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






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






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






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






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






6. 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






7. 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.






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






9. 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






10. An instance where a financial statement assertion is not in accordance with the criteria against which it is audited (e.g: GAAP). Misstatements may be classified as fraud (intentional) - other illegal acts such as noncompliance with laws and regulati






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






12. 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






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






14. A measure of sampling risk added and subtracted to the projected misstatement to form a confidence interval.






15. Violations of laws or government regulations.






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






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






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






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






20. The risk that the sample supports the conclusion that the control is not operating effectively when it actually is or that the recorded account balance is materially misstated when it is not materially misstated.






21. The deviation rate that the auditor expects to exist in the population.






22. 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.






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






24. 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






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






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






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






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






29. 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 -






30. Expressed or implied representations by management regarding the recognitions - measurement - presentation - and disclosure of information in the financial statements and related disclosures.






31. 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






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






33. Basic unit containing the elements of the population to be sampled






34. 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.






35. 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






36. 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.






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






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 review of audit documentation by an additional person (normally - a partner or equivalent with the firm) who has not been involved with the audit; its purpose is to ensure that quality of the audit work and reporting is consistent with the quality






40. 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.






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






42. 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.






43. Examination of internal or external records or documents that are in paper form - electronic form - or other media.






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






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






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






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






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






50. Specific acts performed by the auditor in gathering evidence to determine if specific assertions are met.