Test your basic knowledge |

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






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






3. Physical examination of the tangible assets.






4. 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.






5. The diagnosticity of evidence; that is whether the type of evidence can be relied on to signal the true state of the assertion.






6. 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.






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






8. Unintentional misstatements or omissions of amounts or disclosures.






9. Tests to detect errors or fraud in individual transactions.






10. Specific acts performed by the auditor in gathering evidence to determine if specific assertations are being met.






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






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






13. 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)






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






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






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






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






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






19. 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






20. Tests to detect errors or fraud in individual transactions.






21. Computer programs that allow auditors to test computer files and databases.






22. 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.






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






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






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






26. 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






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






28. 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.






29. An organization created to provide professional accounting-related services - including auditing. Usually formed as a proprietorship or as a form of partnership.






30. The concept that the manager generally has more information about the true financial position and results of operations of the entity than the absentee owner does.






31. Standards against which the quality of the auditor's performance is measured.






32. 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.






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






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






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






36. An attitude that includes a questioning mind and a critical assessment of an audit evidence. The auditor should not assume that management is either honest or dishonest.






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






38. 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 -






39. 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






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






41. 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.






42. The individual member of the population being sampled.






43. Computer programs that allow auditors to test computer files and databases.






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. 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.






46. Sampling used to estimate the proportion of a population that possesses a specified characteristic.






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






48. 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.






49. The risk that the auditor will not detect a material misstatement that exists in the financial statements






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