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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. 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)






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






3. Tests that concentrate on the details of amounts contained in an account balance and related footnotes.






4. Independent professional services that improve the quality of information - or its context - for decision makers. Encompasses attest services and financial statement audits.






5. The total of the projected misstatement plus the allowance for sampling risk.






6. 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.






7. 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






8. Risks resulting from significant conditions - events - circumstances - and actions or inactions that could adversely affect management's ability to execute its strategies and to achieve its objectives - or through the setting of inappropriate objecti






9. 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






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






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






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






13. Expressed or implied representations by management regarding the recognitions - measurement - presentation - and disclosure of information in the financial statements and related disclosures.






14. 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.






15. 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.






16. 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






17. 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.






18. Ten broad statements guiding the conduct of financial statement auditing.






19. 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.






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






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






22. Violations of laws or government regulations.






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






24. A deficiency - or a combination of deficiencies - in internal control that is less severe than a material weakness - yet important enough to merit attention by those charged with governance.






25. 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.






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






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






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






29. 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.






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






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






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






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






34. 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






35. Audit sampling that relies on the auditor's judgment to determine sample size - select the sample - and/or evaluate the results for the purpose of reaching a conclusion about the population.






36. 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.






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






38. A management letter is a report to management containing the auditors' recommendations for correcting any deficiencies disclosed by the auditors' consideration of internal control. The management letter also provides recommendations on where the comp






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






40. 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






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






42. 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.






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






44. 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.






45. 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.






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






47. 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.






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






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






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