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






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






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






4. 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






5. 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.






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






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






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






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






11. Test of transactions that both evaluate the effectiveness of controls and detect monetary errors.






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






13. 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.






14. 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






15. 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.






16. 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.






17. 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.






18. 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






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






20. The risk that the auditor may unknowingly fail to appropriately modify his or her opinion on financial statements that are materially misstated.






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






22. 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






23. The individual member of the population being sampled.






24. 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.






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






26. 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.






27. 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






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






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






30. All the information used by the auditor in arriving at the conclusions on which the audit opinion is based; includes the information contained in the accounting records underlying the financial statements and other information






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






32. Test to detect errors or fraud in individual transactions.






33. 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






34. 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






35. 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.






36. 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






37. 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.






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






39. The end product of the auditor's work indicating the auditing standards followed - and expressing an opinion as to whether an entity's financial statements are fairly presented in accordance with agreed-upon criteria (eg. GAAP)






40. 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






41. 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.






42. 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.






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






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






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






46. 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






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






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






49. 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






50. Process of watching a process or procedure being performed by others.