Audit documentation
Audit documentation is the written record of audit procedures performed, evidence obtained, and conclusions reached.
OpenFinancial Dictionary
Accounting & Finance Terms (English)
Accounting and Finance Terms Explained
Explore accounting, finance, auditing, taxation, and economics terms explained in clear English. Each entry provides a definition, a detailed explanation, practical uses, and examples where available.
Use the search box below to find a term by its name, definition, application, or related financial concept.
Audit Engagement
An audit engagement is the formal agreement (usually via an engagement letter) that defines the scope, responsibilities, timing, and fees for the audit between the auditor and the client.
OpenAudit Evidence
Audit evidence includes information (documents, confirmations, observations, recalculations, analytics) that supports the auditor’s conclusions. Evidence must be sufficient (quantity) and appropriate ...
OpenAudit evidence
Audit evidence consists of all information used by the auditor to support conclusions and form an audit opinion.
OpenAudit Evidence
Audit evidence is the information used to support the auditor’s conclusions and opinion. It must be sufficient in quantity and appropriate in quality, obtained through tests and procedures.
OpenAudit Evidence
Evidence may include documents, confirmations, observations, recalculations, and analytical procedures, and should be sufficient and appropriate.
OpenAUDIT FAILURE
Audit failure occurs when the auditor issues an inappropriate opinion—e.g., stating the financial statements are fairly presented when they contain material misstatements. It may result from insuffici...
OpenAudit opinion
Audit opinion is the auditor’s formal conclusion regarding the fairness of the financial statements.
OpenAudit Opinion Letter
An audit opinion letter (audit report) is the auditor’s signed report expressing an opinion on whether the financial statements are fairly presented in accordance with the applicable reporting framewo...
OpenAudit planning
Developing an overall strategy and detailed audit plan.
OpenAudit Risk
Audit risk is typically considered as a combination of inherent risk, control risk, and detection risk.
OpenAudit scope
Audit scope defines the boundaries and extent of audit work, including areas covered, procedures performed, and limitations.
OpenAudit trail
Audit trail is the documented path that allows transactions to be traced from source documents through accounting records to financial statements.
OpenAudit working papers
Documentation that records the work performed and evidence obtained by the auditor.
OpenAverage Age of Inventory
Average age of inventory estimates how long inventory sits before being sold. A common approximation is 365 divided by inventory turnover; higher days indicate slower-moving stock.
OpenAveraging
Leveraging means use borrowed capital for (an investment), expecting the profits made to be greater than the interest payable.
OpenB.O.Y
it is mean Beginning Of Year.
OpenBank Credit Advice
The credit may represent a customer receipt, loan proceeds, refund or another incoming amount. A bank credit generally increases the customer’s bank asset and is recorded as a debit to Bank in the cus...
OpenBank current account
A bank current account is a transactional account used for frequent deposits and withdrawals, typically via checks, transfers, and card payments.
OpenBank Debit Advice
The debit may relate to a transfer, bank fee, loan repayment or another transaction. The advice describes the bank’s action; the accountant must identify the underlying purpose. A bank debit generally...
OpenBank Errors
Bank errors are mistakes made by the bank in processing a company’s transactions (e.g., wrong amount, posting to wrong account). They are identified during bank reconciliation and corrected by the ban...
OpenBank Overdraft
A bank overdraft is a negative bank balance when withdrawals exceed available funds. It is usually classified as a current liability unless it is part of an offset arrangement.
OpenBank Reconciliation
A bank reconciliation compares the company’s cash account balance to the bank statement to identify timing differences and errors (outstanding checks, deposits in transit, bank charges). It ensures ca...
OpenBank Reconciliation
Bank reconciliation is the process of comparing the company's cash records with the bank statement to identify differences and ensure accuracy.
OpenBank reconciliation procedure
Bank reconciliation procedures include matching deposits and checks, identifying deposits in transit and outstanding checks, recording bank charges/interest, and investigating discrepancies to ensure ...
OpenBank Reconciliation Statement
Bank reconciliation statements reconcile differences between bank records and company cash records due to timing or errors.
OpenBank Reconciliation Statement
A Bank Reconciliation Statement matches the cash balance per company books with the bank statement balance by adjusting for timing differences (outstanding cheques, deposits in transit) and errors, st...
OpenBank Statement
A bank statement is the bank’s record of account activity for a period, showing deposits, withdrawals, cleared checks, fees, and transfers. It is used to reconcile the company’s cash records.
OpenBank Value Date
It may differ from the transaction date or posting date shown on the statement. These dates serve different purposes, and the value date alone does not determine when the underlying transaction should...
OpenBankruptcy
Bankruptcy is a legal process addressing inability to pay debts. Frameworks vary by country; in the U.S., common chapters include liquidation (Chapter 7) and reorganization (Chapter 11) for entities a...
OpenBeginning Inventory
Beginning inventory is the inventory balance at the start of an accounting period. It is used in cost of goods sold calculations: Beginning Inventory + Purchases − Ending Inventory.
OpenBehavior
Behavior in accounting contexts refers to how human actions, incentives, and judgments affect accounting choices, reporting quality, and decision-making.
OpenBehavioural Accounting
Behavioral accounting studies and predicts how people (managers, auditors, investors) behave in accounting situations—such as disclosure decisions, materiality judgments, and how reports influence dec...
OpenBelow the line
“Below the line” in accounting commonly refers to items recorded outside the main operating results or directly in equity/balance sheet accounts rather than through the income statement. Usage varies ...
OpenBenchmark
A benchmark is a standard or reference point used to compare performance (e.g., a market index, industry average, or target metric). It helps assess whether results are above or below expectations.
OpenBeneficial Owner
A beneficial owner is the person who ultimately enjoys the benefits of ownership (profits, control, economic benefits) even if the asset is registered in another name. The concept is important for com...
OpenBeneficial owner
A beneficial owner is the natural person who ultimately owns or controls an entity, even if the ownership is indirect or exercised through other means, and is a key concept in anti-money laundering an...
OpenBest practices
Best practices are the generally understood operating characteristics of companies that have succeeded in terms of high reimbursement rates, high outreach, and progress toward generating surplus.
OpenBETA
Beta measures a security’s sensitivity to market movements. A beta above 1 means more volatile than the market; below 1 means less volatile. Beta is used in risk assessment and portfolio analysis.
OpenBetterment
Betterment refers to expenditures that improve an asset’s capacity or extend its useful life beyond its original condition. Such costs are generally capitalized (added to the asset cost) when criteria...
OpenBIC Code
A BIC (SWIFT) code is an international bank identifier used to route cross-border payments and identify recipient banks accurately in international transfers.
OpenBid
A bid is a formal offer or quotation submitted for a project or contract, typically in response to a tender. It helps compare suppliers on price, quality, and delivery terms.
OpenBid price
Bid price is the price offered in a bid. In financial markets it can also mean the highest price a buyer is willing to pay for a security.
OpenBifurcated
Bifurcated means divided into two parts. In accounting it can describe splitting an amount or account into separate components for clearer reporting or different treatments.
OpenBIG 4
“Big 4” refers to the four largest global professional services firms widely known for audit and advisory services: Deloitte, EY, KPMG, and PwC. They audit many large listed companies.
OpenBig Bang
“Big Bang” refers to major reforms of the UK financial markets in 1986, including deregulation and changes to trading practices on the London Stock Exchange.
OpenBIG BATH
“Big bath” accounting describes deliberately recognizing large expenses or write-offs in a bad year to make results look worse now and potentially better in future periods. It is often discussed in ea...
OpenBig Board
“Big Board” is a nickname for the New York Stock Exchange (NYSE) and historically referred to its large price display board; it is also used as a synonym for the exchange itself.
OpenBig Five
“Big Five” historically referred to the five largest accounting firms before major industry changes (including the collapse of Arthur Andersen). The term is largely historical today.
OpenBig Four
Big Four The four largest public accounting firms in the U.S.: Deloitte, Ernst & Young, KPMG, PricewaterhouseCoopers. Typically, these four firms perform the audits of the largest publicly-traded corp...
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