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






2. 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






3. The extrapolation of sample results to the population; represents the auditors 'best estimate' of the misstatement in the sampling population






4. All the information used by the auditor in arriving at the conclusions on which the audit opinion is based - and includes the information contained in the accounting records underlying the financial statements and other information such as minutes of






5. 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.






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






7. When a subsequent event disclosed in the financial statements occurs after the date of the report but before the issuance of the related financial statements - the auditor may use dual dating. The auditor may use the original date of the report excep






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






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






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






11. 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






12. Persons elected by the stockholders of a corporation to oversee management and to direct the affairs of the corporation.






13. The relevance of audit evidence refers to its relationship to the assertion or to the objective of the control being tested.






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






15. 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.






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






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






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






19. A financial statement assertion that has a reasonable possibility of containing a misstatement or misstatements that would cause financial statements to be materially misstated.






20. 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






21. A process that assess the quality of internal control performance over time.






22. 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






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






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






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






26. The amount of the planning materiality that is allocated to a financial statement account.






27. Statements issued by the AICPA Auditing Standards Boards - considered as interpretations of the 10 GAAS statements.






28. 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






29. 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.






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






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






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






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






34. 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.






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






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






37. 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






38. A subcommittee of the board of directors that is responsible for the financial reporting and disclosure process.






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






40. 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.






41. 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






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






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






44. 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






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






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






47. 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.






48. A letter that formalizes the contract between the auditor and the client and outlines the responsibilities of both parties.






49. 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






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