Glossary
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
The following terms are provided to assist in clarifying the Government Auditing Standards. The most relevant paragraph numbers are provided for reference. When terminology differs from that used at an organization subject to generally accepted government auditing standards (GAGAS), auditors use professional judgment to determine if there is an equivalent term.
A
Abuse: Behavior that is deficient or improper when compared with behavior that a prudent person would consider reasonable and necessary business practice given the facts and circumstances, but excludes fraud and noncompliance with provisions of laws, regulations, contracts, and grant agreements. (paragraphs 6.23, 7.25, and 8.122)
Agreed-upon procedures engagement: Consists of auditors performing specific procedures on subject matter or an assertion and reporting findings without providing an opinion or a conclusion on it. (paragraph 1.18c)
Appropriateness: The measure of the quality of evidence that encompasses the relevance, validity, and reliability of evidence used for addressing the audit objectives and supporting findings and conclusions. (paragraph 8.102)
Attestation engagement: An examination, review, or agreed-upon procedures engagement conducted under the GAGAS attestation standards related to subject matter or an assertion that is the responsibility of another party. (paragraph 1.27a)
Audit: Either a financial audit or performance audit conducted in accordance with GAGAS. (paragraph 1.27b)
Audit objectives: What the audit is intended to accomplish. They identify the audit subject matter and performance aspects to be included. Audit objectives can be thought of as questions about the program that the auditors seek to answer based on evidence obtained and assessed against criteria. Audit objectives may also pertain to the current status or condition of a program. (paragraph 8.08)
Audit organization: A government audit entity or a public accounting firm or other audit entity that conducts GAGAS engagements. (paragraph 1.27c)
Audit procedures: The specific steps and tests auditors perform to address the audit objectives. (paragraph 8.11)
Audit report: A report issued as a result of a financial audit, attestation engagement, review of financial statements, or performance audit conducted in accordance with GAGAS. (paragraph 1.27d)
Audit risk: The possibility that the auditors’ findings, conclusions, recommendations, or assurance may be improper or incomplete. The assessment of audit risk involves both qualitative and quantitative considerations. (paragraph 8.16)
Audited entity: The entity that is subject to a GAGAS engagement, whether that engagement is a financial audit, attestation engagement, review of financial statements, or performance audit. (paragraph 1.27e)
Auditor: An individual assigned to planning, directing, performing engagement procedures or reporting on GAGAS engagements (including work on audits, attestation engagements, and reviews of financial statements) regardless of job title. Therefore, individuals who may have the title auditor, information technology auditor, analyst, practitioner, evaluator, inspector, or other similar titles are considered auditors under GAGAS. (paragraph 1.27f)
B
Bias threat: The threat that an auditor will, as a result of political, ideological, social, or other convictions, take a position that is not objective. (paragraph 3.30c)
C
Cause: The factor or factors responsible for the difference between the condition and the criteria, which may also serve as a basis for recommendations for corrective actions. (paragraphs 6.27, 7.29, and 8.126)
Competence: The knowledge, skills, and abilities, obtained from education and experience, necessary to conduct the GAGAS engagement. Competence enables auditors to make sound professional judgments. Competence includes possessing the technical knowledge and skills necessary for the assigned role and the type of work being done. This includes possessing specific knowledge about GAGAS. (paragraph 4.05)
Condition: A situation that exists. The condition is determined and documented during the engagement. (paragraphs 6.26, 7.28, and 8.125)
Control objective: The aim or purpose of specified controls; control objectives address the risks related to achieving an entity’s objectives. (paragraph 1.27g)
CPE programs: Structured educational activities or programs with learning objectives designed to maintain or enhance the auditors’ competence to address engagement objectives and perform work in accordance with GAGAS. (paragraph 4.32)
Criteria: Laws, regulations, contracts, grant agreements, standards, measures, expected performance, defined business practices, and benchmarks against which performance is compared or evaluated. Criteria identify the required or desired state or expectation with respect to the program or operation. Criteria provide a context for evaluating evidence and understanding the findings, conclusions, and recommendations in the report. (paragraphs 6.25, 7.27, and 8.124)
D
Directing: Supervising the efforts of others who are involved in accomplishing the objectives of the engagement or reviewing engagement work to determine whether those objectives have been accomplished. (paragraph 4.11b)
E
Education: A structured and systematic process aimed at developing knowledge, skills, and other abilities; it is a process that is typically but not exclusively conducted in academic or learning environments. (paragraph 4.06)
Effect or potential effect: The outcome or consequence resulting from the difference between the condition and the criteria. (paragraphs 6.28, 7.30, and 8.127)
Engagement: A financial audit, attestation engagement, review of financial statements, or performance audit conducted in accordance with GAGAS. (paragraph 1.27h)
Engagement partner or director: The partner or director assigned overall responsibility by the audit organization for managing and achieving quality for the engagement and for being sufficiently and appropriately involved throughout the engagement. (paragraph 5.54a)
Engagement quality review: An objective evaluation of the engagement team’s significant judgments and the conclusions reached thereon that the engagement quality reviewer performs and completes before the audit report is released. (paragraph 5.70)
Engagement team (or audit team): Auditors assigned to planning, directing, performing engagement procedures or reporting on GAGAS engagements. (paragraph 1.27i)
Engaging party: The party that engages the auditor to conduct a GAGAS engagement. (paragraph 1.27j)
Entity objective: What an entity wants to achieve; entity objectives are intended to meet the entity’s mission, strategic plan, and goals and the requirements of applicable laws and regulations. (paragraph 1.27k)
Examination: Consists of obtaining reasonable assurance by obtaining sufficient, appropriate evidence about the measurement or evaluation of subject matter against criteria in order to be able to draw reasonable conclusions on which to base the auditor’s opinion about whether the subject matter is in accordance with (or based on) the criteria or the assertion is fairly stated, in all material respects. (paragraph 1.18a)
Experience: Workplace activities that are relevant to developing professional proficiency. (paragraph 4.06)
External audit organization: An audit organization that issues reports to third parties external to the audited entity, either exclusively or in addition to issuing reports to senior management and those charged with governance of the audited entity. (paragraph 1.27l)
F
Familiarity threat: The threat that aspects of a relationship with management or personnel of an audited entity, such as a close or long relationship, or that of an immediate or close family member, will lead an auditor to take a position that is not objective. (paragraph 3.30d)
Financial audits: Provide an independent assessment of whether an entity’s reported financial information (e.g., financial condition, results, and use of resources) is presented fairly, in all material respects, in accordance with recognized criteria. (paragraph 1.17)
Finding: An issue that may involve a deficiency in internal control; noncompliance with provisions of laws, regulations, contracts, or grant agreements; or instances of fraud. Elements of a finding generally include criteria, condition, cause, and effect or potential effect. (paragraphs 6.17, 6.19, 7.19, 7.21, 8.116, and 8.118)
Finding (in relation to a system of quality management): Information about the design, implementation, and operation of the system of quality management that the audit organization has accumulated through the performance of monitoring activities and from other relevant sources, which indicates that one or more deficiencies may exist. (paragraph 5.111)
Fraud: Involves obtaining something of value through willful misrepresentation. Whether an act is, in fact, fraud is determined through the judicial or other adjudicative system and is beyond auditors’ professional responsibility. (paragraph 8.73)
I
Independence in appearance: The absence of circumstances that would cause a reasonable and informed third party to reasonably conclude that the integrity, objectivity, or professional skepticism of an audit organization or member of the engagement team had been compromised. (paragraph 3.21b)
Independence of mind: The state of mind that permits the conduct of an engagement without being affected by influences that compromise professional judgment, thereby allowing an individual to act with integrity and exercise objectivity and professional skepticism. (paragraph 3.21a)
Inputs: The amount of resources (in terms of, for example, money, material, or personnel) that is put into a program. These resources may come from within or outside the entity operating the program. Measures of inputs can have a number of dimensions, such as cost, timing, and quality. (paragraph 8.38d)
Inspection (in relation to a system of quality management): A retrospective evaluation of the adequacy of the audit organization’s quality management policies and procedures, its personnel’s understanding of those policies and procedures, and the extent of its compliance with them. (paragraph 5.101)
Integrity: Auditors performing their work with an attitude that is objective, fact-based, nonpartisan, and nonideological with regard to audited entities and users of the audit reports and making decisions consistent with the public interest of the program or activity under audit. (paragraphs 3.09 and 3.10)
Internal audit organization: An audit organization that is accountable to senior management and those charged with governance of the audited entity and that does not generally issue reports to third parties external to the audited entity. (paragraph 1.27m)
Internal control: A process effected by an entity’s oversight body, management, and other personnel that provides reasonable assurance that the objectives of an entity will be achieved. (paragraph 1.22b)
L
Likelihood of occurrence: The possibility of a deficiency impacting an entity’s ability to achieve its objectives. (paragraph 8.56b)
M
Magnitude of impact: The likely effect that a deficiency could have on the entity achieving its objectives. (paragraph 8.56a)
Management participation threat: The threat that results from an auditor’s taking on the role of management or otherwise performing management functions on behalf of the audited entity, which will lead an auditor to take a position that is not objective. (paragraph 3.30f)
Methodology: The nature and extent of audit procedures for gathering and analyzing evidence to address the audit objectives. (paragraph 8.11)
Monitoring of quality: A process comprising ongoing consideration and evaluation of the audit organization’s system of quality management. (paragraph 5.88)
Monitoring of quality: A process comprising an ongoing consideration and evaluation of the audit organization’s system of quality control. (paragraph 5.47)
N
Nature of the deficiency: Involves factors such as the degree of subjectivity involved with the deficiency and whether the deficiency arises from fraud or misconduct. (paragraph 8.56c)
Nonsupervisory auditor: An auditor who plans or performs engagement procedures and whose work situation is characterized by low levels of ambiguity, complexity, and uncertainty. (paragraph 4.10a)
O
Objectivity: The basis for the credibility of auditing in the government sector. Objectivity includes independence of mind and appearance when conducting engagements, maintaining an attitude of impartiality, having intellectual honesty, and being free of conflicts of interest. (paragraph 3.11)
Outcomes: Accomplishments or results of a program. (paragraph 8.38g)
Outputs: The quantity of goods or services produced by a program. (paragraph 8.38f)
P
Partners and directors: Auditors who plan engagements, perform engagement procedures, or direct or report on engagements and whose work situations are characterized by high levels of ambiguity, complexity, and uncertainty. Partners and directors may also be responsible for reviewing engagement quality prior to issuing the report, for signing the report, or both. (paragraph 4.10c)
Peer review risk: The risk that the review team (1) fails to identify significant weaknesses in the reviewed audit organization’s system of quality management for its auditing practice, its lack of compliance with that system, or a combination thereof; (2) issues an inappropriate opinion on the reviewed audit organization’s system of quality management for its auditing practice, its compliance with that system, or a combination thereof; or (3) makes an inappropriate decision about the matters to be included in, or excluded from, the peer review report. (paragraph 5.163)
Performance audits: Engagements that provide objective analysis, findings, and conclusions to assist management and those charged with governance and oversight to, among other things, improve program performance and operations, reduce costs, facilitate decision making by parties with responsibility to oversee or initiate corrective action, and contribute to public accountability. In a performance audit, the auditors measure or evaluate the subject matter of the audit and present the resulting information as part of, or accompanying, the audit report. (paragraphs 1.21 and 8.14)
Period of professional engagement: The period beginning when the auditors either sign an initial engagement letter or other agreement to conduct an engagement or begin to conduct an engagement, whichever is earlier. The period lasts for the duration of the professional relationship—which, for recurring engagements, could cover many periods—and ends with the formal or informal notification, either by the auditors or the audited entity, of the termination of the professional relationship or with the issuance of a report, whichever is later. (paragraph 3.23)
Performing engagement procedures: Performing tests and procedures necessary to accomplish the engagement objectives in accordance with GAGAS. (paragraph 4.11c)
Planning: Determining engagement objectives, scope, and methodology; establishing criteria to evaluate matters subject to audit; or coordinating the work of the other audit organization. This definition excludes auditors whose role is limited to gathering information used in planning the engagement. (paragraph 4.11a)
Presumptively mandatory requirements: Auditors and the audit organization must comply in all cases where such a requirement is relevant except in rare circumstances discussed in paragraphs 2.03, 2.04, and 2.08. GAGAS uses should to indicate a presumptively mandatory requirement. (paragraph 2.02b)
Professional behavior: Behavior that includes auditors avoiding any conduct that could bring discredit to their work and putting forth an honest effort in performing their duties in accordance with the relevant technical and professional standards. (paragraph 3.16)
Professional judgment: Use of the auditor’s professional knowledge, skills, and abilities, in good faith and with integrity, to diligently gather information and objectively evaluate the sufficiency and appropriateness of evidence. Professional judgment includes exercising reasonable care and professional skepticism. (paragraphs 3.109 through 3.117)
Program: Includes processes, projects, studies, policies, operations, activities, entities, and functions. (paragraph 8.08)
Program operations: The strategies, processes, and activities management uses to convert inputs into outputs. Program operations may be subject to internal control. (paragraph 8.38e)
Public interest: The collective well-being of the community of people and entities that the auditors serve. (paragraph 3.07)
Q
Quality objective: The desired outcomes to be achieved by the audit organization in relation to the components of the system of quality management. (paragraph 5.29)
Quality risk: Risks that have a reasonable possibility of occurring and adversely affecting the achievement of one or more quality objectives individually or in combination with other risks. (paragraph 5.34)
R
Reasonable and informed third party: As evaluated by a hypothetical person, a person who possesses skills, knowledge, and experience to objectively evaluate the appropriateness of the auditor’s judgments and conclusions. This evaluation entails weighing all the relevant facts and circumstances, including any safeguards applied, that the auditor knows, or could reasonably be expected to know, at the time that the evaluation is made. (paragraph 3.46)
Reporting: Determining the report content and substance or reviewing reports to determine whether the engagement objectives have been accomplished and the evidence supports the report’s technical content and substance prior to issuance. This includes signing the report. (paragraph 4.11d)
Responsible party: The party responsible for a GAGAS engagement’s subject matter. (paragraph 1.27n)
Response to address a quality risk: The policies and procedures that the audit organization designs and implements to address one or more quality risks. (paragraph 5.40)
Review: Consists of obtaining limited assurance by obtaining sufficient, appropriate review evidence about the measurement or evaluation of subject matter against criteria in order to express a conclusion about whether any material modifications should be made to the subject matter in order for it to be in accordance with (or based on) the criteria or to the assertion in order for it to be fairly stated. Review-level work does not include reporting on internal control or compliance with provisions of laws, regulations, contracts, and grant agreements. (paragraph 1.18b)
Review of financial statements: An engagement conducted under GAGAS for review of financial statements. (paragraph 1.27o)
S
Safeguards: Actions or other measures, individually or in combination, that auditors and the audit organization take that effectively eliminate threats to independence or reduce them to an acceptable level. (paragraph 3.49)
Scope: The boundary of the audit and is directly tied to the audit objectives. The scope defines the subject matter that the auditors will assess and report on, such as a particular program or aspect of a program, the necessary documents or records, the period of time reviewed, and the locations that will be included. (paragraph 8.10)
Self-interest threat: The threat that a financial or other interest will inappropriately influence an auditor’s judgment or behavior. (paragraph 3.30a)
Self-review threat: The threat that an auditor or audit organization that has provided nonaudit services will not appropriately evaluate the results of previous judgments made or services provided as part of the nonaudit services when forming a judgment significant to a GAGAS engagement. (paragraph 3.30b)
Service provider: An individual or organization external to the audit organization that provides a human, technological, or intellectual resource that the audit organization uses in its system of quality management or in performing its engagements. (paragraph 5.79)
Significance: The relative importance of a matter within the context in which it is being considered, including quantitative and qualitative factors. In the performance audit requirements, the term significant is comparable to the term material as used in the context of financial statement engagements. (paragraph 8.15)
Source documents: Documents providing evidence that transactions have occurred (for example, purchase orders, payroll time records, customer orders, and contracts). Such records also include an audited entity’s general ledger and subsidiary records or equivalent. (paragraph 3.92)
Specialist: An individual or organization possessing special skill or knowledge in a particular field other than accounting or auditing that assists auditors in conducting engagements. A specialist may be either an internal specialist or an external specialist. (paragraph 1.27p)
Structural threat: The threat that an audit organization’s placement within a government entity, in combination with the structure of the government entity being audited, will affect the audit organization’s ability to perform work and report results objectively. (paragraph 3.30g)
Sufficiency: A measure of the quantity of evidence used to support the findings and conclusions related to the audit objectives. (paragraph 8.99)
Supervisory auditor: An auditor who plans engagements, performs engagement procedures, or directs engagements, and whose work situation is characterized by moderate levels of ambiguity, complexity, and uncertainty. (paragraph 4.10b)
System of Quality Management: A system designed, implemented, and operated by an audit organization that provides it with reasonable assurance that the audit organization and its personnel fulfill their responsibilities in accordance with professional standards and applicable laws and regulations and perform and report on engagements in accordance with such standards and requirements. (paragraph 5.05)
T
Technical comments: Comments that address points of fact or are editorial in nature and do not address substantive issues, such as methodology, findings, conclusions, or recommendations. (paragraphs 6.62, 7.59, and 9.54)
Those charged with governance: The individuals responsible for overseeing the strategic direction of the entity and obligations related to the accountability of the entity. This includes overseeing the financial reporting process, subject matter, or program under audit, including related internal controls. Those charged with governance may also be part of the entity’s management. In some audited entities, multiple parties may be charged with governance, including oversight bodies, members or staff of legislative committees, boards of directors, audit committees, or parties contracting for the engagement. (paragraph 1.04)
U
Unconditional requirement: Requirement with which auditors and the audit organization must comply in all cases where such requirement is relevant. GAGAS uses must to indicate an unconditional requirement. (paragraph 2.02a)
Undue influence threat: The threat that influences or pressures from sources external to the audit organization will affect an auditor’s ability to make objective judgments. (paragraph 3.30e)