accounting systemThe personnel, procedures, devices, and records used by an organization to develop accounting information and communicate that information to decision makers.

American Accounting AssociationA professional accounting organization consisting primarily of accounting educators that is dedicated to improving accounting education, research, and practice.

American Institute of CPAsA professional accounting organization of certified public accountants that engages in a variety of professional activities, including establishing auditing standards for private companies, conducting research, and establishing industry-specific financial reporting standards.

auditAn investigation of financial statements designed to determine their fairness in relation to generally accepted accounting principles.

balance sheetA position statement that shows where the company stands in financial terms at a specific date. (Also called the statement of financial position.)

bookkeepingThe clerical dimension of accounting that includes recording the routine transactions and day-to-day record keeping of an enterprise.

cash flow prospectsThe likelihood that an enterprise will be able to provide an investor with both a return on the investor’s investment and the return of that investment.

Certificate in Internal AuditingA professional designation issued by the Institute of Internal Auditors signifying expertise in internal auditing.

Certificate in Management AccountingA professional designation issued by the Institute of Management Accountants signifying expertise in management accounting.

certified public accountantAn accountant who is licensed by a state after meeting rigorous education, experience, and examination requirements.

Committee of Sponsoring Organizations of the Treadway CommissionA voluntary private-sector organization dedicated to improving the quality of financial reporting through business ethics, effective internal controls, and corporate governance.

control activitiesPolicies and procedures that management puts in place to address the risks identified during the risk assessment process.

control environmentThe foundation for all the other elements of internal control, setting the overall tone for the organization.

corporate governanceIncludes the corporate structures and processes for overseeing a company’s affairs, for example, the board of directors and the company’s internal control processes.

cost accountingDetermining the cost of certain business activities and interpreting cost information.

external usersIndividuals and other enterprises that have a financial interest in the reporting enterprise but that are not involved in the day-to-day operations of that enterprise (e.g., owners, creditors, labor unions, suppliers, customers).

financial accountingProviding information about the financial resources, obligations, and activities of an economic entity that is intended for use primarily by external decision makers—investors and creditors.

Financial Accounting Standards Board (FASB)A private-sector organization that is responsible for determining generally accepted accounting principles in the United States.

financial forecastA plan of financial operations for some future period.

financial statementA monetary declaration of what is believed to be true about an enterprise.

Government Accountability OfficeA federal government agency that audits many other agencies of the federal government and other organizations that do business with the federal government and reports its findings to Congress.

generally accepted accounting principlesPrinciples that provide the framework for determining what information is to be included in financial statements and how that information is to be presented.

general-purpose informationInformation that is intended to meet the needs of multiple users that have an interest in the financial activities of an enterprise rather than tailored to the specific information needs of one user.

income statementAn activity statement that shows details and results of the company’s profit-related activities for a period of time.

information and communicationThe organization’s process for capturing operational, financial, and compliancerelated information necessary to run the business, and communicating that information downstream (from management to employees), upstream (from employees to management), and across the organization.

Institute of Internal AuditorsA professional accounting organization that is dedicated to the promotion and development of the practice of internal auditing.

Institute of Management AccountantsA professional accounting organization that intends to influence the concepts and ethical practice of management accounting and financial management.

integrityThe qualities of being complete, unbroken, unimpaired, sound, honest, and sincere.

internal auditingThe study of internal control structure and evaluation of the efficiency and effectiveness of many different aspects of the enterprise’s operations.

internal controlA process designed to provide reasonable assurance that the organization produces reliable financial reports, complies with applicable laws and regulations, and conducts its operations in an efficient and effective manner.

Internal Revenue ServiceA government organization that handles millions of income tax returns filed by individuals and businesses and performs audit functions to verify the data contained in those returns.

internal usersIndividuals who use accounting information from within an organization (for example, board of directors, chief financial officer, plant managers, store managers).

International Accounting Standards Board (IASB)The group responsible for creating and promoting International Financial Reporting Standards (IFRSs).

management accountingProviding information that is intended primarily for use by internal management in decision making required to run the business.

monitoringThe process of evaluating the effectiveness of an organization’s system of internal control over time, including both ongoing management and supervisory activities and periodic separate evaluations.

Public Company Accounting Oversight Board (PCAOB)A quasi-governmental body charged with oversight of the public accounting profession. The PCAOB sets auditing standards for audits of publicly traded companies.

return of investmentThe repayment to an investor of the amount originally invested in another enterprise.

return on investmentThe payment of an amount (interest, dividends) for using another’s money.

risk assessmentA process of identifying, analyzing, and managing those risks that pose a threat to the achievement of the organization’s objectives.

Sarbanes-Oxley ActA landmark piece of securities law, designed to improve the effectiveness of corporate financial reporting through enhanced accountability of auditors, boards of directors, and management.

Securities and Exchange Commission (SEC)A governmental organization that has the legal power to establish accounting principles and financial reporting requirements for publicly held companies in the United States.

statement of cash flowsAn activity statement that shows the details of the company’s activities involving cash during a period of time.

statement of financial positionAlso called the balance sheet.

tax accountingPreparation of income tax returns and anticipating the tax effects of business transactions and structuring them in such a way as to minimize the income tax burden.