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






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






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






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






5. 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.






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






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






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






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






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






11. 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.






12. 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






13. Those policies and procedures that provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition - use - or disposition of the company's assets that could have a material effect on the financial statements






14. 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.






15. 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.






16. Controls that have a pervasive effect on the entity's system of internal control such as controls related to the control environment; controls over management override; the company's risk assessment process; centralized processing and controls - incl






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






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






19. 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.






20. 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.






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






22. 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.






23. The records of initial entries and supporting records - such as checks and records of electronic fund transfers; invoices; contracts; the general and subsidiary ledgers - journal entries - and other adjustments to the financial statements that are no






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






25. Processes implemented by management to achieve entity objectives. Business processes are typically organized into the following categories: revenue - purchasing. human resource management - inventory management - and financing processes






26. 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.






27. Computer programs that allow auditors to test computer files and databases.






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






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






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






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






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






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






34. Refers to the nature - timing - and extent of audit procedures - when nature refers to the type of evidence; timing refers to when the evidence will be gathered; and extent refers to how much of the type of evidence will be evaluated.






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






36. 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.






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






38. 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.






39. A deficiency - or combination of deficiencies - in internal control - such that there is a reasonable possibility that a material misstatememnt of the entity's financial statements will not be prevent - or detected and corrected on a timely basis.






40. Persons elected by the stockholders of a corporation to oversee management and to direct the affairs of the corporation.






41. An audit of both financial statements and internal control over financial reporting - provided by the external auditor. Required for public companies.






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






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






44. Computer programs that allow auditors to test computer files and databases.






45. 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.






46. 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.






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






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






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






50. A deficiency - or a combination of deficiencies - in internal control that is less severe than a material weakness - yet important enough to merit attention by those charged with governance.