Audit Vocabulary

A paragraph included in the auditor’s report that refers to a matter appropriately presented or disclosed in the financial statements that, in the auditor’s judgement, is of such importance that it is fundamental

Accounting standards set out the requirements for the recognition, measurement, presentation and disclosure of transactions and events that are important to the financial statements.

It states the auditor’s conclusion on whether the financial statements, including disclosures are presented fairly in all material respects in accordance with the applicable financial reporting standards.

responsible for the oversight of a company’s financial reporting and accounting, financial regulatory compliance, financial risk management processes, and the engagement of and interaction with the company’s external auditor on

requirements and guidance for auditors regarding performing audit engagements. Set by national or international organizations, such as the International Auditing and Assurance Standards Board (IAASB).

The processes designed, implemented and maintained by those charged with governance, management and other personnel to provide reasonable assurance about the achievement of an entity’s objectives with applicable laws and regulations

sufficient in terms of both quality and quantity to satisfy the reasonable expectations of users of the financial statements.

A financial statement that presents a company’s financial position as of a specified date.

opinion—the auditor concludes that, except for specific matters explained in the audit report, the financial statements give a true and fair view

Preparing the financial statements of a company where management is unable to confirm that it is a going concern. Assets and liabilities are included at the net value that would be realisable in the event of a forced sale or liquidation.

a difference—arising from an error or fraud—between the amount, classification, presentation or disclosure of an item in the financial statements.

responsibility in relation to the qualification and supervision of auditors.

company whose shares can be bought and sold by the general public and are listed on a stock exchange, such as the London Stock Exchange.

The auditor concludes that the extent of their inability to obtain sufficient appropriate audit evidence is such that it is not possible to form an opinion on the financial statements.

A financial statement that measures a company’s financial performance over a specific accounting period.

enhancing the user’s confidence in the information that is being reported.

concept used by both preparers and auditors of financial statements to help determine what information is important, what information should be disclosed in the financial statements

the auditor concludes that the financial statements do not give a true and fair view.

Management’s assumption that the company will continue to operate for the foreseeable future.

report issued by a company detailing its activities and financial performance during the preceding year.

An annual general meeting (commonly referred to as an AGM) is a formal meeting held once a year by a company, required by law, to which shareholders are invited.

A financial metric that measures the resources available to a company to finance its day- to-day operations.

The inclusion of information in the financial statements, such as further analysis of the primary financial statements, a statement of principal accounting policies applied.

In the context of an audit of financial statements, a high, but not absolute, level of assurance.