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






2. The auditor's plan for the expected conduct - organization - and staffing of the audit.






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






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






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






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






7. 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






8. Physical examination of the tangible assets.






9. 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






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






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






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






13. Consulting services that may provide advice and assistance concerning an entity's organization - personnel - finances - operations - systems - or other activities






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






15. Expressed or implied representations by management regarding recognition - measurement - presentation - and disclosure of information in the financial statements.






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






17. 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






18. The risk that the entity's financial statements will contain a material misstatements whether caused by error or fraud.






19. The susceptibility of an assertion to material misstatement - assuming no related controls






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






21. 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.






22. 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)






23. 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.






24. Intentional misstatements that can be classified as fraudulent financial reporting and/or misappropriation of assets.






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






26. 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






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






28. A state of objectivity in fact and in appearance - including the absence of any significant conflicts of interest.






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






30. 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






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






32. 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.






33. 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.






34. 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.






35. 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






36. 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.






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






38. 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.






39. 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






40. Refers to the nature - timing - and extent of audit procedures - when nature refers to the type of evidence; timing refers to when the evidence will be gathered; and extent refers to how much of the type of evidence will be evaluated.






41. 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.






42. 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






43. 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.






44. 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.






45. Examination of internal or external records or documents that are in paper form - electronic form - or other media.






46. 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.






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






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






49. The auditor's opinion that the financial statements do not present fairly in accordance with generally accepted accounting principles (or other comprehensive basis of accounting) due to a pervasively material misstatement.






50. 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