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Test your basic knowledge |
Auditing Vocab
Start Test
Study First
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 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.
Audit committee
Significant account or disclosure
Substantive strategy
Audit procedures
2. A term that implies some risk that a material misstatement could be present in the financial statements without the auditor detecting it - even when the auditor has exercised due care.
Engagement letter
Audit sampling
Reasonable assurance
Information asymmetry
3. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting material misstatements at the relevant assertion level.
Tests of controls
Misstatement
Control deficiency
Illegal acts
4. 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.
Reliance strategy
Nonsampling risk
Risk of incorrect rejection
Other comprehensive basis of accounting
5. The auditor's plan for the expected conduct - organization - and staffing of the audit.
Assurance Services
Audit strategy
Professional skepticism
Subsequent event
6. The risk that the auditor may unknowingly fail to appropriately modify the opinion on materially misstated financial statements.
Analytical procedures
Dual dating
Audit risk
Management letter
7. 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.
Reperformance
Materiality
Internal Control
Statistical sampling
8. 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
Application controls
Analytical procedures
Significant account or disclosure
Audit procedures
9. 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
Remediation
Materiality
Control activities
Entity-level controls
10. The policies and procedures that help ensure that management's directives are carried out.
Application controls
Audit Evidence
Analytical procedures
Control activities
11. A subcommittee of the board of directors that is responsible for the financial reporting and disclosure process.
Desired confidence level
Audit Evidence
Audit committee
Audit strategy
12. 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
Tests of controls
Application controls
Tests of details of account balances and disclosures
Statistical sampling
13. An organization created to provide professional accounting-related services - including auditing. Usually formed as a proprietorship or as a form of partnership.
Tests of details of account balances and disclosures
Reliance strategy
Application controls
Public accounting firm
14. 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
Audit Evidence
Lapping
Public accounting firm
Audit sampling
15. 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
Substantive tests of transactions
Audit procedures
Control deficiency
Auditing
16. Attribute sampling techniques used to estimate the dollar amount of misstatement for a class of transactions or an account balance.
Materiality
Analytical procedures
Monetary-unit sampling
Control environment
17. The risk that the sample supports the conclusion that the recorded account balance is materially misstated when it is not materially misstated.
Risk of inccorect rejection
Tolerable deviation rate
Significant deficiency
Confidence bound
18. Expressed or implied representations by management regarding the recognitions - measurement - presentation - and disclosure of information in the financial statements and related disclosures.
Standards of the PCAOB
Assertions
Illegal act
Engagement risk
19. A state of objectivity in fact and in appearance - including the absence of any significant conflicts of interest.
Assertions
Independence
Corporate governance
Audit risk
20. A violation of laws or governmental regulations.
Sampling risk
Expected misstatement
Business risks
Illegal act
21. Violations of laws or government regulations.
Audit evidence
Reperformance
Tests of details of account balances and disclosures
Illegal acts
22. The process of covering a cash shortage by applying cash from one customer's accounts receivable against another customer's accounts receivable.
Legal letter
Control risk
Relevant Assertions
Lapping
23. Controls that related to the overall information processing environment and have a pervasive effect on the entity's computer operations
Standards of the PCAOB
Analytical procedures
General controls
Sampling unit
24. 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.
Engagement risk
General controls
Auditing
Detection risk
25. The extrapolation of sample results to the population; represents the auditors 'best estimate' of the misstatement in the sampling population
Attest
Assertions
Projected misstatement
Representation letter
26. The relevance of audit evidence refers to its relationship to the assertion or to the objective of the control being tested.
Entity-level controls
Contingent liability
Relevance of evidence
Application controls
27. 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.
Generally accepted accounting principles (GAAP)
Dual dating
Accounting records
Control environment
28. 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
Lapping
Substantive strategy
Internal Control
Walkthrough
29. An audit of both financial statements and internal control over financial reporting - provided by the external auditor. Required for public companies.
Risk of incorrect acceptance
Significant deficiency
Integrated audit
Monetary unit sampling
30. 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
Material Weakness
Engagement quality review
Substantive strategy
Application controls
31. Standards against which the quality of the auditor's performance is measured.
Business processes
Generally accepted auditing standards
Control activities
Analytical procedures
32. All the information used by the auditor in arriving at the conclusions on which the audit opinion is based - and includes the information contained in the accounting records underlying the financial statements and other information such as minutes of
Public accounting firm
Professional skepticism
Scope limitation
Audit evidence
33. 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.
Significant deficiency
Desired confidence level
Reliance strategy
Lapping
34. 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
Application controls
Sampling risk
Audit strategy
Audit sampling
35. 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
Nonstatistical sampling
Tests of controls
Expected misstatement
Other information
36. A confirmation request on which the recipient fills in the amount or furnishes the information requested.
Control risk
Control risk
Control deficiency
Blank or zero-balance confirmations
37. Business transactions between individuals and organizations that occur without proper documents - using computers - and telecommunication networks.
Tests of details of account balances and disclosures
Reliance strategy
Electronic (Internet) commerce
Subsequent event
38. An event occurring between the balance sheet date and the audit report release date - Type I - Type II
Subsequent event
Audit committee
Blank or zero-balance confirmations
Allowance for sampling risk
39. Sampling used to estimate the proportion of a population that possesses a specified characteristic.
Reliance strategy
Engagement risk
Confirmation
Attribute sampling
40. 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.
Nonsampling risk
Reliance strategy
Tolerable misstatement
Attest
41. The susceptibility of an assertion to material misstatement - assuming no related controls
Audit evidence
Material weakness
Substantive tests of transactions
Inherent risk
42. Issued when auditors do not express an opinion on the fairness of the entity's financial statements. Can be issued for pervasive going-concern uncertainties - pervasive scope limitations - and situations in which the auditors are not independent.
Standards of the PCAOB
Computer-assisted audit techniques (CAATs)
Reporting
Disclaimer of opinion
43. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
General controls
Analytical procedures
Inquiry
ositive confirmation
44. Intentional misstatements that can be classified as fraudulent financial reporting and/or misappropriation of assets.
Audit sampling
Fraud
Audit Evidence
Control risk
45. 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.
Risk of incorrect acceptance
Representation letter
Safeguarding of Assets
Substantive strategy
46. A lack of evidence that may preclude the auditor from issuing a clean opinion - usually resulting from an inability to conduct an audit procedure considered necessary.
Materiality
Control activities
Scope limitation
Substantive strategy
47. A confirmation request to which the recipient responds whether or not he or she agrees with the amount or information stated.
Errors
ositive confirmation
Control deficiency
Audit strategy
48. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
Control activities
Application controls
Nonsampling risk
Significant risk
49. 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.
Sampling risk
Statistical sampling
Application controls
Assertions
50. Financial statements prepared under regulatory - tax - cash basis - or other definitive criteria having substantial support.
Other comprehensive basis of accounting
Tests of controls
Substantive tests of transactions
Allowance for sampling risk