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






2. 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






3. 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






4. Violations of laws or government regulations.






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






6. Audit procedures performed to test material misstatements in an account balance - transaction class - or disclosure component of the financial statements.






7. 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.






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






9. 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.






10. A confirmation request on which the recipient fills in the amount or furnishes the information requested.






11. An objective for ICFR generally relates to a relevant financial statement assertion and states a criterion for evaluating whether the company's control procedures in a specific area provide reasonable assurance that a misstatement or omission in that






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






13. 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.






14. 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






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






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






18. 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.






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






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






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






22. 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






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






24. 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.






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






26. 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






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






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






29. 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.






30. Issued when auditors do not express an opinion on the fairness of the entity's financial statements. Can be issued for pervasive going-concern uncertainties - pervasive scope limitations - and situations in which the auditors are not independent.






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






32. 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






33. 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.






34. A deficiency - or combination of deficiencies - in internal control - such that there is a reasonable possibility that a material misstatememnt of the entity's financial statements will not be prevent - or detected and corrected on a timely basis.






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






36. The records of initial entries and supporting records - such as checks and records of electronic fund transfers; invoices; contracts; the general and subsidiary ledgers - journal entries - and other adjustments to the financial statements that are no






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






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






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






40. Physical examination of the tangible assets.






41. 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.






42. 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






43. Expressed or implied representations by management about information that is reflected in the financial statements. The three sets of assertions related to ending account balances - transactions - and presentation and disclosure.






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






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






46. 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.






47. The auditor's decision not to rely on the entity's controls and to audit the related financial statement account by relying more on substantive procedures.






48. A transaction being traced by an auditor from origination through the entity's information system until it is reflected in the entity's financial reports; it encompasses the entire process of initiating - authorizing - recording - processing - and re






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






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