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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 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






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






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 auditor's plan for the expected conduct - organization - and staffing of the audit.






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






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






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






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






9. 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






10. The extrapolation of sample results to the population; represents the auditors 'best estimate' of the misstatement in the sampling population






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






12. Papers that document the evidence gathered by auditors to show the work they have done - the methods and procedures they have followed - and the conclusions they have developed in an audit of financial statements or other type of engagement.






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






14. 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.






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






16. 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.






17. 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.






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






19. 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.






20. 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.






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






22. A deficiency - or combination of deficiencies - in internal control - such that there is a reasonable possibility that a material misstatememnt of the entity's financial statements will not be prevent - or detected and corrected on a timely basis.






23. Standards against which the quality of the auditor's performance is measured.






24. 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.






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






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






27. 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






28. Statements issued by the AICPA Auditing Standards Boards - considered as interpretations of the 10 GAAS statements.






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






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






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






32. 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






33. The auditor's decision not to rely on the entity's controls and to audit the related financial statement account by relying more on substantive procedures.






34. An audit inquiry sent to the client's attorneys in order to obtain or corroborate information about litifation - claims - and assessments.






35. 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






36. 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.






37. 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.






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






39. A violation of laws or governmental regulations.






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






41. 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






42. 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.






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






44. The transmission of business transactions over telecommunication networks.






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






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






47. 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






48. 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.






49. 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.






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