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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. 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.






2. 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.






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






4. All the information used by the auditor in arriving at the conclusions on which the audit opinion is based - and includes the information contained in the accounting records underlying the financial statements and other information such as minutes of






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






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






7. Violations of laws or government regulations.






8. 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.






9. 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.






10. 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.






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






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






13. 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






14. The risk that the auditor may unknowingly fail to appropriately modify his or her opinion on financial statements that are materially misstated.






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






16. Unintentional misstatements or omissions of amounts or disclosures.






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






18. 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.






19. 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






20. The identification - analysis - and management of risks relevant to the preparation of financial statements that are fairly presented in conformity with GAAP.






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






22. 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






23. 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.






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






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






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






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






28. 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.






29. A service when a practitioner is engaged to issue or does issue a report on a subject matter - or an assertion about subject matter - that is the responsibility of another party. Encompasses financial statement audits.






30. 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






31. Intentional misstatements that can be classified as fraudulent financial reporting and/or misappropriation of assets.






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






33. An organization created to provide professional accounting-related services - including auditing. Usually formed as a proprietorship or as a form of partnership.






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






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






36. 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 -






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






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






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






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






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






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






43. A control deficiency - or combination of control deficiencies - that adversely effects the entity's ability to initate - authorize - record - process - or report external financial data reliably in accordance with GAAP such that there is more than a






44. 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






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






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






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






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






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






50. 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.







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