What does the phrase “above the line mean”?
In the phrase “above the line”, the line is generally referring to gross profit. Therefore, any costs or expenses that are above the line refer to costs incurred to make the product or provide a service. Any costs “below the line” would be operating expenses, or those costs that are not directly incurred to produce…
What is check kiting?
Check kiting is a form of fraud that involves floating checks from one bank account to another. Generally, the objective of check kiting is for the client to attempt to make use of a fund or bank account that might not actually exist.
What is footing and cross-footing?
Audit teams will often receive financial schedules in excel or PDF, and its important that the audit team tests the totals on any of these financial schedules. The two procedures that are performed to verify totals are called footing and cross-footing. Footing is when the audit team confirms that the a column of numbers sums…
What is a rubber check?
What does rubber do? It bounces. A rubber check is a check that bounces. When a check bounces, it means that the person that wrote the check doesn’t have enough funds in their account. For example, if you wrote a check for $100, but only had $90 in your checking account, the check would bounce.
What is “tone at the top”?
Tone at the top is another phrase for the control environment, which is one of the key components of the COSO internal control framework. The phrase “tone at the top” basically helps define or assess management’s leadership and commitment to creating a culture in the organization that is focused on honesty, integrity, and ethical behavior….
What does the slang term “suicide pill” mean in finance?
If a company is on the verge of being acquired by another company, and they don’t want to be acquired, then they might take a suicide pill. There is no concrete way to commit financial suicide. Basically, any extreme action by the company to prevent being acquired would be considered financial suicide. Examples include taking…
What does PBC mean in audit?
PBC means “prepared by client”. The audit team will send the client a request list, which is basically a huge long list of documents that will be needed for the audit team to perform an effective audit. The client will have to pull together files based on the request list and provide them to the…
What is a clean audit opinion?
If you hear the phrase “clean audit opinion” or “clean opinion”, that means that the company received an unqualified or unmodified audit opinion. A clean audit opinion is great news for the company because that means that the audit team believes the financial statements are reasonably stated (i.e. free from material misstatement). Additionally, that also…
