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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 amount of the planning materiality that is allocated to a financial statement account.






2. 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.






3. 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.






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






5. The risk that the auditor will not detect a material misstatement that exists in the financial statements






6. Unintentional misstatements or omissions of amounts or disclosures.






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






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






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






10. 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.






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






12. 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






13. 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






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






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






16. 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.






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






18. 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.






19. The process of correcting a material weakness as part of management's assessment of the effectiveness of ICFR






20. The transmission of business transactions over telecommunication networks.






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






22. Standards regarding the conduct of financial statement auditing for public companies. Currently - consist primarily of standards and statements established by the AICPA's Auditing Standards Board - as these statements and standards were adopted by th






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






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






25. 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.






26. A range of acceptable amounts or a precisely determined point estimate for an estimate (eg. uncollectible receivables) - if that is a better estimate than any other amount






27. Physical examination of the tangible assets.






28. 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.






29. 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






30. 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.






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






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






33. 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






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






35. An audit inquiry sent to the client's attorneys in order to obtain or corroborate information about litifation - claims - and assessments.






36. 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






37. 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.






38. 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






39. 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.






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






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






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






43. 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






44. 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.






45. Test to detect errors or fraud in individual transactions.






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






47. 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.






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






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






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