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Test your basic knowledge |
Auditing Vocab
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Subject
:
business-skills
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
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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. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
General controls
Corporate governance
Computer-assisted audit techniques (CAATs)
Application controls
2. 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
Application controls
Monitoring of controls
Standards of the PCAOB
Other information
3. 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.
Nonstatistical sampling
Analytical procedures
Monetary-unit sampling
Audit committee
4. 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.
Dual-purpose tests
Audit sampling
Nonstatistical sampling
Control deficiency
5. The process of covering a cash shortage by applying cash from one customer's accounts receivable against another customer's accounts receivable.
Confirmation
Nonsampling risk
Lapping
General controls
6. The relevance of audit evidence refers to its relationship to the assertion or to the objective of the control being tested.
Internal Control
Desired confidence level
Fraud
Relevance of evidence
7. Controls that relate to the overall information processing environment and have a pervasive effect on the entity's computer operations.
General controls
Engagement risk
Inherent risk
Expected misstatement
8. The amount of the planning materiality that is allocated to a financial statement account.
Audit Risk
General controls
Tolerable misstatement
Risk of material misstatement
9. Basic unit containing the elements of the population to be sampled
Tests of details of account balances and disclosures
Tests of details of account balances and disclosures
Adverse opinion
Sampling unit
10. The concept that an audit done in accordance with auditing standards may fail to detect a material misstatement in a client's financial statements. In an auditing context this term has been defined to mean a high - but not absolute level of assurance
Material Weakness
Audit procedures
Sampling unit
Reasonable assurance
11. Specific acts performed as the auditor gathers evidence to determine if specific audit objectives are being met.
Audit procedures
Tests of controls
Auditing
Monetary unit sampling
12. 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.
Tests of details of account balances and disclosures
Sampling risk
Tests of details of account balances and disclosures
Nonsampling risk
13. 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.
Sampling risk
Risk of incorrect rejection
Illegal act
Significant deficiency
14. Sampling used to estimate the proportion of a population that possesses a specified characteristic.
Analytical procedures
Attribute sampling
Reliance strategy
Risk of incorrect acceptance
15. The use of normal distribution theory to estimate the dollar amount of misstatement for a class of transactions or an account balance.
Other comprehensive basis of accounting
Substantive tests of transactions
Misstatement
Classical variables sampling
16. 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.
Legal letter
Tests of details of account balances and disclosures
Significant deficiency
Fraud
17. A letter that corroborates oral representations made to the auditor by management or by other auditors and documents the continued appropriateness of such representations.
Tests of controls
Audit procedures
Substantive procedures
Representation letter
18. An audit inquiry sent to the client's attorneys in order to obtain or corroborate information about litifation - claims - and assessments.
Allowance for sampling risk
Legal letter
Risk of material misstatement
Monitoring of controlsa
19. 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
Illegal acts
Control deficiency
Statements on Auditing Standards
Reliance strategy
20. Determination of the mathematical accuracy of documents or records.
Electronic data interchange
Substantive strategy
Recalculation
Monetary unit sampling
21. Tests to detect errors or fraud in individual transactions.
Substantive tests of transactions
Control activities
Audit sampling
Control risk
22. 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.
Control environment
Reliance strategy
Statements on Auditing Standards
Business processes
23. Persons elected by the stockholders of a corporation to oversee management and to direct the affairs of the corporation.
Reperformance
Board of directors
Scope limitation
Audit Evidence
24. 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.
Corporate governance
Audit procedures
Audit risk
Scope of the audit
25. 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.
Electronic (Internet) commerce
Nonsampling risk
Detection risk
Control deficiency
26. 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.
Electronic data interchange
Attest
Application controls
Unqualified opinion
27. 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.
Contingent liability
Assertions
Independence
Substantive tests of transactions
28. A 'clean' audit report - indicating the auditor's opinion that a client's financial statements are fairly presented in accordance with agreed-upon criteria (eg. GAAP)
Control deficiency
Unqualified audit report
Analytical procedures
Computer-assisted audit techniques (CAATs)
29. 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
Qualified opinion
Positive confirmation
Sampling risk
Substantive tests of transactions
30. The risk that material misstatements that could occur will not be prevented - or detected and corrected - by internal controls.
Control risk
Reasonable assurance
Substantive tests of transactions
Management letter
31. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
General controls
Application controls
Computer-assisted audit techniques (CAATs)
Subsequent event
32. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting material misstatements at the relevant assertion level.
General controls
Control deficiency
Tests of controls
Tests of details of account balances and disclosures
33. 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.
Material Weakness
Engagement risk
Scope limitation
Internal control
34. Test of transactions that both evaluate the effectiveness of controls and detect monetary errors.
Allowance for sampling risk
Dual-purpose tests
Audit sampling
Tests of details of account balances and disclosures
35. A systematic process of (1) objectively obtaining an evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and (2) communicating the resu
Auditing
Projected misstatement
Audit sampling
Closest reasonable estimate
36. Attribute-sampling techniques used to estimaed the dollar amount of misstatement for a class of transactions or an account balance.
Monetary unit sampling
Application controls
Substantive tests of transactions
Tests of controls
37. 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.
Confirmation
Risk of material misstatement
Financial statement assertions
Observation
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.
Monitoring of controlsa
Illegal acts
Audit sampling
Management advisory services
39. 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
Substantive procedures
Risk of material misstatement
Walkthrough
Confirmation
40. 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
Audit procedures
Audit Evidence
Closest reasonable estimate
Reasonable assurance
41. Consulting services that may provide advice and assistance concerning an entity's organization - personnel - finances - operations - systems - or other activities
Substantive procedures
Statements on Auditing Standards
Management advisory services
ositive confirmation
42. The extrapolation of sample results to the population; represents the auditors 'best estimate' of the misstatement in the sampling population
Projected misstatement
Standards of the PCAOB
Analytical procedures
Safeguarding of Assets
43. The amount of the planning materiality that is allocated to a financial statement account.
Substantive tests of transactions
Control activities
Tolerable misstatement
Dual dating
44. A confirmation request to which the recipient responds only if the amount or information stated is incorrect.
Tolerable deviation rate
Allowance for sampling risk
Negative confirmation
Board of directors
45. A measure of sampling risk added and subtracted to the projected misstatement to form a confidence interval.
Confidence bound
Application controls
Nonsampling risk
Attribute sampling
46. The susceptibility of an assertion to material misstatement - assuming no related controls
Observation
Inherent risk
Integrated audit
Assertions
47. Specific acts performed by the auditor in gathering evidence to determine if specific assertions are met.
Audit procedures
Nonstatistical sampling
Material Weakness
Analytical procedures
48. A confirmation request to which the recipient responds whether or not he or she agrees with the amount or information stated.
Subsequent event
Positive confirmation
Analytical procedures
Illegal act
49. The method by which an entity's board of directors - management - and other personnel provide reasonable assurance about the achievement of objectives in the following categories: (1) reliability of financial reporting - (2) effectiveness and efficie
Relevance of evidence
Assertions
Internal control
Control risk
50. Attribute sampling techniques used to estimate the dollar amount of misstatement for a class of transactions or an account balance.
Walkthrough
Nonsampling risk
Monetary-unit sampling
Disclaimer of opinion