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






2. The risk that the auditor will not detect a material misstatement that exists in the financial statements






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






4. The possibility that the auditor may use inappropriate audit procedures - fail to detect a misstatement when applying an audit procedure - or misinterpret an audit result.






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






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






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






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






9. 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.






10. All the information used by the auditor in arriving at the conclusions on which the audit opinion is based - and includes the information contained in the accounting records underlying the financial statements and other information such as minutes of






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






12. The extrapolation of sample results to the population; represents the auditors 'best estimate' of the misstatement in the sampling population






13. The method by which an entity's board of directors - management - and other personnel provide reasonable assurance about the achievement of objectives in the following categories: (1) reliability of financial reporting - (2) effectiveness and efficie






14. The amount of the planning materiality that is allocated to a financial statement account.






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






16. The end product of the auditor's work indicating the auditing standards followed - and expressing an opinion as to whether an entity's financial statements are fairly presented in accordance with agreed-upon criteria (eg. GAAP)






17. 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






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






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






20. The probability that the true but unknown measure of the characteristic of interest is within specified limits.






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






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






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






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






25. The maximum deviation rate from a prescribed control that the auditor is willing to accept without altering the planned assessed level of control risk.






26. The risk that the auditor is exposed to financial loss or damage to his or her professional reputation from litigation - adverse publicity - or other events arising in connection wit financial statements audited and reported on.






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






28. A lack of evidence that may preclude the auditor from issuing a clean opinion - usually resulting from an inability to conduct an audit procedure considered necessary.






29. Audit procedures performed to test material misstatements in an account balance - transaction class - or disclosure component of the financial statements.






30. 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






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






32. A system or code of conduct based on moral duties and obligations that indicates how an individual should behave.






33. An objective for ICFR generally relates to a relevant financial statement assertion and states a criterion for evaluating whether the company's control procedures in a specific area provide reasonable assurance that a misstatement or omission in that






34. Independent professional services that improve the quality of information - or its context - for decision makers. Encompasses attest services and financial statement audits.






35. 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.






36. The transmission of business transactions over telecommunication networks.






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






38. 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.






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






40. The deviation rate that the auditor expects to exist in the population.






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






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






43. 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.






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






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






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






47. 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.






48. A process that assesses the quality of internal control performance over time.






49. 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.






50. 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