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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. A range of acceptable amounts or a precisely determined point estimate for an estimate (eg. uncollectible receivables) - if that is a better estimate than any other amount






2. 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.






3. 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.






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






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






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






7. Violations of laws or government regulations.






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






9. 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.






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






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






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






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






14. 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.






15. 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.






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






17. The method by which an entity's boardof 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 efficien






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






19. The risk that the auditor will not detect a material misstatement that exists in the financial statements






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






21. 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






22. A process that assess the quality of internal control performance over time.






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






24. 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






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






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






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






28. 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






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






30. 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






31. 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






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






33. 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






34. A term that implies some risk that a material misstatement could be present in the financial statements without the auditor detecting it - even when the auditor has exercised due care.






35. 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)






36. 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






37. 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.






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






39. 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.






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






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






42. Test to detect errors or fraud in individual transactions.






43. 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






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






45. Expressed or implied representations by management that are reflected in the financial statement components






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






47. A violation of laws or governmental regulations.






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






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






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