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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 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.






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






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






4. Physical examination of the tangible assets.






5. Test to detect errors or fraud in individual transactions.






6. 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.






7. The magnitude of an omission or misstatement of accounting information that - in light of surrounding circumstances - makes it probable that the judgement of a reasonable person relying on the information would have been changed or influenced.






8. 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






9. 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






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






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






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






13. 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.






14. Violations of laws or government regulations.






15. An attitude that includes a questioning mind and a critical assessment of an audit evidence. The auditor should not assume that management is either honest or dishonest.






16. 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






17. 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






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






19. 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.






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






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. Sampling used to estimate the proportion of a population that possesses a specified characteristic.






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






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






25. 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.






26. Expressed or implied representations by management that are reflected in the financial statement components.






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






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






29. 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






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






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






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






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






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






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






36. 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.






37. 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.






38. 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.






39. The auditor's plan for the expected conduct - organization - and staffing of the audit.






40. 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






41. 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






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






43. The risk that the sample supports the conclusion that the recorded account balance is materially misstated when it is not materially misstated.






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






45. 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.






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






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






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






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






50. 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.