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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 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.
Internal Control
Control deficiency
Scope limitation
Sampling risk
2. 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.
Confirmation
Application controls
Application controls
Risk of incorrect acceptance
3. 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.
Statistical sampling
Significant risk
Statistical sampling
Disclaimer of opinion
4. Tests that concentrate on the details of amounts contained in an account balance and related footnotes.
Professional skepticism
Representation letter
Tests of details of account balances and disclosures
Control risk
5. The amount of misstatement that the auditor believes exists in the population.
Other comprehensive basis of accounting
Representation letter
Audit sampling
Expected misstatement
6. A management letter is a report to management containing the auditors' recommendations for correcting any deficiencies disclosed by the auditors' consideration of internal control. The management letter also provides recommendations on where the comp
Integrated audit
Upper misstatement limit
Tests of controls
Management letter
7. Specific acts performed by the auditor in gathering evidence to determine if specific assertations are being met.
Computer-assisted audit techniques (CAATs)
Audit procedures
Material Weakness
Confirmation
8. A letter that corroborates oral representations made to the auditor by management or by other auditors and documents the continued appropriateness of such representations.
Scope of the audit
General controls
Representation letter
Engagement letter
9. Controls that relate to the overall information processing environment and have a pervasive effect on the entity's computer operations.
General controls
Dual dating
Allowance for sampling risk
Classical variables sampling
10. Intentional misstatements that can be classified as fraudulent financial reporting and/or misappropriation of assets.
Assurance Services
ositive confirmation
Confidence bound
Fraud
11. The policies and procedures that help ensure that management's directives are carried out.
Nonstatistical sampling
Other information
Information asymmetry
Control activities
12. An audit inquiry sent to the client's attorneys in order to obtain or corroborate information about litifation - claims - and assessments.
Analytical procedures
Materiality
Legal letter
Audit strategy
13. The process of correcting a material weakness as part of management's assessment of the effectiveness of ICFR
Risk of inccorect rejection
Expected misstatement
Remediation
Scope of the audit
14. Test of transactions that both evaluate the effectiveness of controls and detect monetary errors.
Internal Control
Audit procedures
Material weakness
Dual-purpose tests
15. The uncertainty that results from sampling; the difference between the expected mean of the population and the tolerable deviation or misstatement.
Allowance for sampling risk
Audit committee
Tolerable misstatement
Nonsampling risk
16. Specific acts performed as the auditor gathers evidence to determine if specific audit objectives are being met.
Electronic data interchange
Audit procedures
Control environment
Illegal act
17. An event occurring between the balance sheet date and the audit report release date - Type I - Type II
Tests of details of account balances and disclosures
Subsequent event
Independence
Analytical procedures
18. An attitude that includes a questioning mind and a critical assessment of an audit evidence. The auditor should not assume that management is either honest or dishonest.
Desired confidence level
Generally accepted accounting principles (GAAP)
Professional skepticism
Significant account or disclosure
19. The susceptibility of an assertion to material misstatement - assuming no related controls
Inherent risk
Internal Control
Audit procedures
Nonsampling risk
20. Audit sampling that relies on the auditor's judgment to dewtermine the sample size - select the sample - and/or evaluate the results for the purpose of reaching a conclusion about the population.
Nonstatistical sampling
Audit committee
Classical variables sampling
Materiality
21. 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.
Disclaimer of opinion
Allowance for sampling risk
Walkthrough
Confirmation
22. A confirmation request to which the recipient responds whether or not he or she agrees with the amount or information stated.
Positive confirmation
Projected misstatement
Other comprehensive basis of accounting
Material weakness
23. The probability that the true but unknown measure of the characteristic of interest is within specified limits.
Financial statement assertions
Tests of controls
Desired confidence level
Assurance Services
24. 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.
Reliance strategy
Misstatement
Risk of incorrect acceptance
Dual-purpose tests
25. Test to detect errors or fraud in individual transactions.
Dual-purpose tests
Substantive strategy
Substantive tests of transactions
Application controls
26. Statements issued by the AICPA Auditing Standards Boards - considered as interpretations of the 10 GAAS statements.
Disclaimer of opinion
Statements on Auditing Standards
Upper misstatement limit
Analytical procedures
27. 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.
Scope limitation
ositive confirmation
Sampling unit
Nonsampling risk
28. 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
Business processes
Observation
Generally accepted auditing standards (GAAS)
Analytical procedures
29. 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 -
Assertions
Significant deficiency
Internal control over financial reporting
Projected misstatement
30. The amount of the planning materiality that is allocated to a financial statement account.
Tolerable misstatement
Professional skepticism
Illegal acts
Fraud
31. 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.
Positive confirmation
General controls
Attest
Fraud
32. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting and correcting - material misstatements at the relevant assertion level.
Materiality
Significant deficiency
Sampling unit
Tests of controls
33. Determination of the mathematical accuracy of documents or records.
Expected population deviation rate
Allowance for sampling risk
Public accounting firm
Recalculation
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
Engagement risk
Ethics
Substantive tests of transactions
Sampling risk
35. A state of objectivity in fact and in appearance - including the absence of any significant conflicts of interest.
Inquiry
Desired confidence level
Management letter
Independence
36. Business transactions between individuals and organizations that occur without proper documents - using computers - and telecommunication networks.
Scope of the audit
General controls
Monetary-unit sampling
Electronic (Internet) commerce
37. 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.
Analytical procedures
Contingent liability
Entity-level controls
Audit Evidence
38. A financial statement assertion that has a reasonable possibility of containing a misstatement or misstatements that would cause financial statements to be materially misstated.
Tests of details of account balances and disclosures
Reliance strategy
Reasonable assurance
Relevant Assertions
39. The auditor's decision not to rely on the entity's controls and to audit the related financial statement account by relying more on substantive procedures.
ateriality
Lapping
Monetary-unit sampling
Substantive strategy
40. 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.
Audit sampling
Inquiry
Materiality
Control objective
41. 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.
Audit sampling
Other information
Computer-assisted audit techniques (CAATs)
Accounting records
42. Papers that document the evidence gathered by auditors to show the work they have done - the methods and procedures they have followed - and the conclusions they have developed in an audit of financial statements or other type of engagement.
Reliance strategy
Reliance strategy
Audit procedures
Working papers
43. The risk that the entity's financial statements will contain a material misstatements whether caused by error or fraud.
Application controls
Control activities
Control activities
Risk of material misstatement
44. The risk that the auditor may unknowingly fail to appropriately modify his or her opinion on financial statements that are materially misstated.
Reliability of evidence
Audit Risk
Risk of incorrect acceptance
Risk of incorrect acceptance
45. A process that assesses the quality of internal control performance over time.
Monitoring of controls
Inspections of records and documents
Substantive procedures
Application controls
46. The auditor's plan for the expected conduct - organization - and staffing of the audit.
Audit committee
Audit strategy
Subsequent event
Reperformance
47. Standards against which the quality of the auditor's performance is measured.
Analytical procedures
Reperformance
Walkthrough
Generally accepted auditing standards
48. 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.
Corporate governance
Reliance strategy
Disclaimer of opinion
Sampling unit
49. 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.
Closest reasonable estimate
ateriality
Monitoring of controlsa
Nonstatistical sampling
50. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data
Risk of incorrect rejection
Significant account or disclosure
Negative confirmation
Analytical procedures
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