Random sample
Identical probability of each population item being selected for a
sample. Also, the use of random numbers to select a random sample
from a population.
Ratio
The relation between two quantities expressed as the quotient of one
divided by the other. The ratio of 8 to 2 is written 8/2 and equals
four. Financial statement ratios are used in analytical procedures
in audits.
Reasonable assurance
An auditor works within economic limits. The audit opinion, to be
economically useful, must be formed in a reasonable time and at reasonable
cost. The auditor must decide, exercising professional judgment, whether
evidence available within limits of time and cost is sufficient to
justify an opinion.
Reconcile
A schedule establishing agreement between separate sources of information,
such as accounting records reconciled with the financial statements.
Reliable
Different audit evidence provides different degrees of assurance to
the auditor. When evidence can be obtained from independent sources
outside an entity, it provides greater assurance of reliability for
an independent audit than that secured solely in the entity. More
effective internal controls provide more assurance about reliability
of the accounting data and financial statements. The independent auditor's
direct personal knowledge, from physical examination, observation,
computation, and inspection, is more persuasive than information obtained
indirectly.
Remittance
Sending money to someone at a distance. A remittance advice is a paper
record of the amount sent, purpose of the payment, and associated
account identification.
Reportable condition
Matters coming to the auditor's attention that are communicated to
the audit committee because they are significant deficiencies in internal
control which could adversely affect the ability to record, process,
summarize, and report financial data.
Requisition
A formal written request for something needed. A purchase by a company
is initiated internally by a requisition, resulting in the issuance
of a purchase order to the outside supplier.
Revenue cycle
The portion of an organization that fills customer orders, accounts
for receivables, and collects those receivables.
Risk analysis
An analysis of the possibility of suffering loss.
