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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. A letter that formalizes the contract between the auditor and the client and outlines the responsibilities of both parties.






2. The use of normal distribution theory to estimate the dollar amount of misstatement for a class of transactions or an account balance.






3. 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)






4. 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.






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






6. Unintentional misstatements or omissions of amounts or disclosures.






7. 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.






8. 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.






9. A risk of material misstatement that is important enough to require special audit consideration.






10. 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






11. 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.






12. 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






13. 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.






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






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






16. 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.






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






18. A process that assesses the quality of internal control performance over time.






19. 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.






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






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






22. When a subsequent event disclosed in the financial statements occurs after the date of the report but before the issuance of the related financial statements - the auditor may use dual dating. The auditor may use the original date of the report excep






23. Risks resulting from significant conditions - events - circumstances - and actions or inactions that could adversely affect management's ability to execute its strategies and to achieve its objectives - or through the setting of inappropriate objecti






24. Ten broad statements guiding the conduct of financial statement auditing.






25. 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.






26. 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.






27. 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






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






29. 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.






30. Expressed or implied representations by management that are reflected in the financial statement components.






31. Independent professional services that improve the quality of information - or its context - for decision makers. Encompasses attest services and financial statement audits.






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






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






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






35. 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






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






37. 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






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






39. The maximum deviation rate from a prescribed control that the auditor is willing to accept without altering the planned assessed level of control risk.






40. 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






41. Expressed or implied representations by management about information that is reflected in the financial statements. The three sets of assertions related to ending account balances - transactions - and presentation and disclosure.






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






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






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






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






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






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






48. Expressed or implied representations by management regarding recognition - measurement - presentation - and disclosure of information in the financial statements.






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






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