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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. The identification - analysis - and management of risks relevant to the preparation of financial statements that are fairly presented in conformity with GAAP.
Inspections of records and documents
Reasonable assurance
Illegal acts
Risk assessment
2. 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
General controls
Statistical sampling
Walkthrough
Audit committee
3. Business transactions between individuals and organizations that occur without paper documents - using computers and telecommunication networks.
Risk of inccorect rejection
Business processes
Application controls
Electronic (Internet) commerce
4. Computer programs that allow auditors to test computer files and databases.
Tests of details of account balances and disclosures
Significant account or disclosure
Substantive strategy
Computer-assisted audit techniques (CAATs)
5. 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)-i.e. - a clean opinion.
Unqualified opinion
Tests of details of account balances and disclosures
Confirmation
Monetary-unit sampling
6. Specific acts performed by the auditor in gathering evidence to determine if specific assertions are met.
Nonsampling risk
Subsequent event
Audit procedures
Computer-assisted audit techniques (CAATs)
7. The susceptibility of an assertion to material misstatement - assuming no related controls
Analytical procedures
Substantive tests of transactions
Control objective
Inherent risk
8. 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
Control environment
Detection risk
Internal Control
Illegal act
9. Tests that concentrate on the details of amounts contained in an account balance and related footnotes.
Internal Control
Tests of details of account balances and disclosures
Sampling risk
Tolerable misstatement
10. Audit procedures performed to test material misstatements in an account balance - transaction class - or disclosure component of the financial statements.
Substantive procedures
Integrated audit
Statements on Auditing Standards
Assurance Services
11. 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.
Contingent liability
Substantive strategy
General controls
Significant deficiency
12. Determination of the mathematical accuracy of documents or records.
Recalculation
Attribute sampling
Projected misstatement
Audit risk
13. A letter that formalizes the contract between the auditor and the client and outlines the responsibilities of both parties.
Control activities
Business risks
Engagement letter
Classical variables sampling
14. 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.
Substantive strategy
Significant risk
Representation letter
General controls
15. A deficiency - or combination of deficiencies - in internal control - such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented - or detected and corrected - on a timely basis.
Tolerable deviation rate
Business processes
Material weakness
Computer-assisted audit techniques (CAATs)
16. The probability that the true but unknown measure of the characteristic of interest is within specified limits.
Representation letter
Desired confidence level
Safeguarding of Assets
Significant deficiency
17. Standards against which the quality of the auditor's performance is measured.
Inspections of tangible assets
Tests of controls
Internal control over financial reporting
Generally accepted auditing standards
18. Consulting services that may provide advice and assistance concerning an entity's organization - personnel - finances - operations - systems - or other activities
Public accounting firm
Substantive strategy
Material Weakness
Management advisory services
19. 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
Audit sampling
Audit strategy
Ethics
20. Refers to the nature - timing - and extent of audit procedures - when nature refers to the type of evidence; timing refers to when the evidence will be gathered; and extent refers to how much of the type of evidence will be evaluated.
Inspections of records and documents
Scope of the audit
Statistical sampling
Dual dating
21. The risk that the sample supports the conclusion that the recorded account balance is materially misstated when it is not materially misstated.
Risk of inccorect rejection
Tolerable misstatement
Audit documentation (working papers)
General controls
22. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting material misstatements at the relevant assertion level.
Materiality
Tolerable misstatement
Tests of controls
Nonsampling risk
23. 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
Tolerable deviation rate
Financial statement assertions
Standards of the PCAOB
24. The auditor's independent execution of procedures or controls that were originally performed as part of other entity's internal control - either manually or through the use of CAATs.
Monetary unit sampling
Analytical procedures
Risk of incorrect rejection
Reperformance
25. The process of correcting a material weakness as part of management's assessment of the effectiveness of ICFR
Analytical procedures
Subsequent event
Remediation
Classical variables sampling
26. Financial statements prepared under regulatory - tax - cash basis - or other definitive criteria having substantial support.
Other comprehensive basis of accounting
Material Weakness
Disclaimer of opinion
Confidence bound
27. Intentional misstatements that can be classified as fraudulent financial reporting and/or misappropriation of assets.
Fraud
Contingent liability
Internal Control
Walkthrough
28. The relevance of audit evidence refers to its relationship to the assertion or to the objective of the control being tested.
Independence
Application controls
Relevance of evidence
Attribute sampling
29. The amount of the planning materiality that is allocated to a financial statement account.
Tests of details of account balances and disclosures
Tolerable misstatement
Unqualified opinion
Audit committee
30. 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.
Fraud
Significant deficiency
Risk assessment
Nonsampling risk
31. The amount of misstatement that the auditor believes exists in the population.
Legal letter
Expected misstatement
Analytical procedures
Illegal act
32. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting and correcting - material misstatements at the relevant assertion level.
Inquiry
Other comprehensive basis of accounting
Tests of controls
Financial statement assertions
33. Ten broad statements guiding the conduct of financial statement auditing.
Materiality
Tolerable misstatement
Generally accepted auditing standards (GAAS)
Remediation
34. Sampling used to estimate the proportion of a population that possesses a specified characteristic.
Application controls
Nonsampling risk
Nonsampling risk
Attribute sampling
35. Persons elected by the stockholders of a corporation to oversee management and to direct the affairs of the corporation.
Material Weakness
Nonsampling risk
Fraud
Board of directors
36. 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.
Unqualified opinion
Substantive tests of transactions
Control deficiency
Scope limitation
37. 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
Dual dating
Standards of the PCAOB
Control deficiency
Audit procedures
38. 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.
Contingent liability
Classical variables sampling
Unqualified audit report
Engagement letter
39. 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
Assurance Services
Analytical procedures
Detection risk
40. 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
Audit procedures
Inspections of records and documents
Entity-level controls
Audit strategy
41. 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 documentation (working papers)
Material weakness
Materiality
Business processes
42. 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.
Assurance Services
Nonstatistical sampling
General controls
Control environment
43. Statements issued by the AICPA Auditing Standards Boards - considered as interpretations of the 10 GAAS statements.
Statements on Auditing Standards
Statistical sampling
Reliance strategy
Reliance strategy
44. Controls that related to the overall information processing environment and have a pervasive effect on the entity's computer operations
Lapping
General controls
Statistical sampling
Reporting
45. The uncertainty that results from sampling; the difference between the expected mean of the population and the tolerable deviation or misstatement.
Control activities
Tests of controls
Control risk
Allowance for sampling risk
46. An organization created to provide professional accounting-related services - including auditing. Usually formed as a proprietorship or as a form of partnership.
Information asymmetry
Computer-assisted audit techniques (CAATs)
Public accounting firm
Dual dating
47. A confirmation request on which the recipient fills in the amount or furnishes the information requested.
Sampling risk
Audit Evidence
Financial statement assertions
Blank or zero-balance confirmations
48. The policies and procedures that help ensure that management's directives are carried out.
Internal control
Financial Statement Assertions
Inquiry
Control activities
49. Substantive tests that concentrate on the details of items contained in the account balance and disclosures.
ateriality
Tests of details of account balances and disclosures
Illegal acts
Accounting records
50. 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.
Nonstatistical sampling
Monetary unit sampling
Generally accepted accounting principles (GAAP)
Confirmation
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