g., management).
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| Audit of financial statements | An examination designed to provide the highest level of assurance that CPAs provide that the financial statements follow generally accepted accounting principles, or another acceptable basis of accounting.
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| Business risk (of the client) | The risk assumed by investors or creditors that is associated with the company's survival and profitability.
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| Certified public accountant | A person licensed by the state to practice public accounting as a profession, based on having passed the Uniform CPA Examination and having met certain educational and experience requirements.
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| Compliance audit | An audit to measure the compliance of the organization with some established criteria; for example, laws and regulations, or internal control policies and procedures.
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| CPA examination | A uniform examination administered by the American Institute of Certified Public Accountants for state boards of accountancy to enable them to issue CPA licenses. The examination covers the topics of accounting and reporting, auditing, business environment, regulation, and professional responsibilities.
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| Examination | An attest engagement designed to provide the highest level of assurance that CPAs provide on an assertion. An examination of financial statements is referred to as an audit.
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| Financial audit | An audit of the financial statements of an organization or segment of the organization.
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| Fraud | Intentional misstatement of financial statements by management (management fraud), or theft of assets by employees (employee fraud). Fraud also is referred to as irregularities.
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| Generally accepted accounting principles (GAAP) | Concepts or standards established by such authoritative bodies as the FASB and the GASB and accepted by the accounting profession as essential to proper financial reporting.
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| Information risk | The risk that the information used by investors, creditors, and others to assess business risk is not accurate.
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| Integrated audit | As required by the Sarbanes-Oxley Act and the Public Company Accounting Oversight Board, an audit that includes providing assurance on both the financial statements and internal control over financial reporting. Integrated audits are required of publicly traded companies in the United States.
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| Operational audit | An analysis of a department or other unit of a business or governmental organization to measure the effectiveness and efficiency of operations.
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| Public Company Accounting Oversight Board (PCAOB) | The five-member board established in 2002 to oversee the audit of public companies that are subject to the securities laws. The board has authority to establish or adopt, or both, rules for auditing, quality control, ethics, independence, and other standards relating to the preparation of audit reports.
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| Review | An engagement designed to lend only a limited degree of assurance relating to an assertion. As discussed in further detail in Chapter 19, the procedures performed are generally limited to inquiries and analytical procedures.
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| Sarbanes-Oxley Act of 2002 | A set of reforms that toughened penalties for corporate fraud, restricted the kinds of consulting CPAs can perform for audit clients, and created the Public Company Accounting Oversight Board to oversee CPAs and public accounting firms.
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| Securities and Exchange Commission (SEC) | A government agency authorized to regulate companies seeking approval to issue securities for sale to the public.
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| Statements on Auditing Standards (SASs) | A series of statements issued by the Auditing Standards Board of the AICPA. These statements are considered to be interpretations of generally accepted auditing standards.
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| Suitable criteria | Criteria are the standards or benchmarks used to measure and present the subject matter and against which the CPA evaluates the subject matter. Suitable criteria are criteria that are established or developed by groups composed of experts that follow due process procedures, including exposure of the proposed criteria for public comment. Suitable criteria must have each of the following attributes: objectivity, measurability, completeness, and relevance.
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