SUBJECTS
|
BROWSE
|
CAREER CENTER
|
POPULAR
|
JOIN
|
LOGIN
Business Skills
|
Soft Skills
|
Basic Literacy
|
Certifications
About
|
Help
|
Privacy
|
Terms
|
Email
Search
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. The process of covering a cash shortage by applying cash from one customer's accounts receivable against another customer's accounts receivable.
Lapping
Representation letter
Application controls
Working papers
2. 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.
Nonstatistical sampling
Desired confidence level
Engagement quality review
Contingent liability
3. 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
Risk of incorrect acceptance
Entity-level controls
Sampling risk
Nonsampling risk
4. Seeking information of knowledgeable persons - both financial and nonfinancial - throughout the entity or outside the entity.
Inspections of records and documents
Contingent liability
Inquiry
General controls
5. The risk that the sample supports the conclusion that the control is not operating effectively when it actually is or that the recorded account balance is materially misstated when it is not materially misstated.
Projected misstatement
Analytical procedures
Representation letter
Risk of incorrect rejection
6. A letter that corroborates oral representations made to the auditor by management or by other auditors and documents the continued appropriateness of such representations.
Engagement quality review
Risk of incorrect rejection
Representation letter
Material weakness
7. 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.
Reperformance
Projected misstatement
Substantive strategy
Risk of inccorect rejection
8. Ten broad statements guiding the conduct of financial statement auditing.
Generally accepted auditing standards (GAAS)
Audit committee
Tests of details of account balances and disclosures
Control objective
9. A process that assess the quality of internal control performance over time.
Monitoring of controlsa
General controls
Financial Statement Assertions
Material weakness
10. 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
Information asymmetry
Analytical procedures
Substantive tests of transactions
11. The diagnosticity of evidence; that is whether the type of evidence can be relied on to signal the true state of the assertion.
Generally accepted accounting principles (GAAP)
Tolerable deviation rate
Reliability of evidence
Detection risk
12. 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.
Electronic (Internet) commerce
Nonstatistical sampling
Audit risk
Unqualified opinion
13. 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
Business processes
Monitoring of controlsa
Assurance Services
Substantive strategy
14. 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
Business risks
Generally accepted auditing standards (GAAS)
Negative confirmation
Allowance for sampling risk
15. Consulting services that may provide advice and assistance concerning an entity's organization - personnel - finances - operations - systems - or other activities
General controls
Management advisory services
Public accounting firm
General controls
16. 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.
Financial Statement Assertions
Analytical procedures
General controls
Projected misstatement
17. The policies and procedures that help ensure that management's directives are carried out.
Control activities
Generally accepted auditing standards
Analytical procedures
Desired confidence level
18. 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.
Scope of the audit
Assurance Services
Observation
Material weakness
19. A risk of material misstatement that is important enough to require special audit consideration.
Audit procedures
Significant risk
General controls
Representation letter
20. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting material misstatements at the relevant assertion level.
Internal control
Tests of controls
Board of directors
Upper misstatement limit
21. Business transactions between individuals and organizations that occur without proper documents - using computers - and telecommunication networks.
Statements on Auditing Standards
Control objective
Electronic (Internet) commerce
Monetary-unit sampling
22. A state of objectivity in fact and in appearance - including the absence of any significant conflicts of interest.
Independence
Generally accepted auditing standards (GAAS)
Inspections of tangible assets
Inspections of records and documents
23. The risk that the sample supports the conclusion that the control is operating effectively when it is not or that the recorded account balance is not materially misstated when it is materially misstated.
Detection risk
Nonsampling risk
Risk of incorrect acceptance
Subsequent event
24. Basic unit containing the elements of the population to be sampled
Audit documentation (working papers)
Reliance strategy
Sampling unit
Assurance Services
25. 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.
Significant deficiency
Subsequent event
Entity-level controls
Blank or zero-balance confirmations
26. 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 -
Audit strategy
Internal control over financial reporting
Audit documentation (working papers)
Positive confirmation
27. 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.
Entity-level controls
Reliance strategy
Analytical procedures
Professional skepticism
28. A review of audit documentation by an additional person (normally - a partner or equivalent with the firm) who has not been involved with the audit; its purpose is to ensure that quality of the audit work and reporting is consistent with the quality
Management advisory services
Engagement quality review
Closest reasonable estimate
Positive confirmation
29. 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
Electronic data interchange
Safeguarding of Assets
Risk of incorrect acceptance
Audit Evidence
30. 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.
Financial Statement Assertions
Scope of the audit
Confidence bound
Audit sampling
31. Specific acts performed as the auditor gathers evidence to determine if specific audit objectives are being met.
Observation
Audit procedures
Confirmation
Nonstatistical sampling
32. The susceptibility of an assertion to material misstatement - assuming no related controls
Inherent risk
Electronic (Internet) commerce
Representation letter
Auditing
33. 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
Materiality
Internal control
Reliance strategy
Corporate governance
34. 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.
Contingent liability
Significant deficiency
Unqualified audit report
Control risk
35. A confirmation request on which the recipient fills in the amount or furnishes the information requested.
Blank or zero-balance confirmations
Significant deficiency
Monitoring of controlsa
Financial statement assertions
36. The auditor's plan for the expected conduct - organization - and staffing of the audit.
Representation letter
Attest
Substantive tests of transactions
Audit strategy
37. 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.
Control risk
Dual dating
Sampling unit
Corporate governance
38. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Disclaimer of opinion
Audit documentation (working papers)
Analytical procedures
Risk of incorrect acceptance
39. A violation of laws or governmental regulations.
Illegal act
Material weakness
Statements on Auditing Standards
Desired confidence level
40. A measure of sampling risk added and subtracted to the projected misstatement to form a confidence interval.
Confidence bound
Generally accepted auditing standards (GAAS)
General controls
Control risk
41. A subcommittee of the board of directors that is responsible for the financial reporting and disclosure process.
Upper misstatement limit
Audit committee
Statistical sampling
Closest reasonable estimate
42. Audit evidence that includes minutes of meetings; confirmations from third parties; industry analysts' reports; comparable data about competitors (benchmarking); controls manuals; information obtained by the auditor from such audit procedures as inqu
Other information
Inspections of records and documents
Risk of material misstatement
Representation letter
43. 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.
Auditing
Risk of inccorect rejection
Negative confirmation
Material weakness
44. 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.
Walkthrough
General controls
Generally accepted accounting principles (GAAP)
Positive confirmation
45. A control deficiency - or combination of control deficiencies - that adversely effects the entity's ability to initate - authorize - record - process - or report external financial data reliably in accordance with GAAP such that there is more than a
Reperformance
Significant deficiency
Computer-assisted audit techniques (CAATs)
Reliance strategy
46. Controls that related to the overall information processing environment and have a pervasive effect on the entity's computer operations
Sampling risk
Dual dating
Reliance strategy
General controls
47. Test to detect errors or fraud in individual transactions.
Substantive tests of transactions
Risk of incorrect acceptance
Dual-purpose tests
Generally accepted auditing standards
48. 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
Control risk
Management letter
Tolerable deviation rate
Reliance strategy
49. The use of normal distribution theory to estimate the dollar amount of misstatement for a class of transactions or an account balance.
Classical variables sampling
Management letter
Remediation
Working papers
50. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting material misstatements at the relevant assertion level.
Audit procedures
Tests of controls
Application controls
Tests of details of account balances and disclosures