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Auditing Vocab

Subject : business-skills
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. The auditor's decision to rely on the entity's controls - test those controls - and reduce the direct tests of the financial statements accounts.






2. The risk that material misstatements that could occur will not be prevented - or detected and corrected - by internal controls.






3. Determination of the mathematical accuracy of documents or records.






4. The records of initial entries and supporting records - such as checks and records of electronic fund transfers; invoices; contracts; the general and subsidiary ledgers - journal entries - and other adjustments to the financial statements that are no






5. Expressed or implied representations by management regarding the recognitions - measurement - presentation - and disclosure of information in the financial statements and related disclosures.






6. An event occurring between the balance sheet date and the audit report release date - Type I - Type II






7. Attribute-sampling techniques used to estimaed the dollar amount of misstatement for a class of transactions or an account balance.






8. Basic unit containing the elements of the population to be sampled






9. An organization created to provide professional accounting-related services - including auditing. Usually formed as a proprietorship or as a form of partnership.






10. Violations of laws or government regulations.






11. The risk that the sample supports the conclusion that the control is operating effectively when it is not or that the recorded account balance is not materially misstated when it is materially misstated.






12. Sampling used to estimate the proportion of a population that possesses a specified characteristic.






13. A violation of laws or governmental regulations.






14. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.






15. Specific acts performed by the auditor in gathering evidence to determine if specific assertions are met.






16. An instance where a financial statement assertion is not in accordance with the criteria against which it is audited (e.g: GAAP). Misstatements may be classified as fraud (intentional) - other illegal acts such as noncompliance with laws and regulati






17. Audit sampling that relies on the auditor's judgment to determine sample size - select the sample - and/or evaluate the results for the purpose of reaching a conclusion about the population.






18. The risk that material misstatements that could occur will not be prevented - or detected and corrected - by internal controls.






19. The risk that the sample supports the conclusion that the control is not operating effectively when it actually is or that the recorded account balance is materially misstated when it is not materially misstated.






20. Tests to detect errors or fraud in individual transactions.






21. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.






22. Sampling that uses the laws of probability to select and evaluate the results of an audit sample - thereby permitting the auditor to quantify the sampling risk for the purpose of reaching a conclusion about the population.






23. A process designed by - or under the supervision of - the company's principal executive and principal financial officers - or persons performing similar functions - and effected by the company's board of directors - management - and other personnel -






24. A confirmation request on which the recipient fills in the amount or furnishes the information requested.






25. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting and correcting - material misstatements at the relevant assertion level.






26. A review of audit documentation by an additional person (normally - a partner or equivalent with the firm) who has not been involved with the audit; its purpose is to ensure that quality of the audit work and reporting is consistent with the quality






27. Audit sampling that relies on the auditor's judgment to dewtermine the sample size - select the sample - and/or evaluate the results for the purpose of reaching a conclusion about the population.






28. The auditor's decision not to rely on the entity's controls and to audit the related financial statement account by relying more on substantive procedures.






29. A process that assess the quality of internal control performance over time.






30. The total of the projected misstatement plus the allowance for sampling risk.






31. A transaction being traced by an auditor from origination through the entity's information system until it is reflected in the entity's financial reports; it encompasses the entire process of initiating - authorizing - recording - processing - and re






32. Physical examination of the tangible assets.






33. A systematic process of (1) objectively obtaining an evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and (2) communicating the resu






34. The risk that the auditor may unknowingly fail to appropriately modify the opinion on materially misstated financial statements.






35. Controls that relate to the overall information processing environment and have a pervasive effect on the entity's computer operations.






36. The application of an audit procedure to less than 100 percent of the items within an account or class of transactions for the purpose of evaluating some characteristic of the balance or class.






37. The application of an audit procedure to less than 100 percent of the items within an account or class of transactions for the purpose of evaluating some characteristic of the balance or class.






38. Controls that related to the overall information processing environment and have a pervasive effect on the entity's computer operations






39. Those policies and procedures that provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition - use - or disposition of the company's assets that could have a material effect on the financial statements






40. The process of obtaining and evaluating direct communication from a third party in response to a request for information about a particular item affecting financial statement assertions.






41. The possibility that the sample drawn is not representative of the population and that - as a result - the auditor reaches an incorrect conclusion about the reliability of the control - the account balance - or class of transactions based on the samp






42. Consulting services that may provide advice and assistance concerning an entity's organization - personnel - finances - operations - systems - or other activities






43. The amount of misstatement that the auditor believes exists in the population.






44. A weakness in the design or operation of a control such that management or employeesm in the normal course of performing their assigned functions - fail to prevent - or detect misstatements on a timely basis.






45. A deficiency - or combination of deficiencies - in internal control - such that there is a reasonable possibility that a material misstatememnt of the entity's financial statements will not be prevent - or detected and corrected on a timely basis.






46. The magnitude of an omission or misstatement of accounting information that - in light of surrounding circumstances - makes it probable that the judgment of a reasonable person relying on the information would have been changed or influenced.






47. Papers that document the evidence gathered by auditors to show the work they have done - the methods and procedures they have followed - and the conclusions they have developed in an audit of financial statements or other type of engagement.






48. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data






49. A letter that formalizes the contract between the auditor and the client and outlines the responsibilities of both parties.






50. A deficiency in internal control exists when the design or operation of a control does not allow management or employees - in the normal course of performing their assigned functions - to prevent - or detect and correct misstatements on a timely basi