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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 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.






2. The maximum deviation rate from a prescribed control that the auditor is willing to accept without altering the planned assessed level of control risk.






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






4. 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.






5. 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






6. The identification - analysis - and management of risks relevant to the preparation of financial statements that are fairly presented in conformity with GAAP.






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






8. 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.






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






10. 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






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






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






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






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






15. 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






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






17. A violation of laws or governmental regulations.






18. 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






19. The auditor's principal record of the work performed and the basis for the conclusions in the auditor's report. It also facilitates the planning - performance - and supervision of the engagement and provides the basis for the review of the quality of






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






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






22. The risk that the entity's financial statements will contain a material misstatements whether caused by error or fraud.






23. A risk of material misstatement that is important enough to require special audit consideration.






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






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






26. 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






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






28. Financial statements prepared under regulatory - tax - cash basis - or other definitive criteria having substantial support.






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






30. 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.






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






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






33. 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






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






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






36. 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.






37. 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






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






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






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






41. 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.






42. 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.






43. Substantive tests that concentrate on the details of items contained in the account balance and disclosures.






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






45. A process designed by - or under the supervision of - the company's principal executive and principal financial officers - or persons performing similar functions - and effected by the company's board of directors - management - and other personnel -






46. Unintentional misstatements or omissions of amounts or disclosures.






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






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






49. 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






50. Audit evidence that includes minutes of meetings; confirmations from third parties; industry analysts' reports; comparable data about competitors (benchmarking); controls manuals; information obtained by the auditor from such audit procedures as inqu