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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 identification - analysis - and management of risks relevant to the preparation of financial statements that are fairly presented in conformity with GAAP.






2. A confirmation request to which the recipient responds whether or not he or she agrees with the amount or information stated.






3. 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.






4. 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






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






6. A 'clean' audit report - indicating the auditor's opinion that a client's financial statements are fairly presented in accordance with agreed-upon criteria (eg. GAAP)






7. A measure of sampling risk added and subtracted to the projected misstatement to form a confidence interval.






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






9. Audit evidence that includes minutes of meetings; confirmations from third parties; industry analysts' reports; comparable data about competitors (benchmarking); controls manuals; information obtained by the auditor from such audit procedures as inqu






10. Specific acts performed as the auditor gathers evidence to determine if specific audit objectives are being met.






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






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






13. A control deficiency - or combination of control deficiencies - that adversely effects the entity's ability to initate - authorize - record - process - or report external financial data reliably in accordance with GAAP such that there is more than a






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






15. The policies and procedures that help ensure that management's directives are carried out.






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






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






18. 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.






19. A committee consisting of members of the board of directors - charged with overseeing the entity's system of internal control over financial reporting - internal and external auditors - and financial reporting process. Members typically must be indep






20. The concept that the manager generally has more information about the true financial position and results of operations of the entity than the absentee owner does.






21. A term that implies some risk that a material misstatement could be present in the financial statements without the auditor detecting it - even when the auditor has exercised due care.






22. 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.






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






24. 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.






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






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






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






28. Existing condition or set of circumstances involving uncertainty about a possible loss that will ultimately be resolved when some future event occurs or fails to occur.






29. 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.






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






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






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






33. A violation of laws or governmental regulations.






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






35. 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.






36. 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






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






38. The auditor's decision not to tely on the entity's controls and to audit the related financial statement accounts by relying more on substantive procedures.






39. 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.






40. 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.






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






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






43. A range of acceptable amounts or a precisely determined point estimate for an estimate (eg. uncollectible receivables) - if that is a better estimate than any other amount






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






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






46. 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.






47. Tests that concentrate on the details of amounts contained in an account balance and related footnotes.






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






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