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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 identification - analysis - and management of risks relevant to the preparation of financial statements that are fairly presented in conformity with GAAP.






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






3. 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.






4. 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.






5. 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.






6. Tests that concentrate on the details of amounts contained in an account balance and related footnotes.






7. 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.






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






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






10. The auditor's plan for the expected conduct - organization - and staffing of the audit.






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






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. 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






14. 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






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






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






17. 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






18. The risk that the auditor may unknowingly fail to appropriately modify the opinion on materially misstated financial statements.






19. 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






20. 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.






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






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






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






24. A financial statement assertion that has a reasonable possibility of containing a misstatement or misstatements that would cause financial statements to be materially misstated.






25. 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.






26. The extrapolation of sample results to the population; represents the auditors 'best estimate' of the misstatement in the sampling population






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






28. A transaction being traced by an auditor from origination through the entity's information system until it is reflected in the entity's financial reports; it encompasses the entire process of initiating - authorizing - recording - processing - and re






29. 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) - except for a material misstatement that does no






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






31. 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






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. 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 -






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






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






36. The maximum deviation rate from a prescribed control that the auditor is willing to accept without altering the planned assessed level of control risk.






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






38. A letter that formalizes the contract between the auditor and the client and outlines the responsibilities of both parties.






39. The deviation rate that the auditor expects to exist in the population.






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






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






42. 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






43. 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.






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






45. 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.






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






47. Examination of internal or external records or documents that are in paper form - electronic form - or other media.






48. 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)






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






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