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






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






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






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






5. 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)






6. 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.






7. Determination of the mathematical accuracy of documents or records.






8. The deviation rate that the auditor expects to exist in the population.






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






10. 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.






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






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






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






14. 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






15. 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.






16. 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






17. 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






18. 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.






19. A letter that corroborates oral representations made to the auditor by management or by other auditors and documents the continued appropriateness of such representations.






20. 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






21. 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.






22. 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.






23. 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






24. 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






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






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






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






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






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






30. Statements issued by the AICPA Auditing Standards Boards - considered as interpretations of the 10 GAAS statements.






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






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






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






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






35. A transaction being traced by an auditor from origination through the entity's information system until it is reflected in the entity's financial reports; it encompasses the entire process of initiating - authorizing - recording - processing - and re






36. 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.






37. The risk that the auditor will not detect a material misstatement that exists in the financial statements






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






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






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






41. 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






42. 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.






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






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






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






46. 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






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






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






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






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