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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. 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.






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






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






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






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






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






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






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






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






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






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






12. Specific acts performed as the auditor gathers evidence to determine if specific audit objectives are being met.






13. Specific acts performed by the auditor in gathering evidence to determine if specific assertions are met.






14. 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.






15. 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.






16. 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






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






18. 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.






19. 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






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






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






22. 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.






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






24. All the information used by the auditor in arriving at the conclusions on which the audit opinion is based - and includes the information contained in the accounting records underlying the financial statements and other information such as minutes of






25. 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.






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






27. Basic unit containing the elements of the population to be sampled






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






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






30. 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.






31. 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






32. 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






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






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






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






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






37. 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.






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






39. 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






40. 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.






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






42. 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






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






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






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






46. A process that assesses the quality of internal control performance over time.






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






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






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






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