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KnowledgeLeader Power User Series: Glossary of Audit and Risk Management Terms

Posted by Dave Goff on Fri, Jun 03, 2016 @ 02:03 PM

""Have you had a colleague send an email marked “URGENT!” and you realize you haven’t a clue what they’re talking about? It happens. Especially in an industry with a wide variety of activities that are similar but have different names, or similar names but might be completely different, or even different names for the exact same thing!

Fortunately, we’re here to help.

On KnowledgeLeader, we have a Glossary of Terms you can check.

For example:

Absorption Costing (also called Absorption Accounting)
Cost of a finished unit in inventory will include direct materials, direct labor, and both variable and fixed manufacturing overhead (or all manufacturing costs).

Deviation Condition
A departure from acceptable/effective performance of the prescribed control activity. This indicates that the control is not being performed as required and employee operations need to be adjusted to reflect accurate control activity ending in normal/expected results.

- Versus -

Deviation Rate
The percentage of items in a population that exhibit evidence of error.

And of course, there are also all of the acronyms and initialisms. Sometimes people spell out the whole phrase, sometimes they use an acronym or initialism, and maybe you haven’t had your coffee yet and can’t remember what those letters stand for.

Like:

Simple Average Dilution Horizon (SADH)
One type of test to calculate dilution horizon (the lag between the time an invoice is generated and when a credit is issued). The SADH represents an average of the total number of lag days between the time an invoice is generated and a credit is issued. To calculate the SADH, a simple numerical average is taken between a set of calculated lags

- Or -

International Financial Reporting Standards (IFRS)
International Financial Reporting Standards (IFRS) are accounting and reporting standards set by the International Accounting Standards Board (IASB). IFRS has been gradually adopted worldwide since 2000 as a replacement to local GAAP.

- Or –

Computer-Assisted Audit Techniques (CAATs)
Can be used by internal auditors to complete some tests more efficiently and effectively than otherwise possible with traditional manual audit techniques. CAATs include many types of tools and techniques including audit software, utility software, test data, application software tracing and mapping, and audit expert systems. The two categories of CAATs include (1) tools and techniques that involve retrieving and manipulating data and (2) tools and techniques that allow auditors to verify the presence and operating effectiveness of application and system controls.

So if you’re ever stuck, or just having a memory lapse, hop on over to our Glossary of Terms!

Topics: KnowledgeLeader Power User Series

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