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Test your basic knowledge |
Auditing Vocab
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Subject
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business-skills
Instructions:
Answer 50 questions in 15 minutes.
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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 - 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.
Tests of details of account balances and disclosures
Adverse opinion
Significant deficiency
Control deficiency
2. 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
Control deficiency
Other information
Errors
Ethics
3. Basic unit containing the elements of the population to be sampled
Unqualified audit report
Negative confirmation
Classical variables sampling
Sampling unit
4. Tests that concentrate on the details of amounts contained in an account balance and related footnotes.
Statistical sampling
Tests of details of account balances and disclosures
Engagement risk
Control risk
5. 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
Professional skepticism
Substantive strategy
Internal control
Errors
6. The amount of the planning materiality that is allocated to a financial statement account.
Tolerable misstatement
Monetary unit sampling
Analytical procedures
Confidence bound
7. Expressed or implied representations by management regarding the recognitions - measurement - presentation - and disclosure of information in the financial statements and related disclosures.
Assertions
Nonstatistical sampling
Application controls
Significant account or disclosure
8. 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.
Control environment
Positive confirmation
Contingent liability
Reporting
9. Controls that relate to the overall information processing environment and have a pervasive effect on the entity's computer operations.
Sampling risk
Management advisory services
Reliance strategy
General controls
10. A subcommittee of the board of directors that is responsible for the financial reporting and disclosure process.
Audit committee
Attest
Unqualified opinion
Illegal acts
11. The end product of the auditor's work indicating the auditing standards followed - and expressing an opinion as to whether an entity's financial statements are fairly presented in accordance with agreed-upon criteria (eg. GAAP)
Audit Evidence
Reporting
Risk of material misstatement
Entity-level controls
12. Examination of internal or external records or documents that are in paper form - electronic form - or other media.
Audit sampling
Reliance strategy
Inspections of records and documents
Classical variables sampling
13. Determination of the mathematical accuracy of documents or records.
Risk of incorrect rejection
Fraud
Audit evidence
Recalculation
14. Controls that relate to the overall information processing environment and have a pervasive effect on the entity's computer operations.
Tests of details of account balances and disclosures
Illegal acts
General controls
Upper misstatement limit
15. A confirmation request to which the recipient responds whether or not he or she agrees with the amount or information stated.
Significant deficiency
Qualified opinion
Assertions
ositive confirmation
16. 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.
Representation letter
Tests of details of account balances and disclosures
Substantive procedures
Statistical sampling
17. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting and correcting - material misstatements at the relevant assertion level.
Tests of controls
Audit Evidence
Significant risk
Tests of details of account balances and disclosures
18. When a subsequent event disclosed in the financial statements occurs after the date of the report but before the issuance of the related financial statements - the auditor may use dual dating. The auditor may use the original date of the report excep
Dual dating
Significant account or disclosure
Reliability of evidence
Electronic data interchange
19. The extrapolation of sample results to the population; represents the auditors 'best estimate' of the misstatement in the sampling population
Scope limitation
Sampling unit
Risk of incorrect acceptance
Projected misstatement
20. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
Nonstatistical sampling
Application controls
Blank or zero-balance confirmations
Sampling risk
21. 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.
Significant deficiency
Audit sampling
Other information
Control risk
22. 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 documentation (working papers)
Internal control over financial reporting
Electronic data interchange
Tests of details of account balances and disclosures
23. 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)
Representation letter
Unqualified audit report
Analytical procedures
Monetary unit sampling
24. Consulting services that may provide advice and assistance concerning an entity's organization - personnel - finances - operations - systems - or other activities
Sampling unit
Materiality
Analytical procedures
Management advisory services
25. 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
Sampling unit
Control risk
Sampling risk
Assertions
26. 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.
Scope of the audit
Assertions
Monetary-unit sampling
Generally accepted auditing standards
27. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting material misstatements at the relevant assertion level.
Corporate governance
Tests of controls
Computer-assisted audit techniques (CAATs)
Scope of the audit
28. The risk that the auditor will not detect a material misstatement that exists in the financial statements
Audit committee
Sampling unit
Detection risk
Attest
29. 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
Misstatement
Reasonable assurance
Significant account or disclosure
Qualified opinion
30. Persons elected by the stockholders of a corporation to oversee management and to direct the affairs of the corporation.
Board of directors
Inherent risk
Nonstatistical sampling
Working papers
31. The auditor's decision to rely on the entity's controls - test those controls - and reduce the direct tests of the financial statements accounts.
Walkthrough
Risk of material misstatement
Monitoring of controlsa
Reliance strategy
32. An organization created to provide professional accounting-related services - including auditing. Usually formed as a proprietorship or as a form of partnership.
Illegal acts
Public accounting firm
Audit evidence
Risk of incorrect acceptance
33. The risk that material misstatements that could occur will not be prevented - or detected and corrected - by internal controls.
Entity-level controls
Errors
Control risk
Classical variables sampling
34. Controls that relate to the overall information processing environment and have a pervasive effect on the entity's computer operations.
Reliance strategy
Business processes
Generally accepted accounting principles (GAAP)
General controls
35. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
Errors
Walkthrough
Monitoring of controls
Application controls
36. A system or code of conduct based on moral duties and obligations that indicates how an individual should behave.
Audit sampling
Analytical procedures
Ethics
Generally accepted accounting principles (GAAP)
37. 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.
Substantive tests of transactions
Analytical procedures
Projected misstatement
Risk of incorrect rejection
38. The auditor's principal record of the work performed and the basis for the conclusions in the auditor's report. It also facilitates the planning - performance - and supervision of the engagement and provides the basis for the review of the quality of
Audit documentation (working papers)
Confirmation
Tolerable misstatement
Corporate governance
39. A financial statement assertion that has a reasonable possibility of containing a misstatement or misstatements that would cause financial statements to be materially misstated.
Independence
Relevant Assertions
Desired confidence level
Application controls
40. The policies and procedures that help ensure that management's directives are carried out.
Control activities
Relevant Assertions
Tests of controls
Classical variables sampling
41. 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
Disclaimer of opinion
Confirmation
Illegal act
Audit Evidence
42. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Nonsampling risk
Substantive procedures
Risk of inccorect rejection
Analytical procedures
43. Financial statements prepared under regulatory - tax - cash basis - or other definitive criteria having substantial support.
Tolerable misstatement
Other comprehensive basis of accounting
Attribute sampling
Electronic data interchange
44. Business transactions between individuals and organizations that occur without proper documents - using computers - and telecommunication networks.
Remediation
Analytical procedures
Application controls
Electronic (Internet) commerce
45. The use of normal distribution theory to estimate the dollar amount of misstatement for a class of transactions or an account balance.
Tests of details of account balances and disclosures
Classical variables sampling
Substantive strategy
Safeguarding of Assets
46. Violations of laws or government regulations.
Negative confirmation
Illegal acts
Safeguarding of Assets
Control deficiency
47. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Analytical procedures
Assurance Services
Confirmation
Assertions
48. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Standards of the PCAOB
Control deficiency
Reliability of evidence
Analytical procedures
49. Statements issued by the AICPA Auditing Standards Boards - considered as interpretations of the 10 GAAS statements.
Statements on Auditing Standards
Substantive procedures
Internal control
Control activities
50. Tests to detect errors or fraud in individual transactions.
Substantive tests of transactions
Sampling risk
Statements on Auditing Standards
Errors
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