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






2. The probability that the true but unknown measure of the characteristic of interest is within specified limits.






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






4. 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






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






6. 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.






7. 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






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






9. Violations of laws or government regulations.






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






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






12. 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.






13. 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.






14. The deviation rate that the auditor expects to exist in the population.






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






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






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






18. The magnitude of an omission or misstatement of accounting information that - in light of surrounding circumstances - makes it probable that the judgment of a reasonable person relying on the information would have been changed or influenced.






19. 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






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






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






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






23. 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.






24. 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






25. An account or disclosure is significant if there is a reasonable possibility that the account or disclosure could contain a misstatement that - individually or when aggregated with others - has a material effect on the financial statements - consider






26. 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






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






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






29. A deficiency - or combination of deficiencies - that results in a reasonable possibility that a material misstatement of the company's annual or interim financial stsatements will not be prevented or detected on a timely basis






30. 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.






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






32. 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






33. 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






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






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






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






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






38. 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.






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






40. A violation of laws or governmental regulations.






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






42. 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.






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






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






45. 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.






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






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






48. 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






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






50. 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







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