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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. 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.






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






3. 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.






4. 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






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






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






7. Consulting services that may provide advice and assistance concerning an entity's organization - personnel - finances - operations - systems - or other activities






8. 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.






9. The diagnosticity of evidence; that is whether the type of evidence can be relied on to signal the true state of the assertion.






10. Test of transactions that both evaluate the effectiveness of controls and detect monetary errors.






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






12. Ten broad statements guiding the conduct of financial statement auditing.






13. A confirmation request on which the recipient fills in the amount or furnishes the information requested.






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






15. An event occurring between the balance sheet date and the audit report release date - Type I - Type II






16. The amount of misstatement that the auditor believes exists in the population.






17. 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






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






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






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






21. 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.






22. 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.






23. 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.






24. 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.






25. The auditor's decision not to tely on the entity's controls and to audit the related financial statement accounts by relying more on substantive procedures.






26. 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






27. 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






28. The amount of the planning materiality that is allocated to a financial statement account.






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)-i.e. - a clean opinion.






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






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






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






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






34. 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.






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






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






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






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






40. Seeking information of knowledgeable persons - both financial and nonfinancial - throughout the entity or outside the entity.






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






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






43. 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






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






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






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






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






48. 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.






49. Sampling used to estimate the proportion of a population that possesses a specified characteristic.






50. A committee consisting of members of the board of directors - charged with overseeing the entity's system of internal control over financial reporting - internal and external auditors - and financial reporting process. Members typically must be indep