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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. An account or disclosure is significant if there is a reasonable possibility that the account or disclosure could contain a misstatement that - individually or when aggregated with others - has a material effect on the financial statements - consider






2. The identification - analysis - and management of risks relevant to the preparation of financial statements that are fairly presented in conformity with GAAP.






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






4. Financial statements prepared under regulatory - tax - cash basis - or other definitive criteria having substantial support.






5. 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






6. 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.






7. 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.






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






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






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






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






12. 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.






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






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






16. Unintentional misstatements or omissions of amounts or disclosures.






17. The process of correcting a material weakness as part of management's assessment of the effectiveness of ICFR






18. A violation of laws or governmental regulations.






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






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






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






22. A process that assess the quality of internal control performance over time.






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






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. 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






26. 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.






27. 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






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






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






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






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






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






34. 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.






35. 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






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






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






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






39. Attribute-sampling techniques used to estimaed the dollar amount of misstatement for a class of transactions or an account balance.






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






41. 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.






42. 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)






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






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






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






47. Statements issued by the AICPA Auditing Standards Boards - considered as interpretations of the 10 GAAS statements.






48. The method by which an entity's board of 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 efficie






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






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