*asset or *transaction.
2.A *contractual assurance or promise that specified conditions will be ful- filled. For example, the manufacturer of a product can offer a guarantee that the product will be replaced within a specified time period should it be faulty.
See also *warranty.
Guidance on Control *Corporate governance and *internal control guide- lines issued in 1995 by the *Criteria for Control (CoCo) Board of the *Canadian Institute of Chartered Accountants. The report was the first of CoCo’s *Control
& Governance Series.
Further reading: CoCo (1995)
Guidelines for Internal Control Standards Guidance for *public sector auditing issued by the *International Organization of Supreme Audit Institutions. The guidelines were first published in 1992, and cover the role of
*internal controls in government operations.
Web link: www.intosai.org/3_INTCOe.html
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hacker An individual who attempts to gain unauthorized access to computer networks or files. Hackers may be motivated by a desire to corrupt files or to commit another criminal act, or even by the enjoyment of a sense of danger in testing the security of a computerized system.
Hampel Report A British *corporate governance report of 1998. The full title of the report was Final Report: the Committee of Corporate Governance, and it was named for Sir Ronald Hampel, the chairperson of the committee that pre- pared it. The Hampel Reportis popularly known as the Combined Code, as it combined and revised guidance given in two earlier British corporate gover- nance initiatives: the *Cadbury Reportof 1992 and the *Greenbury Reportof 1995. The Hampel Reportstressed that corporate prosperity may be hindered by excessive bureaucratic corporate governance procedures, and it did not impress all commentators. *Andrew Chambers, for example, commented that
“getting to the heart of the . . . Hampel report is like groping one’s way into a hay stack only to find it largely hollow at its core” (Chambers, 1998, 1). The Combined Code was revised in 2003 to incorporate aspects of the *Higgs Reportand the *Smith Report.
Further reading: Hampel Report(1998)
hard asset An alternative term for *tangible asset.
hard copy A document printed from a computer system that records data or information.
hard currency A *currency that is widely accepted throughout the world and freely convertible in currency *markets. Contrast *soft currency.
harmonization The reduction or elimination of differences between things. In an auditing context, the term is frequently used to refer to the elimination of inconsistencies between different national systems of *Generally Accepted Auditing Standards and *Generally Accepted Accounting Principles.
hash total An addition of numbers for *internal control purposes in computer applications. Hash totals are typically used to identify potentially missing items in a data *population.
134• Head 2 Head
Head 2 Head A British newsletter aimed at *Chief Audit Executives. Published quarterly by the *Institute of Internal Auditors UK and Ireland, the newsletter is available in both print and online formats. It focuses mainly on developments in British internal auditing and *corporate governance.
Web link: www.iia.org.uk/knowledgecentre/heads/head2headnewsletter.cfm Head of Audit An alternative term for *Chief Auditing Executive.
hedge An arrangement or transaction intended to protect against fluctuations in the *price of an asset. Hedges are typically used as *risk management measures against price movements of *currencies, *securities, and *commodities.
Higgs Report A British *corporate governance report of 2003. The report’s formal title was Review of the Role and Effectiveness of*Non-executive Directorsand it was named for Derek Higgs, the chairperson of the committee that prepared it.
The Higgs Reportappeared at the same time as the *Smith Reporton *audit com- mittees. The Higgs Reportadded to guidance provided in the 1998 Hampel Report.
Further reading: Higgs Report(2003)
hire purchase (HP) A British term for *installment credit.
historical cost The unadjusted, original *cost of purchasing an *asset or an item of *inventory.
holding company A corporation that controls one or more *subsidiary organ- izations. Control can be effected through either a majority of *common stock voting rights or through dominance influence on a subsidiary’s management or operating policies. Holding companies can be distinguished from *parent organizations on two grounds: (i) the term holding company is frequently used to designate the ultimate parent entity in an organization, rather than an intermediary company that both controls other entities and is itself controlled by another organziation; and (ii) the term holding company is often used for a parent organization that exists principally to hold shares (and also perhaps to employ senior management and to perform head office services), rather than to carry on regular trading or other operations. However, the terms holding company and parent organization are often used interchangeably.
holding cost The *cost of storing items of *inventory. Holding costs typically include (i) *warehouse expenses, (ii) *insurance costs, (iii) *shrinkage, and (iv) obsolescence.
holding gain An *appreciation in the *value of an asset over a period of time.
The *gain may be *realized or *unrealized.
hyperinflation • 135
holding loss A *depreciation in the *value of an asset over a period of time. The
*loss may be *realized or *unrealized.
holy cow See *sacred cow.
horizontal analysis The analysis of *financial statements over time. The technique typically looks at percentage changes in the amounts of specific items between *financial reporting periods. The reasonableness of changes over time is a common aspect of auditors’ *analytical review procedures. Also known as trend analysis, horizontal analysis can be used to forecast future activity through the analysis of past trends. Compare *vertical analysis.
hostile takeover An *acquisition (definition 2) that is unwelcomed by an acquired organization.
housekeeping controls *Internal controls that relate to relatively minor, day-to-day activities in an organization. Although the areas addressed by housekeeping controls may not be of major significance (e.g., the formal
*authorization of individual *petty cash vouchers), the quality of such controls is often considered to be indicative of the quality of an organization’s wider internal control environment.
hurdle rate A *rate of return used as a threshold for accepting or rejecting pro- posed *investments. It represents a required rate of return. See *cost of capital.
hyperinflation An excessively high rate of *inflation. A common yardstick for defining hyperinflation is a rate of 100 percent or more. Hyperinflationary con- ditions can lead to a collapse of a country’s monetary system, with recourse to systems of *barter or the use of foreign *currencies to undertake transactions.
Contrast *deflation and *disinflation.
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IASC Foundation® (IASCF®) The U.S. registered parent organization of the London-based *International Accounting Standards Board (IASB). Formed in 2001, the IASC foundation is an independent organization whose trustees over- see the IASB by appointing its members and raising funds for its activities. The acronym IASC reflects the foundation’s origins in the IASB’s predecessor, the
*International Accounting Standards Committee.
Web site: www.iasb.org.uk