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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. 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






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. 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






4. The end product of the auditor's work indicating the auditing standards followed - and expressing an opinion as to whether an entity's financial statements are fairly presented in accordance with agreed-upon criteria (eg. GAAP)






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






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






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






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






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






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






11. An attitude that includes a questioning mind and a critical assessment of an audit evidence. The auditor should not assume that management is either honest or dishonest.






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






13. Specific acts performed by the auditor in gathering evidence to determine if specific assertations are being met.






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






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






16. The magnitude of an omission or misstatement of accounting information that - in light of surrounding circumstances - makes it probable that the judgement of a reasonable person relying on the information would have been changed or influenced.






17. 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






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






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






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






21. 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.






22. 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.






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






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






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






26. The transmission of business transactions over telecommunication networks.






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






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






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






30. 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.






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






32. 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






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






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






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






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






37. 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.






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






39. 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.






40. Issued when auditors do not express an opinion on the fairness of the entity's financial statements. Can be issued for pervasive going-concern uncertainties - pervasive scope limitations - and situations in which the auditors are not independent.






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






42. 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






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






44. The auditor's opinion that the financial statements do not present fairly in accordance with generally accepted accounting principles (or other comprehensive basis of accounting) due to a pervasively material misstatement.






45. 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.






46. 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)






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






48. The total of the projected misstatement plus the allowance for sampling risk.






49. 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






50. Accounting principles that are generally accepted for the preparation of financial statements in the United States. GAAP standards are currently issued primarily by the FASB - with oversight and influence by the SEC.






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