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Test your basic knowledge |
Auditing Vocab
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Study First
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. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Analytical procedures
Unqualified opinion
Assertions
Substantive tests of transactions
2. A confirmation request to which the recipient responds whether or not he or she agrees with the amount or information stated.
Positive confirmation
Monetary unit sampling
Integrated audit
Tests of details of account balances and disclosures
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
Material Weakness
Statistical sampling
Substantive tests of transactions
Audit committee
4. 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.
Internal control over financial reporting
Contingent liability
Sampling risk
Statements on Auditing Standards
5. 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.
Audit evidence
Control objective
Financial statement assertions
Material weakness
6. 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.
Entity-level controls
Assertions
ateriality
Generally accepted auditing standards (GAAS)
7. 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.
Information asymmetry
Risk of inccorect rejection
Internal Control
Reperformance
8. 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.
Internal Control
Control deficiency
Representation letter
Observation
9. 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.
Financial statement assertions
Control environment
Business risks
Audit strategy
10. 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
Reporting
Standards of the PCAOB
Audit Evidence
Tolerable misstatement
11. Unintentional misstatements or omissions of amounts or disclosures.
Representation letter
Auditing
Substantive tests of transactions
Errors
12. 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
General controls
Control environment
Management letter
Accounting records
13. Basic unit containing the elements of the population to be sampled
Engagement letter
Audit procedures
Sampling unit
Audit procedures
14. A violation of laws or governmental regulations.
Analytical procedures
Other information
Tests of details of account balances and disclosures
Illegal act
15. 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
Significant risk
Material weakness
Audit evidence
Recalculation
16. 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.
Information asymmetry
Substantive procedures
Confirmation
Corporate governance
17. When a subsequent event disclosed in the financial statements occurs after the date of the report but before the issuance of the related financial statements - the auditor may use dual dating. The auditor may use the original date of the report excep
Engagement quality review
Monetary unit sampling
Dual dating
Audit risk
18. Expressed or implied representations by management regarding recognition - measurement - presentation - and disclosure of information in the financial statements.
Independence
Assertions
Statements on Auditing Standards
Control environment
19. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
Classical variables sampling
Application controls
Analytical procedures
Risk assessment
20. An event occurring between the balance sheet date and the audit report release date - Type I - Type II
Subsequent event
Recalculation
Closest reasonable estimate
Substantive tests of transactions
21. A subcommittee of the board of directors that is responsible for the financial reporting and disclosure process.
Analytical procedures
Control deficiency
Business risks
Audit committee
22. 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.
Monetary-unit sampling
Walkthrough
Information asymmetry
Tests of details of account balances and disclosures
23. 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.
Working papers
Business risks
General controls
Tolerable deviation rate
24. The extrapolation of sample results to the population; represents the auditors 'best estimate' of the misstatement in the sampling population
Control deficiency
Independence
Substantive strategy
Projected misstatement
25. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting material misstatements at the relevant assertion level.
Control deficiency
Tests of controls
Audit procedures
Expected population deviation rate
26. The process of correcting a material weakness as part of management's assessment of the effectiveness of ICFR
Tolerable deviation rate
Risk of inccorect rejection
Remediation
Audit committee
27. 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.
Confirmation
Relevant Assertions
Assertions
Confidence bound
28. The auditor's decision to rely on the entity's controls - test those controls - and reduce the direct tests of the financial statement accounts.
Tests of controls
Materiality
Reliance strategy
Control deficiency
29. The risk that material misstatements that could occur will not be prevented - or detected and corrected - by internal controls.
Control risk
General controls
Engagement quality review
Control environment
30. The auditor's decision not to tely on the entity's controls and to audit the related financial statement accounts by relying more on substantive procedures.
Material Weakness
Substantive strategy
Monetary-unit sampling
Control deficiency
31. Examination of internal or external records or documents that are in paper form - electronic form - or other media.
Illegal acts
Inspections of records and documents
Internal Control
Detection risk
32. 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
Tests of controls
Entity-level controls
Audit Evidence
Fraud
33. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting and correcting - material misstatements at the relevant assertion level.
Assertions
Tests of controls
Application controls
Substantive strategy
34. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Analytical procedures
Allowance for sampling risk
Safeguarding of Assets
Entity-level controls
35. Independent professional services that improve the quality of information - or its context - for decision makers. Encompasses attest services and financial statement audits.
Illegal act
Assurance Services
Detection risk
Integrated audit
36. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting material misstatements at the relevant assertion level.
Tests of controls
Board of directors
Audit Risk
Sampling risk
37. Consulting services that may provide advice and assistance concerning an entity's organization - personnel - finances - operations - systems - or other activities
Significant risk
Management advisory services
Electronic data interchange
Nonstatistical sampling
38. Business transactions between individuals and organizations that occur without proper documents - using computers - and telecommunication networks.
Statements on Auditing Standards
Electronic (Internet) commerce
Significant deficiency
Inquiry
39. 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
Sampling risk
Audit sampling
Risk of incorrect acceptance
Control activities
40. A risk of material misstatement that is important enough to require special audit consideration.
Audit procedures
Significant risk
Inherent risk
Control activities
41. Intentional misstatements that can be classified as fraudulent financial reporting and/or misappropriation of assets.
Materiality
Risk assessment
Audit documentation (working papers)
Fraud
42. 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.
Adverse opinion
Disclaimer of opinion
Assertions
Unqualified audit report
43. The uncertainty that results from sampling; the difference between the expected mean of the population and the tolerable deviation or misstatement.
Analytical procedures
Audit procedures
Dual dating
Allowance for sampling risk
44. The amount of the planning materiality that is allocated to a financial statement account.
Entity-level controls
Analytical procedures
Tolerable misstatement
Application controls
45. Determination of the mathematical accuracy of documents or records.
Recalculation
Monitoring of controlsa
Confirmation
Allowance for sampling risk
46. 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.
Substantive strategy
Walkthrough
Nonsampling risk
Reliance strategy
47. A letter that formalizes the contract between the auditor and the client and outlines the responsibilities of both parties.
Expected misstatement
Engagement letter
General controls
Relevance of evidence
48. The risk that the auditor will not detect a material misstatement that exists in the financial statements
Confirmation
Risk of incorrect acceptance
Detection risk
ositive confirmation
49. 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
Accounting records
Board of directors
Inspections of tangible assets
Closest reasonable estimate
50. The auditor's plan for the expected conduct - organization - and staffing of the audit.
Tests of controls
Risk of material misstatement
Analytical procedures
Audit strategy