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






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






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






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






5. The method by which an entity's boardof 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 efficien






6. 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






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






8. 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






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






10. 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.






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






12. The individual member of the population being sampled.






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






14. Process of watching a process or procedure being performed by others.






15. The amount of misstatement that the auditor believes exists in the population.






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






17. 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






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






19. 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.






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






21. 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






22. 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.






23. The susceptibility of an assertion to material misstatement - assuming no related controls






24. 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






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






26. 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






27. A process designed by - or under the supervision of - the company's principal executive and principal financial officers - or persons performing similar functions - and effected by the company's board of directors - management - and other personnel -






28. 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.






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






30. 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.






31. 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.






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






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






34. 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.






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






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






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






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






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 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.






41. 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.






42. 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.






43. 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






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






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.






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






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






48. A measure of sampling risk added and subtracted to the projected misstatement to form a confidence interval.






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






50. 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