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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 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.






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.






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






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.






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






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






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.






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






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






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






11. A subcommittee of the board of directors that is responsible for the financial reporting and disclosure process.






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






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






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






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






16. Attribute sampling techniques used to estimate the dollar amount of misstatement for a class of transactions or an account balance.






17. The risk that the sample supports the conclusion that the recorded account balance is materially misstated when it is not materially misstated.






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






19. A state of objectivity in fact and in appearance - including the absence of any significant conflicts of interest.






20. A violation of laws or governmental regulations.






21. Violations of laws or government regulations.






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






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






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.






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






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






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.






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






29. An audit of both financial statements and internal control over financial reporting - provided by the external auditor. Required for public companies.






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






31. Standards against which the quality of the auditor's performance is measured.






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






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.






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






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






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






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






38. An event occurring between the balance sheet date and the audit report release date - Type I - Type II






39. Sampling used to estimate the proportion of a population that possesses a specified characteristic.






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.






41. The susceptibility of an assertion to material misstatement - assuming no related controls






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.






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






44. Intentional misstatements that can be classified as fraudulent financial reporting and/or misappropriation of assets.






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.






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.






47. A confirmation request to which the recipient responds whether or not he or she agrees with the amount or information stated.






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






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.






50. Financial statements prepared under regulatory - tax - cash basis - or other definitive criteria having substantial support.