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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. 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






2. Papers that document the evidence gathered by auditors to show the work they have done - the methods and procedures they have followed - and the conclusions they have developed in an audit of financial statements or other type of engagement.






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






4. 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.






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






6. A confirmation request to which the recipient responds whether or not he or she agrees with the amount or information stated.






7. A systematic process of (1) objectively obtaining an evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and (2) communicating the resu






8. 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.






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






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






11. 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






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






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






14. Persons elected by the stockholders of a corporation to oversee management and to direct the affairs of the corporation.






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






16. 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 -






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






18. 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.






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






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






21. 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.






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






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






24. The relevance of audit evidence refers to its relationship to the assertion or to the objective of the control being tested.






25. 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.






26. The concept that the manager generally has more information about the true financial position and results of operations of the entity than the absentee owner does.






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






28. 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






29. 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






30. A risk of material misstatement that is important enough to require special audit consideration.






31. 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






32. 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






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






34. Basic unit containing the elements of the population to be sampled






35. 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






36. 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






37. Intentional misstatements that can be classified as fraudulent financial reporting and/or misappropriation of assets.






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






39. 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.






40. 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.






41. 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






42. Determination of the mathematical accuracy of documents or records.






43. 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.






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






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






46. The individual member of the population being sampled.






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






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






49. Specific acts performed by the auditor in gathering evidence to determine if specific assertations are being met.






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