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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 individual member of the population being sampled.






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






3. A management letter is a report to management containing the auditors' recommendations for correcting any deficiencies disclosed by the auditors' consideration of internal control. The management letter also provides recommendations on where the comp






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






5. 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.






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






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






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






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






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






11. 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






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






13. The process of covering a cash shortage by applying cash from one customer's accounts receivable against another customer's accounts receivable.






14. 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.






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






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






17. An audit inquiry sent to the client's attorneys in order to obtain or corroborate information about litifation - claims - and assessments.






18. 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






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






20. 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.






21. An event occurring between the balance sheet date and the audit report release date - Type I - Type II






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






23. 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.






24. Physical examination of the tangible assets.






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






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






27. 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.






28. 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






29. 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.






30. 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






31. 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.






32. 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






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






34. 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






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 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






37. 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.






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






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






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






41. 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






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






43. 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.






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






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






46. 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.






47. Sampling used to estimate the proportion of a population that possesses a specified characteristic.






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






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






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