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Transaction cycle

This refers to the stages of activity involved in carrying out a financial transaction. Transaction cycles can be used for all types of finance transaction; for example the revenue cycle includes making and documenting a sale, accounts receivable activities, cash and banking activities, financial reporting and accounting. Reviewing end to end transaction cycles enables auditors… Read more

Audit sampling

This refers to the technique of reviewing a representative subset of transactions in order to provide evidence to support an audit opinion. Audit sampling enables the auditor to focus on key points in the transaction cycle and enables opinions to be developed without the need for full scrutiny of every single transaction. In devising audit… Read more

Misstatement

This refers to any financial reporting which fails to meet the accounting standards, principles and policies against which it is prepared. Misstatements may be the result of error, non compliance with legal requirements or fraud and may typically be identified during internal or external audits. Misstatements is a term normally found in risk and control and… Read more

Analytical procedures

These refer to a range of financial audit procedures used to assess risk and produce an audit report. Analytical procedures involve assessing the accuracy of financial information and the financial viability of the organisation by comparison with other financial data (for example from previous periods, against forecasts or industry standards) and also ratio analysis of… Read more

Professional scepticism

This refers to an attitude required of auditors. This includes a questioning mind, being alert to conditions which may indicate error or fraud, and an objective and critical assessment of audit evidence.  Professional scepticism relies on audit evidence rather than assumptions. Professional scepticism is a term normally found in risk and control.

Financial internal audit

This refers to the audit of financial records and accounts by an organisation’s internal auditors. Financial internal auditing is an internal control to provide assurance to management. It may also provide assurance, subject to review, to external auditors in arriving at their audit view of the organisation’s accounts. By demonstrating sound financial internal audit controls,… Read more

Operational internal audit

This refers to the audit of an organisation’s management and internal controls by its internal auditors. Operational internal auditing is itself an internal control to provide assurance to management that the organisation’s policies, procedures and controls are being properly applied. It may also provide assurance, subject to review, to external auditors in arriving at their… Read more

Audit risk

This refers to the risk that an auditor may incorrectly give a positive report because they have not identified significant errors or fraud. The level of risk varies according to the levels of inherent risk (for example cash transactions are more susceptible to fraud), control risks (for example poor controls can increase the likelihood of… Read more

Audit report

This refers to the written opinion of an auditor regarding whether a company’s financial statements are a fair representation of the company’s financial performance and financial position. For shareholders the audit report provides an assurance that the organisation’s performance is as stated in their financial reports. It can also be used by banks to obtain… Read more

Control processes

This refers to the policies and procedures established within an organisation to provide governance and assurance. Control processes are designed to prevent or detect error or performance outside the organisation’s targets. They include organisational arrangements (reporting lines etc), defined standards and procedures, internal performance reporting and review. The effectiveness of the control processes is typically… Read more