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quality audit

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Definition of quality audit

Quality Audit Image 1

quality audit

a review of product design activities (although
not for individual products), manufacturing processes and controls, quality documentation and records, and management philosophy



Related Terms:

accepted quality level (AQL)

the maximum limit for the number of defects or errors in a process


Accounting and Auditing Enforcement Release (AAER)

Administrative proceedings or litigation releases that entail an accounting or auditing-related violation of the securities laws.


Audit Committee

A subcommittee of a company's board of directors assigned the responsibility
of ensuring that corporate financial reporting is fair and honest and that an audit is conducted
in a probing and diligent manner.


Auditor's report

A section of an annual report containing the auditor's opinion about the veracity of the
financial statements.


Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit Committees

A committee formed in response to SEC chairman Arthur Levitt's initiative to improve the financial
reporting environment in the United States. In a report dated February 1999, the committee
made recommendations for new rules for regulation of financial reporting in the United States that
either duplicated or carried forward the recommendations of the Treadway Commission.



Configuration audit

A review of all engineering documentation used as the basis
for a manufactured product to see if the documentation accurately represents
the finished product.


Cost of quality

The difference between the actual costs of production, selling and service and the costs that would be incurred if there were no failures during production or usage of products or services.


Quality Audit Image 2

Flight to quality

The tendency of investors to move towards safer, government bonds during periods of high
economic uncertainty.


Panel on Audit Effectiveness

A special committee of the Public Oversight Board that was created
to perform a comprehensive review and evaluation of the way independent audits of financial
statements of publicly traded companies are performed. The panel found generally that the
quality of audits is fundamentally sound. The panel did recommend the expansion of audit steps
designed to detect fraud.


Post-audit

A set of procedures for evaluating a capital budgeting decision after the fact.


postinvestment audit

the process of gathering information
on the actual results of a capital project and comparing
them to the expected results


process quality yield

the proportion of good units that resulted from the activities expended


quality

all the characteristics of a product or service that
make it able to meet the stated or implied needs of the
buyer; it relates to both performance and value; the pride
of workmanship; it is conformance to requirements


quality assurance

the process of determining that product
or service quality conforms to designated specifications
usually through an inspection process


quality control

the implementation of all practices and policies
designed to eliminate poor quality and variability in the
production or service process; it places the primary responsibility
for quality at the source of the product or service


Quality option

Also called the swap option, the seller's choice of deliverables in Treasury Bond and Treasury
note futures contract. Related: cheapest to deliver issue


Quality spread

Also called credit spread, the spread between Treasury securities and non-Treasury securities
that are identical in all respects except for quality rating. For instance, the difference between yields on
Treasuries and those on single A-rated industrial bonds.


total quality management (TQM)

a structural system for creating organization-wide participation in planning and implementing a continuous improvement process that exceeds
the expectations of the customer/client; the application
of quality principles to all company endeavors; it is also known as total quality control




 

 

 

 

 

 

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