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Test your basic knowledge |
Auditing Vocab
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Subject
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business-skills
Instructions:
Answer 50 questions in 15 minutes.
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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. Issued when auditors do not express an opinion on the fairness of the entity's financial statements. Can be issued for pervasive going-concern uncertainties - pervasive scope limitations - and situations in which the auditors are not independent.
Control deficiency
Tests of controls
Disclaimer of opinion
Analytical procedures
2. Controls that relate to the overall information processing environment and have a pervasive effect on the entity's computer operations.
Material weakness
Adverse opinion
Audit evidence
General controls
3. Tests that concentrate on the details of amounts contained in an account balance and related footnotes.
Tests of details of account balances and disclosures
Audit documentation (working papers)
Inherent risk
Fraud
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.
Nonsampling risk
Risk of incorrect acceptance
Electronic data interchange
Errors
5. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data
Monitoring of controls
Confirmation
Audit procedures
Analytical procedures
6. 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.
Financial Statement Assertions
Significant account or disclosure
Risk of incorrect rejection
Allowance for sampling risk
7. The auditor's principal record of the work performed and the basis for the conclusions in the auditor's report. It also facilitates the planning - performance - and supervision of the engagement and provides the basis for the review of the quality of
Walkthrough
Closest reasonable estimate
Audit documentation (working papers)
Unqualified opinion
8. 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.
Control deficiency
Business risks
Inquiry
Attest
9. 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.
Audit committee
Recalculation
Engagement quality review
Reasonable assurance
10. 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
Observation
Contingent liability
Accounting records
Board of directors
11. Expressed or implied representations by management regarding the recognitions - measurement - presentation - and disclosure of information in the financial statements and related disclosures.
Sampling risk
Assertions
Material weakness
Audit evidence
12. The amount of the planning materiality that is allocated to a financial statement account.
Tolerable misstatement
Electronic (Internet) commerce
Accounting records
Standards of the PCAOB
13. Examination of internal or external records or documents that are in paper form - electronic form - or other media.
Application controls
Tests of controls
Illegal act
Inspections of records and documents
14. Attribute sampling techniques used to estimate the dollar amount of misstatement for a class of transactions or an account balance.
Monetary-unit sampling
Misstatement
Accounting records
Materiality
15. Specific acts performed by the auditor in gathering evidence to determine if specific assertations are being met.
Audit committee
Audit procedures
Control deficiency
Assertions
16. A letter that corroborates oral representations made to the auditor by management or by other auditors and documents the continued appropriateness of such representations.
Representation letter
Monetary unit sampling
Confirmation
Inquiry
17. Financial statements prepared under regulatory - tax - cash basis - or other definitive criteria having substantial support.
Other comprehensive basis of accounting
Reasonable assurance
Illegal acts
Upper misstatement limit
18. 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
Analytical procedures
Generally accepted auditing standards
Errors
Other information
19. All the information used by the auditor in arriving at the conclusions on which the audit opinion is based; includes the information contained in the accounting records underlying the financial statements and other information
Control deficiency
Risk of incorrect rejection
Attest
Audit Evidence
20. 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
Positive confirmation
Walkthrough
Significant deficiency
Business processes
21. Sampling used to estimate the proportion of a population that possesses a specified characteristic.
Materiality
Risk assessment
Attribute sampling
Expected population deviation rate
22. 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.
Illegal act
Information asymmetry
Electronic (Internet) commerce
Audit risk
23. The policies and procedures that help ensure that management's directives are carried out.
Control activities
Substantive procedures
Tests of controls
Information asymmetry
24. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting material misstatements at the relevant assertion level.
Negative confirmation
Nonstatistical sampling
Analytical procedures
Tests of controls
25. A confirmation request to which the recipient responds only if the amount or information stated is incorrect.
Desired confidence level
Risk of incorrect rejection
Tolerable deviation rate
Negative confirmation
26. 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
Sampling risk
Analytical procedures
Adverse opinion
Walkthrough
27. A confirmation request to which the recipient responds whether or not he or she agrees with the amount or information stated.
Working papers
ositive confirmation
Attest
Monitoring of controlsa
28. 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)
Confirmation
Reporting
Tests of details of account balances and disclosures
Audit procedures
29. 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
Remediation
Risk of inccorect rejection
Safeguarding of Assets
Reasonable assurance
30. 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
Nonstatistical sampling
Walkthrough
Legal letter
Engagement quality review
31. 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
Reliance strategy
Closest reasonable estimate
Qualified opinion
Dual-purpose tests
32. A risk of material misstatement that is important enough to require special audit consideration.
Significant risk
Tests of controls
Computer-assisted audit techniques (CAATs)
Negative confirmation
33. 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.
Substantive strategy
Fraud
Other comprehensive basis of accounting
Significant deficiency
34. The method by which an entity's boardof 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 efficien
Internal Control
Generally accepted auditing standards
Monitoring of controls
Remediation
35. A process that assess the quality of internal control performance over time.
Analytical procedures
Subsequent event
Material Weakness
Monitoring of controlsa
36. Audit procedures performed to test material misstatements in an account balance - transaction class - or disclosure component of the financial statements.
Substantive procedures
Integrated audit
Audit strategy
Sampling risk
37. A measure of sampling risk added and subtracted to the projected misstatement to form a confidence interval.
Reliance strategy
Audit procedures
Confidence bound
Financial Statement Assertions
38. Specific acts performed by the auditor in gathering evidence to determine if specific assertions are met.
Internal control
Audit procedures
Confirmation
Confirmation
39. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Standards of the PCAOB
Control environment
Risk of incorrect rejection
Analytical procedures
40. Computer programs that allow auditors to test computer files and databases.
Statistical sampling
Computer-assisted audit techniques (CAATs)
Material weakness
Reliability of evidence
41. An attitude that includes a questioning mind and a critical assessment of an audit evidence. The auditor should not assume that management is either honest or dishonest.
Control activities
Positive confirmation
Reliance strategy
Professional skepticism
42. Unintentional misstatements or omissions of amounts or disclosures.
Closest reasonable estimate
Lapping
Errors
Significant deficiency
43. Physical examination of the tangible assets.
Inspections of tangible assets
Risk of inccorect rejection
Material weakness
Significant account or disclosure
44. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
Representation letter
Application controls
Materiality
Inquiry
45. A deficiency - or combination of deficiencies - in internal control - such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented - or detected and corrected - on a timely basis.
Material weakness
Nonsampling risk
Tests of details of account balances and disclosures
Audit strategy
46. Attribute-sampling techniques used to estimaed the dollar amount of misstatement for a class of transactions or an account balance.
Reperformance
Monetary unit sampling
Audit evidence
Substantive strategy
47. Expressed or implied representations by management regarding recognition - measurement - presentation - and disclosure of information in the financial statements.
Generally accepted auditing standards (GAAS)
Other comprehensive basis of accounting
Assertions
Control activities
48. The amount of the planning materiality that is allocated to a financial statement account.
Disclaimer of opinion
Tolerable misstatement
Internal control
Walkthrough
49. 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
Tests of details of account balances and disclosures
Scope of the audit
Inspections of tangible assets
Audit committee
50. 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
Classical variables sampling
Sampling unit
Application controls
Sampling risk
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