Test your basic knowledge |

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 possibility that the auditor may use inappropriate audit procedures - fail to detect a misstatement when applying an audit procedure - or misinterpret an audit result.






2. 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.






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






4. Accounting principles that are generally accepted for the preparation of financial statements in the United States. GAAP standards are currently issued primarily by the FASB - with oversight and influence by the SEC.






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






6. The concept that the manager generally has more information about the true financial position and results of operations of the entity than the absentee owner does.






7. Test to detect errors or fraud in individual transactions.






8. Specific acts performed as the auditor gathers evidence to determine if specific audit objectives are being met.






9. A process designed by - or under the supervision of - the company's principal executive and principal financial officers - or persons performing similar functions - and effected by the company's board of directors - management - and other personnel -






10. 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.






11. 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.






12. Process of watching a process or procedure being performed by others.






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






14. 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.






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






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






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






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






19. 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






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






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






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






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






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






25. 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.






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






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






28. The transmission of business transactions over telecommunication networks.






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






30. Audit procedures performed to test material misstatements in an account balance - transaction class - or disclosure component of the financial statements.






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






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






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






34. 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.






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 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.






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






38. 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.






39. 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






40. 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.






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






42. Physical examination of the tangible assets.






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






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






45. A financial statement assertion that has a reasonable possibility of containing a misstatement or misstatements that would cause financial statements to be materially misstated.






46. An objective for ICFR generally relates to a relevant financial statement assertion and states a criterion for evaluating whether the company's control procedures in a specific area provide reasonable assurance that a misstatement or omission in that






47. A deficiency - or combination of deficiencies - that results in a reasonable possibility that a material misstatement of the company's annual or interim financial stsatements will not be prevented or detected on a timely basis






48. 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.






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






50. 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) - except for a material misstatement that does no