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Test your basic knowledge |
Auditing Vocab
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Subject
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business-skills
Instructions:
Answer 50 questions in 15 minutes.
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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. A control deficiency - or combination of control deficiencies - that adversely effects the entity's ability to initate - authorize - record - process - or report external financial data reliably in accordance with GAAP such that there is more than a
Reasonable assurance
Control risk
Significant deficiency
Management letter
2. The transmission of business transactions over telecommunication networks.
Electronic data interchange
Scope limitation
Reliance strategy
Statements on Auditing Standards
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.
Statistical sampling
Materiality
Computer-assisted audit techniques (CAATs)
Electronic (Internet) commerce
4. Expressed or implied representations by management about information that is reflected in the financial statements. The three sets of assertions related to ending account balances - transactions - and presentation and disclosure.
Financial Statement Assertions
Corporate governance
Classical variables sampling
Control deficiency
5. 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.
Business processes
Confirmation
Expected misstatement
Lapping
6. 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
Statistical sampling
Financial statement assertions
Internal Control
Tests of controls
7. 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.
Generally accepted auditing standards
Materiality
Financial Statement Assertions
Reliance strategy
8. 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.
Substantive strategy
ositive confirmation
Materiality
Confirmation
9. Ten broad statements guiding the conduct of financial statement auditing.
Computer-assisted audit techniques (CAATs)
General controls
Observation
Generally accepted auditing standards (GAAS)
10. Consulting services that may provide advice and assistance concerning an entity's organization - personnel - finances - operations - systems - or other activities
Electronic data interchange
Management advisory services
Business processes
Tests of details of account balances and disclosures
11. Specific acts performed as the auditor gathers evidence to determine if specific audit objectives are being met.
Detection risk
Walkthrough
Audit procedures
Statements on Auditing Standards
12. Controls that relate to the overall information processing environment and have a pervasive effect on the entity's computer operations.
Scope of the audit
Control deficiency
General controls
Tolerable misstatement
13. Test to detect errors or fraud in individual transactions.
Materiality
Sampling unit
Substantive tests of transactions
Electronic (Internet) commerce
14. 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
Corporate governance
Entity-level controls
Safeguarding of Assets
Significant deficiency
15. 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.
Professional skepticism
Application controls
Unqualified opinion
Material weakness
16. A confirmation request to which the recipient responds whether or not he or she agrees with the amount or information stated.
Control deficiency
Reasonable assurance
Reporting
ositive confirmation
17. 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)
Independence
Reporting
Audit sampling
Application controls
18. The amount of the planning materiality that is allocated to a financial statement account.
Assertions
Contingent liability
ateriality
Tolerable misstatement
19. Attribute-sampling techniques used to estimaed the dollar amount of misstatement for a class of transactions or an account balance.
Management letter
Control activities
Monetary unit sampling
Control environment
20. 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.
Business processes
Blank or zero-balance confirmations
Electronic (Internet) commerce
Unqualified opinion
21. The risk that the entity's financial statements will contain a material misstatements whether caused by error or fraud.
Substantive tests of transactions
Risk of material misstatement
Scope of the audit
Audit Evidence
22. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Reasonable assurance
Analytical procedures
Control deficiency
Application controls
23. Audit procedures performed to test material misstatements in an account balance - transaction class - or disclosure component of the financial statements.
Safeguarding of Assets
Audit sampling
Risk of inccorect rejection
Substantive procedures
24. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Substantive strategy
Adverse opinion
Application controls
Analytical procedures
25. Persons elected by the stockholders of a corporation to oversee management and to direct the affairs of the corporation.
Contingent liability
Financial statement assertions
Monetary unit sampling
Board of directors
26. The risk that material misstatements that could occur will not be prevented - or detected and corrected - by internal controls.
Subsequent event
Financial Statement Assertions
Control risk
Tests of details of account balances and disclosures
27. Tests to detect errors or fraud in individual transactions.
Entity-level controls
Substantive tests of transactions
Engagement risk
Assertions
28. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Analytical procedures
Auditing
Sampling unit
Classical variables sampling
29. Examination of internal or external records or documents that are in paper form - electronic form - or other media.
Reasonable assurance
Attribute sampling
Inspections of records and documents
Audit evidence
30. A financial statement assertion that has a reasonable possibility of containing a misstatement or misstatements that would cause financial statements to be materially misstated.
Relevant Assertions
Financial Statement Assertions
Control activities
Reasonable assurance
31. Statements issued by the AICPA Auditing Standards Boards - considered as interpretations of the 10 GAAS statements.
Reliance strategy
Reliability of evidence
Statements on Auditing Standards
Public accounting firm
32. Controls that related to the overall information processing environment and have a pervasive effect on the entity's computer operations
Statements on Auditing Standards
Classical variables sampling
Financial statement assertions
General controls
33. 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.
Illegal act
Allowance for sampling risk
Control deficiency
Analytical procedures
34. Specific acts performed by the auditor in gathering evidence to determine if specific assertations are being met.
Reliance strategy
Audit procedures
Sampling risk
Adverse opinion
35. The risk that material misstatements that could occur will not be prevented - or detected and corrected - by internal controls.
Audit Risk
Reporting
Monitoring of controlsa
Control risk
36. 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.
Control risk
Assurance Services
Desired confidence level
Scope of the audit
37. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting material misstatements at the relevant assertion level.
Tests of controls
Audit sampling
Detection risk
Subsequent event
38. 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.
Audit sampling
Contingent liability
Desired confidence level
Audit strategy
39. 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)
Unqualified audit report
General controls
ositive confirmation
Generally accepted accounting principles (GAAP)
40. A process that assesses the quality of internal control performance over time.
Tests of controls
Monitoring of controls
Reasonable assurance
General controls
41. The uncertainty that results from sampling; the difference between the expected mean of the population and the tolerable deviation or misstatement.
Allowance for sampling risk
Nonsampling risk
Tests of controls
Reliance strategy
42. The auditor's decision to rely on the entity's controls - test those controls - and reduce the direct tests of the financial statement accounts.
Other information
Inspections of records and documents
Tolerable deviation rate
Reliance strategy
43. 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.
Ethics
Disclaimer of opinion
Control environment
Nonstatistical sampling
44. 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.
Confirmation
Reporting
Risk of incorrect rejection
Assertions
45. The extrapolation of sample results to the population; represents the auditors 'best estimate' of the misstatement in the sampling population
Working papers
Projected misstatement
Analytical procedures
Reasonable assurance
46. 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.
Disclaimer of opinion
Financial Statement Assertions
Significant deficiency
Management advisory services
47. A measure of sampling risk added and subtracted to the projected misstatement to form a confidence interval.
Sampling unit
Expected misstatement
Engagement quality review
Confidence bound
48. 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.
Tests of controls
Confidence bound
Dual-purpose tests
Reasonable assurance
49. 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
Closest reasonable estimate
Computer-assisted audit techniques (CAATs)
Accounting records
Control objective
50. 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.
Substantive tests of transactions
Illegal act
Risk of material misstatement
Nonsampling risk
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