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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. Seeking information of knowledgeable persons - both financial and nonfinancial - throughout the entity or outside the entity.






2. A weakness in the design or operation of a control such that management or employeesm in the normal course of performing their assigned functions - fail to prevent - or detect misstatements on a timely basis.






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






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






5. 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.






6. 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.






7. 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.






8. 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






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






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






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






12. A system or code of conduct based on moral duties and obligations that indicates how an individual should behave.






13. 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.






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






15. 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.






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






17. The amount of misstatement that the auditor believes exists in the population.






18. 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.






19. 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






20. 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.






21. 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.






22. Specific acts performed by the auditor in gathering evidence to determine if specific assertions are met.






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






24. 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






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






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






27. A committee consisting of members of the board of directors - charged with overseeing the entity's system of internal control over financial reporting - internal and external auditors - and financial reporting process. Members typically must be indep






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






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






30. Violations of laws or government regulations.






31. Physical examination of the tangible assets.






32. Substantive tests that concentrate on the details of items contained in the account balance and disclosures.






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






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






35. 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






36. 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






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






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






39. Specific acts performed by the auditor in gathering evidence to determine if specific assertations are being met.






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






41. A violation of laws or governmental regulations.






42. Audit sampling that relies on the auditor's judgment to determine sample size - select the sample - and/or evaluate the results for the purpose of reaching a conclusion about the population.






43. An instance where a financial statement assertion is not in accordance with the criteria against which it is audited (e.g: GAAP). Misstatements may be classified as fraud (intentional) - other illegal acts such as noncompliance with laws and regulati






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






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






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






47. The process of correcting a material weakness as part of management's assessment of the effectiveness of ICFR






48. The individual member of the population being sampled.






49. A confirmation request to which the recipient responds only if the amount or information stated is incorrect.






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