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






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






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






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






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






6. An audit of both financial statements and internal control over financial reporting - provided by the external auditor. Required for public companies.






7. The process of correcting a material weakness as part of management's assessment of the effectiveness of ICFR






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






9. 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






10. 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






11. A letter that corroborates oral representations made to the auditor by management or by other auditors and documents the continued appropriateness of such representations.






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






13. 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






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






15. 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






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






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






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






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






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






21. 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.






22. 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.






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






24. A risk of material misstatement that is important enough to require special audit consideration.






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






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






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






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






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






30. The transmission of business transactions over telecommunication networks.






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






32. 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.






33. 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






34. 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.






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






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






37. 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.






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






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






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






41. The tone of an organization - which reflects the overall attitude - awareness - and actions of the board of directors - management - and owners influencing the control consciousness of its people.






42. 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






43. An account or disclosure is significant if there is a reasonable possibility that the account or disclosure could contain a misstatement that - individually or when aggregated with others - has a material effect on the financial statements - consider






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






45. 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.






46. 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






47. 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






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






49. 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






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