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






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






3. 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






4. 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.






5. A service when a practitioner is engaged to issue or does issue a report on a subject matter - or an assertion about subject matter - that is the responsibility of another party. Encompasses financial statement audits.






6. The individual member of the population being sampled.






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






8. 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






9. Persons elected by the stockholders of a corporation to oversee management and to direct the affairs of the corporation.






10. 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)






11. 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.






12. The process of obtaining and evaluation a direct communication from a third party in response to a request for information about a particular item affecting financial statement assertions.






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






14. 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






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






16. 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






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






18. 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






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






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






21. 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






22. 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.






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






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






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






26. 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.






27. 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.






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






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






30. 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.






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






32. 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.






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






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






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






36. 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






37. Ten broad statements guiding the conduct of financial statement auditing.






38. A confirmation request on which the recipient fills in the amount or furnishes the information requested.






39. 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






40. The diagnosticity of evidence; that is whether the type of evidence can be relied on to signal the true state of the assertion.






41. An organization created to provide professional accounting-related services - including auditing. Usually formed as a proprietorship or as a form of partnership.






42. 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.






43. 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






44. Violations of laws or government regulations.






45. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.






46. 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.






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






48. The magnitude of an omission or misstatement of accounting information that - in light of surrounding circumstances - makes it probable that the judgement of a reasonable person relying on the information would have been changed or influenced.






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






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