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Test your basic knowledge |
Auditing Vocab
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Study First
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. Attribute-sampling techniques used to estimaed the dollar amount of misstatement for a class of transactions or an account balance.
Reliability of evidence
Monetary unit sampling
Walkthrough
Risk assessment
2. Controls that relate to the overall information processing environment and have a pervasive effect on the entity's computer operations.
Engagement quality review
Dual-purpose tests
Significant deficiency
General controls
3. Substantive tests that concentrate on the details of items contained in the account balance and disclosures.
Reliance strategy
Tests of controls
Tests of details of account balances and disclosures
General controls
4. A state of objectivity in fact and in appearance - including the absence of any significant conflicts of interest.
Monitoring of controlsa
Confirmation
Independence
Reasonable assurance
5. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Analytical procedures
Contingent liability
Audit procedures
Reasonable assurance
6. 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
Audit sampling
Business risks
Reasonable assurance
Auditing
7. 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.
ositive confirmation
Reliance strategy
Nonsampling risk
Professional skepticism
8. Computer programs that allow auditors to test computer files and databases.
Detection risk
Inherent risk
Computer-assisted audit techniques (CAATs)
Information asymmetry
9. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Analytical procedures
Audit procedures
Nonstatistical sampling
Statistical sampling
10. The use of normal distribution theory to estimate the dollar amount of misstatement for a class of transactions or an account balance.
Classical variables sampling
Application controls
Audit Risk
Statistical sampling
11. The auditor's decision to rely on the entity's controls - test those controls - and reduce the direct tests of the financial statement accounts.
Control risk
Reliance strategy
Adverse opinion
Electronic (Internet) commerce
12. 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
Legal letter
Tolerable misstatement
Significant account or disclosure
Risk of incorrect acceptance
13. Persons elected by the stockholders of a corporation to oversee management and to direct the affairs of the corporation.
Board of directors
Control activities
Confirmation
Illegal acts
14. 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
Internal control over financial reporting
Monitoring of controls
Tolerable misstatement
15. 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.
Relevance of evidence
Detection risk
Materiality
General controls
16. 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.
Audit sampling
Application controls
Risk of incorrect acceptance
General controls
17. Processes implemented by management to achieve entity objectives. Business processes are typically organized into the following categories: revenue - purchasing. human resource management - inventory management - and financing processes
Audit committee
Application controls
Business processes
Inspections of records and documents
18. A confirmation request on which the recipient fills in the amount or furnishes the information requested.
Professional skepticism
Blank or zero-balance confirmations
Standards of the PCAOB
Application controls
19. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Confidence bound
Internal control
Inherent risk
Analytical procedures
20. 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.
Reasonable assurance
Independence
Control environment
Control risk
21. A letter that corroborates oral representations made to the auditor by management or by other auditors and documents the continued appropriateness of such representations.
Risk of incorrect acceptance
Illegal acts
Scope of the audit
Representation letter
22. Examination of internal or external records or documents that are in paper form - electronic form - or other media.
Reasonable assurance
Tolerable misstatement
Relevant Assertions
Inspections of records and documents
23. 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.
Audit committee
Engagement risk
Remediation
Sampling unit
24. The total of the projected misstatement plus the allowance for sampling risk.
Assertions
Computer-assisted audit techniques (CAATs)
Upper misstatement limit
Engagement quality review
25. 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
General controls
Electronic (Internet) commerce
Audit strategy
Other information
26. The auditor's opinion that the financial statements present fairly - in all material respects - in accordance with generally accepted accounting principles (or other comprehensive basis of accounting) - except for a material misstatement that does no
Statistical sampling
Qualified opinion
Confirmation
Engagement quality review
27. Standards against which the quality of the auditor's performance is measured.
Generally accepted auditing standards
Inherent risk
Material weakness
Audit sampling
28. The extrapolation of sample results to the population; represents the auditors 'best estimate' of the misstatement in the sampling population
Management advisory services
Electronic (Internet) commerce
Projected misstatement
Allowance for sampling risk
29. Intentional misstatements that can be classified as fraudulent financial reporting and/or misappropriation of assets.
Projected misstatement
Desired confidence level
Other comprehensive basis of accounting
Fraud
30. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting material misstatements at the relevant assertion level.
Independence
Tests of controls
Substantive strategy
Material Weakness
31. 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
Entity-level controls
Material Weakness
Control deficiency
Monetary unit sampling
32. 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
Tests of details of account balances and disclosures
Internal control over financial reporting
Audit committee
Statistical sampling
33. Tests to detect errors or fraud in individual transactions.
General controls
Control deficiency
Inspections of tangible assets
Substantive tests of transactions
34. The use of normal distribution theory to estimate the dollar amount of misstatement for a class of transactions or an account balance.
Control environment
Risk of incorrect acceptance
Representation letter
Classical variables sampling
35. A financial statement assertion that has a reasonable possibility of containing a misstatement or misstatements that would cause financial statements to be materially misstated.
Relevant Assertions
Assurance Services
Tolerable misstatement
Scope limitation
36. 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
Tolerable deviation rate
Management letter
Misstatement
Reperformance
37. A letter that formalizes the contract between the auditor and the client and outlines the responsibilities of both parties.
Engagement letter
Monitoring of controlsa
Application controls
Scope limitation
38. Computer programs that allow auditors to test computer files and databases.
Ethics
Computer-assisted audit techniques (CAATs)
Audit sampling
Substantive strategy
39. 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.
Generally accepted accounting principles (GAAP)
Statistical sampling
Analytical procedures
Analytical procedures
40. The concept that an audit done in accordance with auditing standards may fail to detect a material misstatement in a client's financial statements. In an auditing context this term has been defined to mean a high - but not absolute level of assurance
Reasonable assurance
Assertions
Accounting records
Control activities
41. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
Monitoring of controls
Public accounting firm
Application controls
Audit Risk
42. 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
Assertions
Control deficiency
Internal Control
Control risk
43. 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.
Substantive tests of transactions
Sampling unit
Scope limitation
Tests of controls
44. The oversight mechanisms in place to help ensure the proper stewardship over an entity's assets. Management and the board of directors play primary roles - and the independent auditor plays a key facilitating role.
Tests of controls
Corporate governance
Attest
Control risk
45. Audit sampling that relies on the auditor's judgment to dewtermine the sample size - select the sample - and/or evaluate the results for the purpose of reaching a conclusion about the population.
Nonstatistical sampling
Recalculation
Engagement quality review
Ethics
46. Violations of laws or government regulations.
Audit strategy
Standards of the PCAOB
Control activities
Illegal acts
47. The uncertainty that results from sampling; the difference between the expected mean of the population and the tolerable deviation or misstatement.
Recalculation
Allowance for sampling risk
Electronic data interchange
Ethics
48. 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.
Risk of incorrect rejection
Other comprehensive basis of accounting
Reasonable assurance
Statements on Auditing Standards
49. A process that assess the quality of internal control performance over time.
Disclaimer of opinion
Unqualified opinion
Business processes
Monitoring of controlsa
50. 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
Expected misstatement
Closest reasonable estimate
Tests of details of account balances and disclosures
Reliance strategy