Test your basic knowledge |

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 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






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






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






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






5. Computer programs that allow auditors to test computer files and databases.






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






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






8. 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.






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






10. 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.






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






12. 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.






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






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






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






16. 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.






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






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






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






20. 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






21. 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.






22. A 'clean' audit report - indicating the auditor's opinion that a client's financial statements are fairly presented in accordance with agreed-upon criteria (eg. GAAP)






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






24. 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






25. 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.






26. 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






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






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






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






30. 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






31. 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.






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






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






34. 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.






35. 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.






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






37. The transmission of business transactions over telecommunication networks.






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






40. 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.






41. Business transactions between individuals and organizations that occur without paper documents - using computers and telecommunication networks.






42. 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.






43. Unintentional misstatements or omissions of amounts or disclosures.






44. 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






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






46. Consulting services that may provide advice and assistance concerning an entity's organization - personnel - finances - operations - systems - or other activities






47. The risk that the auditor may unknowingly fail to appropriately modify his or her opinion on financial statements that are materially misstated.






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






49. A process that assess the quality of internal control performance over time.






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