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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. 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






2. Business transactions between individuals and organizations that occur without paper documents - using computers and telecommunication networks.






3. Expressed or implied representations by management that are reflected in the financial statement components.






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






5. The use of normal distribution theory to estimate the dollar amount of misstatement for a class of transactions or an account balance.






6. 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






7. A deficiency - or a combination of deficiencies - in internal control that is less severe than a material weakness - yet important enough to merit attention by those charged with governance.






8. Specific acts performed by the auditor in gathering evidence to determine if specific assertations are being met.






9. 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






10. Seeking information of knowledgeable persons - both financial and nonfinancial - throughout the entity or outside the entity.






11. Ten broad statements guiding the conduct of financial statement auditing.






12. A subcommittee of the board of directors that is responsible for the financial reporting and disclosure process.






13. Standards against which the quality of the auditor's performance is measured.






14. The individual member of the population being sampled.






15. 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.






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






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






19. Standards regarding the conduct of financial statement auditing for public companies. Currently - consist primarily of standards and statements established by the AICPA's Auditing Standards Board - as these statements and standards were adopted by th






20. The uncertainty that results from sampling; the difference between the expected mean of the population and the tolerable deviation or misstatement.






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






22. The diagnosticity of evidence; that is whether the type of evidence can be relied on to signal the true state of the assertion.






23. The auditor's decision to rely on the entity's controls - test those controls - and reduce the direct tests of the financial statement accounts.






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






25. The relevance of audit evidence refers to its relationship to the assertion or to the objective of the control being tested.






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






27. Expressed or implied representations by management about information that is reflected in the financial statements. The three sets of assertions related to ending account balances - transactions - and presentation and disclosure.






28. Physical examination of the tangible assets.






29. The risk that the auditor may unknowingly fail to appropriately modify his or her opinion on financial statements that are materially misstated.






30. A violation of laws or governmental regulations.






31. The risk that the entity's financial statements will contain a material misstatements whether caused by error or fraud.






32. Controls that have a pervasive effect on the entity's system of internal control such as controls related to the control environment; controls over management override; the company's risk assessment process; centralized processing and controls - incl






33. A service when a practitioner is engaged to issue or does issue a report on a subject matter - or an assertion about subject matter - that is the responsibility of another party. Encompasses financial statement audits.






34. The auditor's independent execution of procedures or controls that were originally performed as part of other entity's internal control - either manually or through the use of CAATs.






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






36. The transmission of business transactions over telecommunication networks.






37. The auditor's decision to rely on the entity's controls - test those controls - and reduce the direct tests of the financial statements accounts.






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






39. A deficiency - or combination of deficiencies - that results in a reasonable possibility that a material misstatement of the company's annual or interim financial stsatements will not be prevented or detected on a timely basis






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






41. 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.






42. The process of covering a cash shortage by applying cash from one customer's accounts receivable against another customer's accounts receivable.






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






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






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






46. Computer programs that allow auditors to test computer files and databases.






47. Test to detect errors or fraud in individual transactions.






48. A confirmation request to which the recipient responds only if the amount or information stated is incorrect.






49. Accounting principles that are generally accepted for the preparation of financial statements in the United States. GAAP standards are currently issued primarily by the FASB - with oversight and influence by the SEC.






50. Financial statements prepared under regulatory - tax - cash basis - or other definitive criteria having substantial support.