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






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






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






4. 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.






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






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






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






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






9. 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.






10. 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






11. A financial statement assertion that has a reasonable possibility of containing a misstatement or misstatements that would cause financial statements to be materially misstated.






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






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






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






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






16. Consulting services that may provide advice and assistance concerning an entity's organization - personnel - finances - operations - systems - or other activities






17. Persons elected by the stockholders of a corporation to oversee management and to direct the affairs of the corporation.






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






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






20. 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






21. 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.






22. The amount of misstatement that the auditor believes exists in the population.






23. 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






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






25. 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.






26. 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






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






28. 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.






29. 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






30. 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.






31. 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.






32. 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)






33. 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.






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






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






36. 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.






37. 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






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






39. The oversight mechanisms in place to help ensure the proper stewardship over an entity's assets. Management and the board of directors play primary roles - and the independent auditor plays a key facilitating role.






40. 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.






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






42. 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.






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






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






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






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






47. Physical examination of the tangible assets.






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






49. The method by which an entity's boardof directors - management - and other personnel provide reasonable assurance about the achievement of objectives in the following categories: (1) reliability of financial reporting - (2) effectiveness and efficien






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