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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. 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






2. 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






3. A state of objectivity in fact and in appearance - including the absence of any significant conflicts of interest.






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






5. Substantive tests that concentrate on the details of items contained in the account balance and disclosures.






6. Tests that concentrate on the details of amounts contained in an account balance and related footnotes.






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






8. 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






9. The total of the projected misstatement plus the allowance for sampling risk.






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






11. An event occurring between the balance sheet date and the audit report release date - Type I - Type II






12. 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.






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






14. A transaction being traced by an auditor from origination through the entity's information system until it is reflected in the entity's financial reports; it encompasses the entire process of initiating - authorizing - recording - processing - and re






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






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






17. Attribute-sampling techniques used to estimaed the dollar amount of misstatement for a class of transactions or an account balance.






18. 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.






19. An audit of both financial statements and internal control over financial reporting - provided by the external auditor. Required for public companies.






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






21. 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






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






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






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






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






26. Attribute sampling techniques used to estimate the dollar amount of misstatement for a class of transactions or an account balance.






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






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






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






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






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






32. A confirmation request to which the recipient responds only if the amount or information stated is incorrect.






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






34. 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.






35. Expressed or implied representations by management regarding the recognitions - measurement - presentation - and disclosure of information in the financial statements and related disclosures.






36. Specific acts performed by the auditor in gathering evidence to determine if specific assertions are met.






37. 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






38. 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.






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






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






41. A letter that corroborates oral representations made to the auditor by management or by other auditors and documents the continued appropriateness of such representations.






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






43. Financial statements prepared under regulatory - tax - cash basis - or other definitive criteria having substantial support.






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






45. 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.






46. 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






47. 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






48. 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.






49. 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.






50. Tests that concentrate on the details of amounts contained in an account balance and related footnotes.