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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 auditor may use inappropriate audit procedures - fail to detect a misstatement when applying an audit procedure - or misinterpret an audit result.






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. 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






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






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






6. 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.






7. Process of watching a process or procedure being performed by others.






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






9. 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






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






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






12. 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






13. Risks resulting from significant conditions - events - circumstances - and actions or inactions that could adversely affect management's ability to execute its strategies and to achieve its objectives - or through the setting of inappropriate objecti






14. The concept that the manager generally has more information about the true financial position and results of operations of the entity than the absentee owner does.






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






16. 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






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






18. Attribute-sampling techniques used to estimaed the dollar amount of misstatement for a class of transactions or an account balance.






19. 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.






20. Expressed or implied representations by management regarding the recognitions - measurement - presentation - and disclosure of information in the financial statements and related disclosures.






21. 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.






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






23. 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.






24. 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.






25. 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






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






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






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






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






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






32. 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






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






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






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






36. The risk that the auditor is exposed to financial loss or damage to his or her professional reputation from litigation - adverse publicity - or other events arising in connection wit financial statements audited and reported on.






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






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






39. The oversight mechanisms in place to help ensure the proper stewardship over an entity's assets. Management and the board of directors play primary roles - and the independent auditor plays a key facilitating role.






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






41. A lack of evidence that may preclude the auditor from issuing a clean opinion - usually resulting from an inability to conduct an audit procedure considered necessary.






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






43. 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.






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






45. A letter that formalizes the contract between the auditor and the client and outlines the responsibilities of both parties.






46. 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.






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






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






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






50. 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