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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. The process of obtaining and evaluation a direct communication from a third party in response to a request for information about a particular item affecting financial statement assertions.
Other information
Observation
Working papers
Confirmation
2. 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.
Substantive tests of transactions
Business risks
Material weakness
Blank or zero-balance confirmations
3. Statements issued by the AICPA Auditing Standards Boards - considered as interpretations of the 10 GAAS statements.
Projected misstatement
Statements on Auditing Standards
Electronic (Internet) commerce
Material weakness
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
Audit evidence
Analytical procedures
Electronic data interchange
Sampling risk
5. A letter that formalizes the contract between the auditor and the client and outlines the responsibilities of both parties.
Assurance Services
Engagement letter
Representation letter
Analytical procedures
6. Financial statements prepared under regulatory - tax - cash basis - or other definitive criteria having substantial support.
Observation
Other comprehensive basis of accounting
Tests of controls
Representation letter
7. Violations of laws or government regulations.
Business processes
Tolerable deviation rate
Illegal acts
Inquiry
8. 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)-i.e. - a clean opinion.
Risk of inccorect rejection
Unqualified opinion
Analytical procedures
Substantive tests of transactions
9. 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.
Allowance for sampling risk
Nonsampling risk
Control objective
Computer-assisted audit techniques (CAATs)
10. 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.
General controls
Analytical procedures
Contingent liability
Audit committee
11. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Analytical procedures
Dual-purpose tests
General controls
Significant deficiency
12. The auditor's decision to rely on the entity's controls - test those controls - and reduce the direct tests of the financial statement accounts.
Accounting records
Substantive procedures
Analytical procedures
Reliance strategy
13. 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
Reperformance
Substantive strategy
Audit documentation (working papers)
Materiality
14. The risk that the auditor may unknowingly fail to appropriately modify his or her opinion on financial statements that are materially misstated.
Confidence bound
Audit Risk
Analytical procedures
Qualified opinion
15. The policies and procedures that help ensure that management's directives are carried out.
Control activities
Analytical procedures
Analytical procedures
Sampling risk
16. Unintentional misstatements or omissions of amounts or disclosures.
Substantive procedures
Reperformance
Errors
Substantive tests of transactions
17. Ten broad statements guiding the conduct of financial statement auditing.
Inherent risk
Assurance Services
Accounting records
Generally accepted auditing standards (GAAS)
18. 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.
Risk of incorrect rejection
Closest reasonable estimate
Computer-assisted audit techniques (CAATs)
Confirmation
19. 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
Materiality
Generally accepted auditing standards
Significant account or disclosure
Significant deficiency
20. The identification - analysis - and management of risks relevant to the preparation of financial statements that are fairly presented in conformity with GAAP.
Reliability of evidence
Assurance Services
Risk assessment
General controls
21. Tests to detect errors or fraud in individual transactions.
Corporate governance
Substantive tests of transactions
Business risks
ositive confirmation
22. 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
Accounting records
Remediation
Application controls
Standards of the PCAOB
23. 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
Monitoring of controlsa
Significant account or disclosure
Illegal acts
24. The auditor's decision to rely on the entity's controls - test those controls - and reduce the direct tests of the financial statements accounts.
Representation letter
Reliance strategy
Unqualified audit report
Adverse opinion
25. A process that assesses the quality of internal control performance over time.
General controls
Fraud
Confidence bound
Monitoring of controls
26. Independent professional services that improve the quality of information - or its context - for decision makers. Encompasses attest services and financial statement audits.
Reporting
Projected misstatement
Assurance Services
Confirmation
27. Controls that relate to the overall information processing environment and have a pervasive effect on the entity's computer operations.
Assertions
Professional skepticism
Substantive strategy
General controls
28. 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.
Risk of incorrect acceptance
Generally accepted accounting principles (GAAP)
Sampling risk
Detection risk
29. A service when a practitioner is engaged to issue or does issue a report on a subject matter - or an assertion about subject matter - that is the responsibility of another party. Encompasses financial statement audits.
Tests of controls
Electronic (Internet) commerce
Upper misstatement limit
Attest
30. 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
Tolerable misstatement
Blank or zero-balance confirmations
Analytical procedures
Material Weakness
31. Intentional misstatements that can be classified as fraudulent financial reporting and/or misappropriation of assets.
Audit Evidence
Accounting records
Contingent liability
Fraud
32. The risk that the sample supports the conclusion that the recorded account balance is materially misstated when it is not materially misstated.
Relevant Assertions
Closest reasonable estimate
Risk of inccorect rejection
Substantive strategy
33. An organization created to provide professional accounting-related services - including auditing. Usually formed as a proprietorship or as a form of partnership.
Public accounting firm
Expected population deviation rate
Confirmation
Risk assessment
34. A confirmation request to which the recipient responds only if the amount or information stated is incorrect.
Engagement quality review
Financial Statement Assertions
Negative confirmation
Audit risk
35. A subcommittee of the board of directors that is responsible for the financial reporting and disclosure process.
Unqualified opinion
Audit Risk
General controls
Audit committee
36. A process designed by - or under the supervision of - the company's principal executive and principal financial officers - or persons performing similar functions - and effected by the company's board of directors - management - and other personnel -
Expected population deviation rate
Walkthrough
Misstatement
Internal control over financial reporting
37. Business transactions between individuals and organizations that occur without proper documents - using computers - and telecommunication networks.
Independence
Audit documentation (working papers)
Electronic (Internet) commerce
Tests of details of account balances and disclosures
38. Controls that relate to the overall information processing environment and have a pervasive effect on the entity's computer operations.
Closest reasonable estimate
Ethics
General controls
Significant deficiency
39. Tests to detect errors or fraud in individual transactions.
Substantive tests of transactions
Assurance Services
Sampling risk
Control environment
40. The diagnosticity of evidence; that is whether the type of evidence can be relied on to signal the true state of the assertion.
Expected population deviation rate
Sampling risk
Reliability of evidence
Representation letter
41. A system or code of conduct based on moral duties and obligations that indicates how an individual should behave.
Application controls
Ethics
Electronic (Internet) commerce
Materiality
42. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
Application controls
Computer-assisted audit techniques (CAATs)
Analytical procedures
ateriality
43. 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
Risk of incorrect acceptance
Closest reasonable estimate
Audit committee
Significant deficiency
44. 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
Attribute sampling
Other information
Computer-assisted audit techniques (CAATs)
Disclaimer of opinion
45. Tests that concentrate on the details of amounts contained in an account balance and related footnotes.
Entity-level controls
Tests of details of account balances and disclosures
Unqualified audit report
Negative confirmation
46. A confirmation request to which the recipient responds whether or not he or she agrees with the amount or information stated.
Audit sampling
ositive confirmation
Confirmation
Tests of details of account balances and disclosures
47. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting and correcting - material misstatements at the relevant assertion level.
General controls
Audit procedures
Tests of controls
Control environment
48. The uncertainty that results from sampling; the difference between the expected mean of the population and the tolerable deviation or misstatement.
Business risks
Reliance strategy
Allowance for sampling risk
Management advisory services
49. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
Application controls
Information asymmetry
Corporate governance
Sampling risk
50. The auditor's decision not to tely on the entity's controls and to audit the related financial statement accounts by relying more on substantive procedures.
Monitoring of controlsa
Application controls
Monitoring of controls
Substantive strategy
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