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Test your basic knowledge |
Auditing Vocab
Start Test
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. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting and correcting - material misstatements at the relevant assertion level.
Reliance strategy
Tests of controls
Relevant Assertions
Reliance strategy
2. The maximum deviation rate from a prescribed control that the auditor is willing to accept without altering the planned assessed level of control risk.
Electronic data interchange
Significant account or disclosure
Assertions
Tolerable deviation rate
3. The risk that material misstatements that could occur will not be prevented - or detected and corrected - by internal controls.
Control risk
Other comprehensive basis of accounting
Attest
Audit procedures
4. Examination of internal or external records or documents that are in paper form - electronic form - or other media.
Material weakness
Control deficiency
Inspections of records and documents
Closest reasonable estimate
5. The risk that the sample supports the conclusion that the recorded account balance is materially misstated when it is not materially misstated.
Risk of inccorect rejection
Expected misstatement
Business risks
Independence
6. 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.
Remediation
Ethics
Disclaimer of opinion
Control deficiency
7. Specific acts performed by the auditor in gathering evidence to determine if specific assertations are being met.
Blank or zero-balance confirmations
Audit procedures
Closest reasonable estimate
Engagement quality review
8. The total of the projected misstatement plus the allowance for sampling risk.
Significant deficiency
Upper misstatement limit
Allowance for sampling risk
Reasonable assurance
9. The concept that an audit done in accordance with auditing standards may fail to detect a material misstatement in a client's financial statements. In an auditing context this term has been defined to mean a high - but not absolute level of assurance
Reasonable assurance
Audit procedures
Professional skepticism
Engagement quality review
10. Controls that related to the overall information processing environment and have a pervasive effect on the entity's computer operations
Statistical sampling
Control environment
Reliance strategy
General controls
11. 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.
Expected misstatement
General controls
Engagement risk
Tolerable deviation rate
12. Refers to the nature - timing - and extent of audit procedures - when nature refers to the type of evidence; timing refers to when the evidence will be gathered; and extent refers to how much of the type of evidence will be evaluated.
Scope of the audit
Substantive tests of transactions
Control environment
Attest
13. 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
Audit committee
Sampling risk
Significant account or disclosure
Business risks
14. Audit sampling that relies on the auditor's judgment to determine sample size - select the sample - and/or evaluate the results for the purpose of reaching a conclusion about the population.
Inherent risk
Nonstatistical sampling
Materiality
Working papers
15. The deviation rate that the auditor expects to exist in the population.
Expected population deviation rate
Accounting records
Qualified opinion
Control risk
16. Attribute-sampling techniques used to estimaed the dollar amount of misstatement for a class of transactions or an account balance.
Analytical procedures
Upper misstatement limit
Monetary unit sampling
Tolerable misstatement
17. 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
Control activities
Control deficiency
Sampling risk
Control environment
18. Process of watching a process or procedure being performed by others.
Lapping
Control deficiency
Board of directors
Observation
19. Seeking information of knowledgeable persons - both financial and nonfinancial - throughout the entity or outside the entity.
Inquiry
Control environment
General controls
Risk of incorrect acceptance
20. 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.
Materiality
Observation
Public accounting firm
Business processes
21. Unintentional misstatements or omissions of amounts or disclosures.
Monitoring of controls
Application controls
Errors
Public accounting firm
22. An audit inquiry sent to the client's attorneys in order to obtain or corroborate information about litifation - claims - and assessments.
Dual-purpose tests
Legal letter
Inquiry
Analytical procedures
23. The auditor's decision to rely on the entity's controls - test those controls - and reduce the direct tests of the financial statement accounts.
Illegal act
Reliance strategy
Business risks
Analytical procedures
24. 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
Tolerable misstatement
Reliance strategy
Business risks
Scope of the audit
25. Test of transactions that both evaluate the effectiveness of controls and detect monetary errors.
Tolerable misstatement
Analytical procedures
Dual-purpose tests
Upper misstatement limit
26. Controls that relate to the overall information processing environment and have a pervasive effect on the entity's computer operations.
General controls
Illegal act
Internal control over financial reporting
Integrated audit
27. Those policies and procedures that provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition - use - or disposition of the company's assets that could have a material effect on the financial statements
Control risk
Tolerable deviation rate
Safeguarding of Assets
Standards of the PCAOB
28. 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
Audit evidence
Audit procedures
Unqualified opinion
Generally accepted auditing standards (GAAS)
29. The auditor's decision to rely on the entity's controls - test those controls - and reduce the direct tests of the financial statement accounts.
Reliance strategy
Tolerable misstatement
Fraud
Statistical sampling
30. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Audit committee
Representation letter
Audit procedures
Analytical procedures
31. 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.
Reliance strategy
Unqualified opinion
Desired confidence level
Attest
32. Test to detect errors or fraud in individual transactions.
Unqualified opinion
Substantive tests of transactions
Board of directors
Control environment
33. A confirmation request to which the recipient responds only if the amount or information stated is incorrect.
Negative confirmation
Significant risk
Disclaimer of opinion
Materiality
34. The identification - analysis - and management of risks relevant to the preparation of financial statements that are fairly presented in conformity with GAAP.
Risk of material misstatement
Risk assessment
Application controls
Tests of details of account balances and disclosures
35. Sampling used to estimate the proportion of a population that possesses a specified characteristic.
Attribute sampling
Standards of the PCAOB
Monetary-unit sampling
Application controls
36. A term that implies some risk that a material misstatement could be present in the financial statements without the auditor detecting it - even when the auditor has exercised due care.
Reasonable assurance
Other information
Assertions
Ethics
37. 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
Unqualified audit report
Standards of the PCAOB
38. The extrapolation of sample results to the population; represents the auditors 'best estimate' of the misstatement in the sampling population
Errors
Electronic (Internet) commerce
Fraud
Projected misstatement
39. 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.
Monitoring of controls
Illegal acts
Attest
Risk of incorrect rejection
40. The amount of misstatement that the auditor believes exists in the population.
Expected misstatement
Control deficiency
Audit documentation (working papers)
Entity-level controls
41. 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.
Independence
Control objective
Generally accepted accounting principles (GAAP)
Internal Control
42. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Analytical procedures
Other information
Assurance Services
Fraud
43. Tests to detect errors or fraud in individual transactions.
Misstatement
Substantive tests of transactions
General controls
Significant risk
44. The risk that the auditor may unknowingly fail to appropriately modify the opinion on materially misstated financial statements.
Control environment
Audit risk
Control risk
Recalculation
45. 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.
Statistical sampling
Nonsampling risk
Expected population deviation rate
Control environment
46. 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.
Control deficiency
Engagement letter
Computer-assisted audit techniques (CAATs)
Expected population deviation rate
47. 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.
Substantive tests of transactions
Accounting records
Nonstatistical sampling
Risk of material misstatement
48. 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
Information asymmetry
Management letter
Risk of incorrect rejection
Misstatement
49. A confirmation request on which the recipient fills in the amount or furnishes the information requested.
Control risk
Analytical procedures
Blank or zero-balance confirmations
Safeguarding of Assets
50. The susceptibility of an assertion to material misstatement - assuming no related controls
Inspections of tangible assets
Inherent risk
Audit Risk
Application controls